What is the primary purpose of tokenization in blockchain?

Tokenization in blockchain primarily serves the purpose of digitizing physical assets for better trading. By converting tangible items, such as real estate or artwork, into digital tokens that can be represented on a blockchain, ownership and transferability of these assets become simplified and more efficient. This process provides several advantages, including fractional ownership, increasing liquidity, and enabling a broader range of participants in markets that may have previously been restricted to high-net-worth individuals.

The digitization process allows for assets to be easily traded on decentralized exchanges and facilitates transparency and traceability in ownership history, enhancing the overall transaction experience. This innovation promotes seamless transactions and empowers individuals to have greater control over their assets while minimizing overhead costs associated with traditional trading methods.

Other choices may touch on aspects related to blockchain, such as security or regulatory aspects, but they do not encapsulate the core function of tokenization, which is fundamentally about creating a digital representation of physical assets to enhance their tradability and accessibility.