Fractionalization

Definition ∞ Fractionalization is the process of dividing a high-value asset, which might otherwise be illiquid or inaccessible, into smaller, more affordable, and tradable units. This technique is commonly applied to real estate, art, or other collectibles by representing portions of the asset as digital tokens. It enhances liquidity and broadens investor access to assets that were previously out of reach for many. Each fractional unit represents a verifiable ownership claim over a portion of the underlying asset.
Context ∞ Fractionalization is a significant trend in the tokenization of real-world assets, democratizing access to traditionally exclusive investment opportunities. Discussions often concern the legal and regulatory implications of fractional ownership, particularly regarding investor rights and asset governance. Future developments are expected to expand fractionalization to a wider array of assets, leveraging blockchain technology for transparent ownership records and efficient secondary markets.