Real-world assets include assets that already exist outside of the blockchain  real estate, bonds, stocks, commodities, and any other financial or tangible assets.

Tokenisation is the process of creating a digital token representing a claim/interest in one of these assets and recording the token on a blockchain or distributed ledger. The token may hold data related to the asset, its ownership, transaction history, and transfer rules.

It provides a digital document that can be updated upon transfer of ownership or other rights.

For example, tokenised bonds represent the claim of investors in certain bonds. Upon change of hands of the token, the transaction can be recorded on the ledger. According to Bank for International Settlements, tokenisation is the process of recording the claim on the financial or real assets on a programmable platform, which allows for conducting transfers of assets and the processes related to it.

The same approach can be used for real estate. Tokenisation platforms can represent interests in real estate by means of digital tokens and allow splitting ownership rights. Recent research of BIS showed the use of tokenisation in fractional ownership of real estate in the US.

An additional fact to consider is the absence of automatic proof of existence and actual ownership of a tangible asset issued on blockchain.

There must be a link between the token itself and the underlying asset from the legal and operational point of view. This means someone must check the asset, keep appropriate records, and make sure the token corresponds to the described rights. This is one of the reasons why regulation, governance, custody and interoperability are important challenges of tokenisation.

When the link is created successfully, blockchain will be able to provide a single source of transaction history for several authorized participants instead of having separate records. Additionally, it can programme some procedures, such as transfer of ownership and other conditions related to the asset.

Thus, the potential advantage of blockchain will be not only "putting assets on blockchain".

It will allow having the records of ownership, history of transactions, permissions and some conditions in one shared digital space.

Tokenisation is still a relatively new process and most of its advantages are not confirmed yet on the large scale. However, it is being studied in different areas of finance and real estate.