In this entire process, there are a lot of words and terms we all tend to use very loosely. Some will say DP account, some will say demat account, some will say a beneficiary account. Essentially, they all mean one and the same thing. It is the account in which the shares and other securities are held in electronic form. Demat is actually the process of converting your physical certificates into demat shares. By now most of the physical certificates are already in demat form but all these shares had to be dematerialized once and that is demat.
Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form. The process is quite simple nowadays. For example, if you are holding shares of a company in physical form, then you can walk into the office of your DP (where you have a demat account) and submit the certificates for dematerialization. The DP will send the details to the registrar and transfer agent (RTA) to verify that you are the genuine owner of the shares. Once the verification is completed and satisfied, the shares will be dematerialized and the same will be credited into your demat account.