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With inflation rates continuing to rise and impact the cost of living, it is difficult to predict with any certainty when inflation will slow down.

Until then, the population will continue to face significant financial burdens and will have to deal with rising living costs.

Under these circumstances, it is clear that not everyone can afford to invest thousands in risky but lucrative investments and stock options in the hope of earning extra income.

However, the tokenization of RWA (real-world assets) could be an attractive alternative.

For those unfamiliar, tokenized RWAs are physical assets such as real estate, art, or commodities that are digitized and represented by tokens on a blockchain.

The process of tokenizing RWAs involves several steps, starting with defining whether the token is fungible or non-fungible, selecting the issuing blockchain, third-party auditing of the off-chain asset, and issuance and post-issuance management.

For assets such as works of art, a gallery or auction house could, for example, offer tokenized shares in blue-chip works by Picasso or Warhol. – and the holders of those shares would receive a portion of the profit once the physical artwork is sold.

Similarly, banks like HSBC now offer a gold token, allowing those who may not be able to afford to buy gold bars to potentially earn passive income when the price of gold rises.

By enabling fractional ownership, tokenized RWAs allow individuals with limited capital to participate in larger ventures and open up opportunities for financial growth and stability, especially for young investors.

But is it really ready for that?

The rocky road to investment uncertainty

To understand the impact that tokenized RWAs could have on the investment landscape, we first need to take the temperature of today’s investment ecosystem.

The current investment landscape reflects a cautious and cautious public attitude – There is a greater aversion to investing, especially among younger generations.

However, these resentments are not unfounded. Although the global financial crisis of 2008 occurred 16 years ago, its aftermath is still being felt by millions of people around the world.

According to reports, the recession has severely weakened confidence and made many people hesitant to invest, while the world is witnessing one of the worst financial crises in history, costing the global economy over two trillion dollars.

Even those who were too young to invest in 2008 are still skeptical, fearing potential losses and wanting to protect their hard-earned savings.

Today, events like the financial crisis of 2008 have wider implications because of our online connectivity.

As online communities and financial markets become increasingly intertwined, the rapid spread of information significantly influences trading decisions and investor sentiment – ​​sometimes with unintended consequences.

Do we have to forget the great GameStop Reddit fiasco that virtually paralyzed social trading platforms like Robinhood?

This event underscores the power of the Internet in financial markets and its potential to reshape discussions about the future of trade and investment stability.

Therefore, the public has now turned to cryptocurrencies and their high return potential. – Due to its volatility, the digital asset market continues to face challenges in terms of mainstream adoption.

In the first two months of 2024, over $200 million worth of cryptocurrencies were lost due to security breaches.

This means that for many people, cryptocurrencies are not an option as a way to generate passive income.

So what are the alternatives when younger generations want to earn passive income but are not attracted to the investment opportunities available? – conventional or otherwise – especially in times of market volatility?

Taking advantage of new financial opportunities

Investing in physical assets has long been considered a relatively stable option because these assets tend to retain their value and provide protection against economic instability.

Despite the interest, these investments have become increasingly difficult to access, creating a barrier for individuals looking to diversify their portfolios.

One of the most appealing components of tokenized RWAs is the ability to lower barriers to entry for investors.

The tokenization market has therefore grown significantly, with forecasts suggesting that the value of tokenized RWAs could reach $16 trillion by 2030.

For example, an investor who participates in fractional ownership and targets the acquisition of residential apartments through tokenized RWAs can generate passive income without having to bear the burden of day-to-day operational responsibilities.

The ability to invest in physical assets through tokenized RWAs not only provides stable rental income but also offers the potential for value appreciation.

This dual benefit of income generation and wealth growth stands in stark contrast to the volatility and uncertainty associated with traditional investment options.

Even some of the world’s most established banks have started looking at tokenized RWAs, recognizing the potential of this blockchain use case to meet the changing needs of their customers.

Linking tokenized RWAs to physical assets creates additional trust and alleviates some of these concerns, opening up investment opportunities even to those who are wary of digital finance and broadening the investor base.

Although it takes time to build trust, people may be more likely to invest in tokenized RWAs backed by physical assets rather than volatile and risky stocks. – or unproven tokens.

This approach promotes financial security and accountability through blockchain while expanding income opportunities for those looking to earn extra money.

The truth is that no investment vehicle will ever be perfect or foolproof, and the regulatory hurdles surrounding tokenization will likely still put people off.

But tokenized RWAs at least offer investors a concrete opportunity for financial diversification.

So, could RWAs be an option for passive income? While RWAs could ultimately be a smart way to make money on the side, investors need to do due diligence to research and understand this evolving financial landscape.

RWAs represent a unique opportunity for those looking for investment alternatives beyond traditional options – However, as with any new financial technology, investments always involve risks.

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Yunes Emre Ozkaya is the founder and CEO of FreeBnk, a next-generation crypto bank that leverages neobanking, fintech, crypto and Web 3.0 technologies to create a financial super-app for investors. With over two decades of experience in business management, sales and marketing, Yunes’ The mission is to develop innovative and sustainable solutions that enable people to make a positive impact with their money.