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What is Tokenization? 10 Terms You Need to Know in 2023
Tokenization is the process of converting rights to an asset into a digital token that can be easily bought, sold, and traded on a blockchain. In addition, asset-based tokenization refers to the tokenization of real-world assets such as real estate, art, and even carbon credits. For example – shares of corporations could be tokenized, ownership of real estate could be recorded on the blockchain, you could even tokenize the title to your luxury car. Read on to discover 10 common tokenization terms to put you in the know.
10 Tokenization Terms You Need to Know
One of the main benefits of asset-based tokenization is that it allows for fractional ownership of assets. For example, rather than having to buy an entire building, investors can purchase a token that represents a fractional ownership of the building. This opens investment opportunities to a wider range of people and allows for greater liquidity of assets.
1. Smart ContractÂ
A self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. They are most used on the Ethereum blockchain and allow trust less, peer-to-peer transactions. Smart contracts have many use cases throughout blockchain technology.Â
2. Fungible TokenÂ
A fungible token is a type of digital asset that represents a uniform, interchangeable item
that can be traded or exchanged for other items of the same type. Fungible tokens are interchangeable because each one has the same value and can be replaced by any other token of the same type. Some examples of fungible tokens include cryptocurrencies like Bitcoin and Ethereum, and in-game items like tokens or currencies used in online games. These tokens can be bought, sold, or traded on various online platforms. Their
value is determined by the market demand for them.
3. Non-Fungible Token (NFT)
A non-fungible token (NFT) is a type of digital asset that represents a unique, indivisible item that cannot be exchanged for other items of the same type. Non-fungible tokens are often used to represent items that are unique or have special attributes, such as collectibles, art, and other one-of-a-kind items. They are stored on a blockchain, like Bitcoin or Ethereum. They are verified as being authentic via smart contract tech.
4. Cryptography
Cryptography is the practice of secure communication in the presence of third parties. It involves the use of mathematical algorithms and protocols to convert plaintext (readable messages) into ciphertext (encrypted messages), and vice versa. Cryptography is used to protect the confidentiality, integrity, and authenticity of information, as well as to verify the identity of individuals and devices.
5. ERC-20 TOKEN
ERC-20 is a technical standard for smart contracts on the Ethereum blockchain for creating tokens. It specifies a common set of rules for Ethereum tokens to follow, which makes it easier for developers to create and interact with them. ERC-20 tokens are digital assets that can represent a wide range of things, such as utility tokens, securities, virtual currencies, and more. They can be bought, sold, and traded on various online platforms. To discover more about tokenization, smart contract blockchain and more all you need to do is reach out and book a call. We are primed to ensure you are tech smart and future ready.
Heveloon
Content Writer
