Explain the Concept of “Tokenizing” a Real-World Asset (RWA) Using an NFT Standard.
Tokenizing an RWA involves creating a digital representation of a physical asset, such as real estate, gold, or a piece of art, on a blockchain. An ERC-721 token is often used because the RWA is unique and non-fungible.
The NFT acts as a digital deed or certificate of ownership. The smart contract links the unique token ID to the legal ownership documents of the RWA.
This process enhances liquidity, enables fractional ownership, and simplifies the transfer of ownership for traditionally illiquid assets.