An Asset-Backed Token is a type of cryptocurrency that represents ownership of a real-world asset. These tokens are typically issued on a blockchain, allowing for secure and transparent transactions. Each token is tied to an underlying asset, such as real estate, gold, or even a company’s equity. The primary advantage of asset-backed tokens is that they bring liquidity to traditionally illiquid markets. For example, real estate investments can be fractionalized, enabling smaller investors to own a portion of a property. This makes investing more accessible and diversifies risk. Additionally, asset-backed tokens often come with the assurance that the value is linked to tangible assets, which can reduce volatility compared to other cryptocurrencies. This connection to physical value can enhance trust and stability in the token’s price. However, it’s important for investors to conduct due diligence on the underlying assets and the issuing entity, as the regulatory framework and asset management practices can vary widely.