Tokenization changes asset ownership by converting rights into digitally native tokens that can be transferred, divided and programmed directly on distributed ledgers. Christian Catalini of MIT Sloan School of Management and Joshua S. Gans of University of Toronto Rotman School of Management describe how these tokenized representations alter transaction costs and create new market structures, making previously illiquid assets more tradable and enabling fractional participation. That shift matters because it redefines who can hold economic claims, how ownership is recorded and how rights travel across jurisdictions, with implications for investors, communities and public institutions.
Technical shift in rights and control
At the core, smart contracts replace some traditional intermediaries by automating enforcement of contractual conditions and distribution rules, while cryptographic ledgers provide a persistent, auditable record. Hyun Song Shin of the Bank for International Settlements explains that tokenization can compress layers of intermediation and create programmable entitlements that behave like securities, property titles or access tokens depending on legal design. The cause of this change is technological convergence: distributed ledger protocols, digital identity tools and standardized token frameworks allow assets to be sliced into fungible or non-fungible units and to carry embedded governance or revenue-sharing rules.
Social and territorial effects
The consequences reach beyond finance. Tokenized land or cultural assets can enable community investment in local projects, but they also pose risks for customary tenure and heritage stewardship when global markets intersect with fragile local governance. UNESCO has highlighted the sensitivity of cultural patrimony to commercialization and external ownership pressures. The World Bank explores how digital registries can improve land administration, while the Cambridge Centre for Alternative Finance at University of Cambridge raises environmental considerations tied to different ledger designs. These human, cultural and territorial dimensions make tokenization unique: it is simultaneously a technical protocol and a social contract that reconfigures who benefits from assets rooted in place.
Regulatory and market impact
Legal systems and market infrastructure must adapt to map tokens onto enforceable rights, to manage custody, and to prevent fragmentation of public goods. Regulators and standard setters are now defining custody rules, interoperability standards and disclosure expectations so that tokenized ownership remains meaningful in courts and for communities. The net effect is a more granular and programmable ownership model that promises greater access and liquidity while requiring careful governance to protect social and environmental values.
