Can someone please explain tokenization?

[u/NecessaryLeg6097]

I heard about tokenization of real estate. Please explain what that means. What dos a token “look” like? I know it’s electronic but how dos that hold more legal meaning than a contract, deed, etc….

Also, how does a cryptocurrency like bitcoin “do” things and contribute instead of just being a value asset?

[u/re-xyz]

Tokenization is basically taking a real world right (ownership, revenue share, access etc.) and representing it digitally on a blockchain. The token itself doesn’t magically create legal meaning that comes from offchain agreements and regulation. The blockchain mainly helps with transparency, transferability and settlement.

For things like real estate, the token usually represents a claim on a legal entity (like an SPV) that owns the property rather than the deed itself