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What is real-world asset tokenization?
Real-world asset tokenization is recording a claim on something that exists off the blockchain, such as a bond, fund share, property or commodity, as a token on a blockchain. The token can move and settle on-chain, but the asset itself stays in traditional systems.
What it means for you
The token gives you only the claim its issuer's legal terms grant, enforced off-chain through the issuer, custodian and courts, not by the blockchain. If the custodian fails or the off-chain record disagrees with the token, code cannot fix it. Check who holds the underlying asset and what the terms let you redeem.
A common mistake: “Owning the token means I own the building or bond directly.”
In fact: You own what the issuer's terms say the token represents, often a claim through a company or custodian. The BIS notes that intermediaries and legal frameworks still stand between the token and the asset.
How it works
The BIS describes tokenisation as recording claims on real or financial assets that sit on a traditional ledger onto a programmable platform. So-called ramps lock the original asset in its home system as collateral for the token, much as a bridge locks coins on one chain. Smart contracts can then automate transfers and settle both sides at once. The hard parts are off-chain: the rules for the token must match those for the asset, and locking a property, for example, means making sure it can no longer be traded in the real world, which still involves offline intermediaries.
Source: BIS Bulletin No 72: The tokenisation continuum · checked 4 October 2026
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Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.