Unit 2 · Level 5 · RWAs & tokenization
What tokenization means
Tokenization means issuing a blockchain token that represents a real-world asset (RWA): a government bond, a share of a fund, even a slice of a building. The token trades 24/7, settles in minutes, and can be split into tiny pieces. But notice the word 'represents': the bond or building itself never enters the blockchain. Only a claim does.
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What you get asked
When a €1,000 government bond is 'tokenized', what actually lives on the blockchain?
The real bond sits with a custodian in the traditional system; the chain records who owns the claim. Tokenization moves the LEDGER, not the asset.
What's the genuinely new benefit tokenization brings to something like a bond or a building?
Faster settlement, smaller pieces, programmable transfers, no market close. What it does NOT change: the asset's actual risk and return. A bad building is a bad building, tokenized or not.
In crypto jargon, tokenized bonds, funds, and property are grouped under the label ___.
Real-world assets. By 2025 tokenized RWAs (excluding stablecoins) had grown to tens of billions of dollars on-chain, led by tokenized treasuries and credit.
Put a typical tokenization pipeline in order
Note where trust lives: steps 1, 2, and 5 happen off-chain, in the ordinary legal world. The chain only handles the middle.
A pitch says: 'This token is backed by real estate, so it can't really lose value.' What's the graduate's correction?
Property prices fall; many European markets dropped hard after 2008 and again when rates jumped in 2022-23. Plus you now hold issuer risk and custody risk on top. 'Backed' never means 'safe'. 🐜
The rest of this unit
Treasuries, buildings, and funds on-chain, and the awkward question of who holds the real thing.