Tokenizing real-world assets creates digital representations that are only as trustworthy as the accuracy of their underlying data.

Without continual, verifiable audits and event logging—such as maintenance, damage, or ownership changes—the digital asset’s value and legitimacy become questionable.

This tension between digital promise and physical uncertainty leaves investors and platforms exposed to hidden risks and disputes, eroding trust and suppressing adoption.

The core challenge is the lack of standardized protocols and integration between physical world audit mechanisms (e.g., IoT, third-party inspections, legal records) and blockchain systems, as well as the high cost and manual labor historically associated with such audits.

This disconnect makes it almost impossible to offer real-time, tamper-resistant updates for tokenized asset provenance.

Manual or ad hoc audits and centralized registries are used, but they introduce trust bottlenecks, are prone to errors, and lack scalability.

IoT devices and RFIDs have spotty adoption and poor integration with blockchain record-keeping, leaving room for data gaps or manipulation between events.