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# What is tokenization and why is it actually important?
- URL: https://paymentandbanking.com/what-is-tokenization-and-why-is-it-actually-important/
- Published: 2021-09-15T13:06:33.000Z
- Updated: 2021-09-20T12:36:28.000Z
- Author: Christina Cassala
- Tags: Fintech

**The principle of the „5-Minute-Friday“ is probably known to many by now. This concept also fits perfectly for the popular podcast model. Every Friday, [Alexander Bechtel](https://www.linkedin.com/in/alexanderbechtel/?ref=paymentandbanking.com), [Jonas Gross](https://www.linkedin.com/in/jonasgross94/?ref=paymentandbanking.com) and [Michael Blaschke](https://www.linkedin.com/in/dr-michael-r-blaschke-00a2ba89/?ref=paymentandbanking.com) explain a question of the crypto community in a short and crisp way in five minutes.**

In today’s 5-Minute Friday episode, Michael Blaschke looks at why no investor can avoid tokenization. Asset tokenization has been making more headlines lately. The process of *tokenization*, or the digital representation of assets, has the potential to digitally transform entire financial systems. Specifically, the vision is of a decentralized financial system (DeFi) based on blockchain technology that operates without traditional intermediaries, enabling more efficient trading of assets.

## The topic is interesting for investors

This makes [tokenization](https://paymentandbanking.com/en/eu-advises-on-the-regulation-of-cryptovaluations/) one of the most exciting future trends for investors in the coming years. Despite attractive and convincing application examples, however, numerous challenges and questions still exist: How *exactly* does tokenization work? What does the *future of* tokenization look like? Will it really *revolutionize* the financial system? And will *all* assets become digital in the future?

Michael provides answers to these questions in the episode and presents key findings from a [study published ](https://www.feri-institut.de/content-center/202109082?ref=paymentandbanking.com)on September 8 in conjunction with the FERI Cognitive Finance Institute. Entitled *Blockchain and Tokenization: Disruption of the Financial System through Crypto-Assets and Decentralized Finance (DeFi)*, the study provides a basic overview of the topic, enabling a qualified assessment of the future potential of decentralized financial systems in general and tokenization in particular. The most important statements of the study are also explained in a [video](https://www.youtube.com/watch?v=AwLxe9sybLc&ref=paymentandbanking.com).