Traditional asset management is a tedious process. In many cases, the involvement of a large number of intermediaries, including various national institutions and regulatory authorities, is required.
Assets such as stocks, bonds, assets, and even land are often prohibitively expensive and time-consuming to be placed out of reach of the vast majority of the world’s population.
Moreover, traditional asset management typically involves complex legal contracts and many documents, so keeping and transferring ownership is all very difficult. It is a slow and cumbersome system that often lacks sufficient transparency to prevent fraud and other forms of corruption.
Tokenization, while not without its own mistakes and regulatory hurdles, it offers a fundamental new way of thinking about asset management. This is to rethink what is possible in the world of finance and technology. Below we explore this new idea.
What is a token?
Simply put, “Tokens represent something else,” according to Joseph Lubin, co-founder of Ethereum and founder of Blockchain Venture Studio Studio Consensys. “It could be a piece of paper. It could be an idea. It’s a symbol of something,” he said. “A driver’s license, for example, is a token that is indexed in a ledger that the state maintains that it is legal for the state to drive.”
Blockchain-based tokens can be thought of as a type of digital receipt for slices of assets. However, unlike receipts for the old ones, these tokens are recorded unequally in the auditable ones Blockchain.
Did you know?
Blockchain technology and tokens originate in cryptocurrencies such as Bitcoin.
2009, Bitcoin We have introduced a peer-to-peer system for transferring value across the Internet. Bitcoin blockchain allows transactions to be made on Decentralizationunreliable and immutable ways – prevent transactions from being illegally copied and digitally replicated, avoiding the so-called double spending problem.
This innovation has led entrepreneurs to imagine new use cases for the underlying technology of Bitcoin. 2015, Ethereum Introducing the world of fintech Programmable Blockchain – Breakthroughs made possible by Ethereum Smart Contract technology.
Ethereum adopted the same technology that Bitcoin is built on and made it. more More than just cryptocurrency or a store of value.
In time, thousands of tokens were developed on the Ethereum Network, each with their own attributes and advantages. Unlike cryptocurrencies, tokens have a variety of potential use cases. From managing properties, stocks and contracts to turning them on Decentralization Applications and games.
Token Use Cases
There are generally two types of tokens: utility tokens and security tokens.
A utility token is a digital asset that allows the owner to access products or services produced by the company. As the label suggests, these tokens are Used For something, not for holding or trading. For example, utility tokens can provide access to future services, such as renting computing power, betting on sports games, and legally binding voting.
Brave Software, a privacy-focused manufacturer Brave Web browser created a basic attention token bat– A utility token designed for the advertising industry that collects the attention of web users.
Security tokens, on the other hand, are digital assets that represent certain investments, such as the company’s share, how the company operates, units of value, or a combination of three. These tokens can also represent some of your real world assets, such as your favorite Popson gold, classic cars, royalties, and more.
Therefore, security tokens must comply with existing regulatory frameworks that govern traditional securities such as stocks. As a result, the entire industry has been developed to help tokenized entrepreneurs comply with applicable regulations.
Securitizeize, a crypto startup backed by leading the Crypto Currency Exchange Coinbase, is one such company specializing in the issuance and management of digital securities, and is specifically intended to support token issuers.
Apart from utility and security tokens, there are also special inappropriate tokens. NFTS. These tokens represent unique digital items ranging from profile photo collections such as crypto plants and boring APE Yacht Clubs to individual artworks selling for tens of millions of dollars.
Should I turn it into a token or not into a token?
Tokenization commitments are based on the potential to democratize access to digital assets and their ability to provide accountability, security, and source of these assets.
“The creation of tokens representing real-world assets that can be traded and accountable is extremely useful,” said Paul Snow, founder and CEO of Factom. Decryption.
People believe they own the inventory, but they really aren’t. They own stock receipts, which is a kind of “trust in us” process.
Blockchain-based systems eliminate the need to trust intermediaries. But it also offers a better level of accounting, Yuki explained. This is particularly beneficial for businesses dealing with fraud prevention.
It is at least in an ideal world.
In late June 2025, the popular trading app Robinhood revealed that over 200 shares are tokenized and tradeable on Ethereum Layer-2 Network Arbitrum, a EU customer. Two of these stocks include Openai and SpaceX, private companies that Robinhood has given “indirect exposure to the private market.” Openai opposed and issued an official statement indicating that they disapproved of the offering.
Despite the backlash, Robinhood co-founder and CEO Vladimir Tenev said in a July 2025 interview. Bloomberg That the list of private companies didn’t stop there.
“We want to have thousands of private companies on our platform. Bloomberg. “And actually, since our announcement, I’ve had a lot of enquiries (from From From) that want to actually want to access retail, tokenize their stocks and become part of this revolution.”
Kurt Watkins, founder of US-based company Watkins Legal, said Decryption Due to the lack of transparency and legal ambiguity, it is likely that the offering was “commercially unfeasible” in the United States.
Regulators around the world, especially in the US, are now Cryptocurrency The industry is looking at the ways tokens have been purchased, sold and distributed so far.
Additionally, rules regarding the sale, distribution and management of tokenized assets vary from country to country. Crypto startups aimed at building global borderless systems must now work with regulations and compliance measurements in the jurisdictions they expect to do business with.
This, too, is a tedious and expensive process in itself, especially in the US, with many token-based companies choosing to take their businesses abroad where rules are less strict.
Nevertheless, US regulators have shown signs of recent warming for tokenized assets, and blockchain entrepreneurs continue to develop innovative uses for tokenization, developing solutions to improve the scalability of their respective networks.
future
Tokenization promises a world where almost all assets or services can be expressed and stored on the blockchain. The possibilities are theoretically infinite. But just like in the early days of the Internet, we are beginning to understand the best ideas for this technology.
It’s still in its early days, but the transition to a tokenized world could change the way we think about everything that holds true value.
This article was published in July 2023 and updated in July 2025.
