C Estates Explainer: What is Tokenization?
What is Tokenization? Tokenization is a process of converting rights of a physical asset into its digital form. When we tokenize something, we retain all its essential value and we don’t compromise its security. To simplify, let us illustrate using online banking: in your banking app, you can view your balance, transfer funds, pay bills or even shop. That money that you are actually using online is what we can call tokens because our actual money is inside the bank’s vault or even used by a bank in various investments to earn interest. The value we see online has the same value in what we really have deposited in the bank.
Now that we already have an overview of tokenization, let’s name several tokens. 1. security tokens, it’s a token that gives you returns or yield and in some cases also gives you rights to a company, for example, company stocks or stock shares. 2. Utility tokens, it’s a token that you need to use or consume, for example, arcade or amusement park’s tokens. 3. Asset Token it’s a token of a physical asset, for example, gold or real estate. Lastly, 4. Payment Token it’s a token that you can use in paying something, for example, credit or debit card.
As what you can see almost all of the major things that we need on a daily basis are now online. Banking, shopping, and transportation just to name a few and they are already using tokens and we already have been using it all along, we’re not just aware of it.