Definition ∞ Data tokenization is the process of converting sensitive data into a non-sensitive equivalent, or “token,” that retains essential information without compromising security. In digital asset contexts, this often involves representing real-world assets, such as real estate or commodities, as digital tokens on a blockchain. The token acts as a secure placeholder for the original data, facilitating secure transactions and data management without exposing the underlying sensitive information. This method enhances data privacy and transactional efficiency.
Context ∞ Data tokenization is a growing trend, particularly in the realm of asset digitization and secure data handling within blockchain ecosystems. Regulatory frameworks are actively being developed to address the legal and ownership implications of tokenized assets. Future applications include expanding the range of real-world assets represented on-chain and improving interoperability between different tokenization platforms.
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