Tokenisation

Tokenisation in more detail

Tokenisation means creating tokens that stand for assets from outside crypto. A US Federal Reserve paper defines it as constructing digital representations for non-crypto assets, which it calls reference assets. The reference asset might be a bond, a share in a fund, gold or property.

So the token is a claim, and a claim is only as good as the party that must honour it. The Fed paper also points out that tokenisation ties crypto markets more closely to the traditional financial system, so trouble in one can spread to the other.