Tokenisation Glossary: The Key Terms Explained

A plain-English guide to the language of tokenisation, written for founders and investors — not developers.

If you are exploring tokenisation for the first time, the terminology can feel like a barrier.

This glossary is designed to cut through that. Each term is explained in straightforward language, with a short note on why it matters in practice.

This is not a technical manual. It is a reference point for anyone who wants to understand the conversation without needing a background in blockchain development.

Bookmark this page. We will keep it updated as the space evolves.

The Fundamentals

Tokenisation

The process of creating a digital token that represents ownership of, or a claim over, a real-world asset. The token lives on a blockchain and can be transferred, traded, or held — much like a digital certificate of ownership.

In practice: When a company tokenises its equity, it creates digital tokens that represent shares. These can then be distributed, tracked, and potentially traded using blockchain infrastructure.

Real-World Assets (RWAs)

Any asset that exists outside the blockchain and has recognised value in the traditional economy. This includes property, company shares, bonds, commodities, art, intellectual property, and more.

In practice: RWAs are what give tokenisation its commercial relevance. The token itself is just a digital wrapper — the value comes from the underlying asset it represents.

Blockchain

A shared digital ledger that records transactions across a network of computers. Once a transaction is recorded, it cannot be secretly altered. Think of it as a spreadsheet that everyone can see, but no single person controls.

In practice: Blockchain provides the infrastructure that makes tokenisation possible. It is the system that records who owns what, and when ownership changes hands.

Token

A digital unit recorded on a blockchain that represents something — ownership, a right, a claim, or a form of value. Tokens can be “native” (created purely for use on the blockchain, like a cryptocurrency) or “linked” (representing something that exists in the real world, like a share in a company or a piece of property).

In practice: In the context of tokenised equity, each token represents a stake in the company. The number of tokens, and what rights attach to them, is defined at the point of issuance.

Digital Asset

A broad term for anything of value that exists in a digital format. This includes cryptocurrencies, tokens, NFTs, and any other form of digitally recorded value. In the context of tokenisation, it typically refers to a token that represents a real-world asset.

In practice: UK law is actively developing a legal framework for digital assets, including the recognition of a third category of personal property specifically for assets that exist only in digital form.

How It Works

Smart Contract

A piece of code stored on a blockchain that automatically executes predefined actions when certain conditions are met. It removes the need for a middleman to enforce the terms of an agreement.

In practice: A smart contract could automatically distribute dividends to token holders once a payment is received, or enforce transfer restrictions so that tokens can only be sold to verified investors.

Minting

The process of creating new tokens on a blockchain. When an asset is tokenised, the tokens representing it are “minted” — brought into existence and recorded on the ledger.

In practice: Minting is the moment a tokenised asset becomes live. Before minting, it is a plan. After minting, the tokens exist, can be allocated, and can begin to be transferred.

Distributed Ledger Technology (DLT)

The broader technology category that includes blockchains. A distributed ledger is a database that is shared and synchronised across multiple locations or participants, with no single central authority.

In practice: You will sometimes see DLT used instead of blockchain in regulatory and institutional contexts. They are closely related, but DLT is the wider term.

Oracle

A service that feeds real-world data into a blockchain. Since blockchains cannot access external information on their own, oracles act as a bridge — bringing in data such as asset valuations, interest rates, or legal status.

In practice: If a tokenised property needs its value updated on-chain, an oracle provides that data to the smart contract so it can reflect current conditions.

Ownership and Investment

Fractional Ownership

The ability to divide a high-value asset into smaller, more affordable units. Each token represents a fraction of the whole, allowing multiple investors to own a share of something they could not afford to buy outright.

In practice: Instead of needing £500,000 to invest in a commercial property, tokenisation could divide it into 5,000 tokens at £100 each — making the asset accessible to a far wider pool of investors.

Liquidity

How easily an asset can be bought or sold without significantly affecting its price. Cash is highly liquid. A building is not. Tokenisation aims to increase the liquidity of traditionally hard-to-trade assets.

In practice: Tokenised assets have the potential to be traded on secondary markets, giving investors a way to exit their position without waiting for the underlying asset to be sold.

Secondary Market

A marketplace where tokens can be bought and sold between investors after the initial issuance. This is where liquidity is created — it allows token holders to trade with each other rather than only dealing with the original issuer.

In practice: Most tokenised assets today operate on a buy-and-hold basis. The development of regulated secondary markets is one of the biggest areas of progress in the sector.

Security Token

A token that represents a financial security — such as equity, debt, or a share in a fund. Security tokens are subject to financial regulation, just like the traditional instruments they represent.

In practice: If you tokenise shares in a startup, those tokens are almost certainly security tokens. That means they fall under the same regulatory framework as any other securities offering.

Security and Control

Custody

The secure storage and management of digital assets, including the private keys that control them. Custody can be handled by the asset owner themselves (self-custody) or by a regulated third-party custodian.

In practice: For institutional investors, regulated custody is often a prerequisite for participation. Who holds the keys to your tokens is one of the most important decisions in any tokenisation project.

Private Key

A secret code that gives its holder the ability to access and transfer digital assets on a blockchain. Whoever controls the private key controls the asset. There is no password reset.

In practice: Losing a private key means losing access to the asset permanently. This is why custody and key management are critical considerations, not afterthoughts.

Self-Custody

When the owner of a digital asset holds and manages their own private keys, without relying on a third party. This gives maximum control, but also maximum responsibility.

In practice: Self-custody is common in crypto-native communities, but most mainstream investors and institutions prefer custodial solutions where a regulated entity holds the keys on their behalf.

Control (Legal Context)

A concept that is becoming central to how English law treats digital assets. Control refers to the practical ability to use an asset, exclude others from it, and transfer it — regardless of who is recognised as the legal owner.

In practice: The UK Jurisdiction Taskforce’s recent report on control is shaping how courts and regulators understand the relationship between a person and a digital asset. It matters because legal ownership and practical control can diverge.

KYC / AML

Know Your Customer and Anti-Money Laundering. These are regulatory requirements that oblige businesses to verify the identity of their customers and monitor transactions for suspicious activity. They apply to tokenisation platforms just as they do to banks.

In practice: Any platform offering tokenised securities will need robust KYC and AML processes in place. This is non-negotiable from a regulatory standpoint.

Broader Concepts

DeFi (Decentralised Finance)

A collective term for financial services that operate on blockchain networks without traditional intermediaries like banks. DeFi applications use smart contracts to offer lending, borrowing, trading, and other services directly between participants.

In practice: DeFi is where much of the innovation in tokenisation originates, but mainstream adoption of tokenised assets is increasingly happening through regulated, institutional channels.

TradFi (Traditional Finance)

The conventional financial system — banks, stock exchanges, fund managers, brokers, and the regulatory framework that governs them. Used as a shorthand to distinguish the established system from blockchain-based alternatives.

In practice: Tokenisation sits at the intersection of TradFi and DeFi. The most successful projects tend to combine the innovation of blockchain with the legal and compliance standards of traditional finance.

Stablecoin

A type of cryptocurrency designed to maintain a stable value, usually pegged to a traditional currency like the US dollar or British pound. Stablecoins are often used as the medium of exchange in tokenised transactions.

In practice: When tokenised assets are bought or sold, payment is often made in stablecoins rather than traditional currency. This allows transactions to settle on-chain without the delays of bank transfers.

Interoperability

The ability of different blockchain networks and systems to communicate and work together. In the context of tokenisation, it means ensuring that a token created on one blockchain can be recognised, transferred, or traded on another.

In practice: As more assets are tokenised across different platforms, interoperability becomes essential. Without it, tokenised markets risk becoming fragmented and siloed.

Regulatory Sandbox

A controlled environment set up by a financial regulator that allows businesses to test new products and services under relaxed regulatory requirements. The UK’s Financial Conduct Authority operates one of the most established sandboxes globally.

In practice: The UK’s Digital Securities Sandbox is directly relevant to tokenisation. It allows firms to test how tokenised securities can be issued and traded within a supervised framework.

This glossary is a living document. As the language of tokenisation evolves, so will this page. If there is a term you think we should add, get in touch.