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Primitive Ventures partner Dovey Wan on Bitcoin, DeFi, and the rise of the digital Yuan

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Primitive Ventures partner Dovey Wan discussed the big three narratives in the crypto space — Bitcoin, Ethereum and DeFi, and state-backed stablecoins like the digital Yuan — in a virtual fireside chat at last week’s BlockDown 3.0.

Speaking to Erhan Korhaliller, the founder & CEO of blockchain PR agency EAK Digital, Wan started off by explaining what got her into Bitcoin years ago, while she was a freshman in a US college.

“I was amazed at how liquid it can be across the border. All the money can only circulate within the domestic environment,” she noted, adding that Bitcoin’s global liquidity proved the asset’s nature as a potential global internet currency at the time, which piqued her interest.

How the digital Yuan fits into the global economy

After a bit about her motives behind becoming an entrepreneur in the crypto space, Wan was asked about the digital Yuan, China’s upcoming central bank digital currency (CBDC) that has been in development since late-2017 and saw a pilot rollout last month.

Wan said that the average Chinese citizen may have no idea that it will be a cash replacement, as “they don’t have the economic background to understand it deeply.” “China has been a cashless society for 5-6 years. Whenever they get airdrop they d/l the new wallet app. There’s nothing significant about the system, even though it’s a digital fiat,” she stated.

There are over 135 blockchain nodes running now in Hangzhou, China. (Source: Pinterest)

Wan added that compared with Alipay, those are not digital fiat. For any of these, you still have to connect to your bank account. This time the digital yuan. Not all about financial surveillance. Close to 30% are senior citizens, don’t know how to use WeChat pay / Alipay.

Concerns raised by Wan around senior citizens being oblivious to the digital Yuan are similar to comments made by a Japanese senator earlier this year. Similar concerns — that make cash more beneficial — include the disruption of digital payment methods during times of an electricity cut or a natural disaster.

“Around 2022 it will have a standard rollout. Will have to compete with Wechat pay and Alipay. After that phase will make monetary policy more elastic.”

“Has to be somewhere where local fiat currency has no strong presence, so Yuan has better credit, so for most African countries. If people Chinese government will have better credibility compared with local governments, like Zimbabwe, so naturally they will flow to a better currency,” he noted.

The good…and ugly of DeFi 

Speaking about decentralized finance (DeFi), Wan observed that liquidity mining was “not a new thing” and that the playbook remains the same. 

“Back in 2018, it’s like wash trading, the more we trade the more tokens we can get. For all liquidity, mining is like proof of capital, its incentive program design, its growth hacking for adoption, and gaining liquidity, whenever there are a hype and wealth generation. That’s why DeFi drives a lot of people crazy. Think about the speed will drive FOMO, and will drive a bubble,” she stated in the regard.

“I think the good thing about the DeFi renaissance and thanks to uniswap and infrastructure, people have to learn how to use defi infrastructure and all these money legos (sic). It’s just like playing poker. If you don’t know the rules well you will be the sucker.”

Wan noted that DeFi enthusiasts and builders will learn that the printing of rewards out of thin air is not a good mechanic to retain. “There has to be some dimension, so I think it will drive healthier competition towards good product design and usability. It will make transactions cheaper,” she added.

Crypto poised for strong growth

Meanwhile, Wan concluded the Fireside chat with a favorable long-term view of crypto adoption and the loss of public trust in fiat currencies. “In 10 years crypto will be native to Generation Z. I think adoption is going to be much more massive. Also, the trust towards fiat currency will be weakened, because of unlimited expansion.”

“I don’t have an optimistic view of how USD can uphold global trust. More and more individuals will see crypto as a plan B. Awareness of BTC as an alternative. BTC is already a household name, in developed nations. In China, BTC is a household name, reputation in general.”

(The above is part of a BlockDown fireside chat available for streaming below.)

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