It's not just token value

In the most abstract form, tokenisation converts the value stored in a tangible or intangible object into a token that usually can be manipulated along a distributed ledger technology (DLT)/blockchain system. In simple words, tokenisation can turn almost any asset, either real or virtual, into a digital token and enables the digital transfer, ownership and storage without the necessary need of a central third party/intermediary....

A digital token can, thereby, be described as a piece of software with a unique asset reference, properties and/or legal rights attached. Even though similar pieces of software can be done, the fact that a token runs on DLT/ blockchain differentiates it from other digitalisation methods. Using a DLT/blockchain to create a digital token enables the collaboration of different companies, which, in turn, allows the aggregation of otherwise fragmented information into one digital token. Moreover, all parties can update information seamlessly and verify their correctness.

Tokenisation allows for fractionalisation, therefore reducing entry barriers and boosting access to new markets for smaller players. The increased market participation may result in additional market liquidity.


However, the larger number of market participants would require an evolution from bilateral towards multilateral trades. While this is burdensome in the traditional world, DLT supports smart contracts and atomic swaps, allowing for secure and near-instant settlement of even complex multiparty trades.

From 'Tokenisation of Assets', Ernst & Young