DDN Business Insider | Unprecedented heat in cryptocurrency: RWA may become new investment trend of 2025
Editor's note: 2024 was a remarkable year for cryptocurrencies, with Bitcoin, the world's largest digital asset, surging over 120% and surpassing the $100,000 mark. Since the beginning of 2025, spot Bitcoin and Ethereum ETFs have attracted a cumulative of $1.75 billion in funds. Additionally, the incoming Trump administration's friendly stance towards cryptocurrencies has led many market participants to cheer for the future of digital assets. However, for most investors, aside from wishing for a time machine to go back and invest in Bitcoin, their understanding of various concepts in the virtual asset space, such as blockchain, Web3, and decentralized finance (commonly known as DeFi), remains limited.
【Anchor】Hello everyone, welcome to DDN Business Insider. I am Yunfei Zhang. 2024 was a remarkable year for cryptocurrencies, with Bitcoin, the world's largest digital asset, surging over 120% and surpassing the $100,000 mark. Since the beginning of 2025, spot Bitcoin and Ethereum ETFs have attracted a cumulative of $1.75 billion in funds. Additionally, the incoming Trump administration's friendly stance towards cryptocurrencies has led many market participants to cheer for the future of digital assets.
【Anchor】However, for most investors, aside from wishing for a time machine to go back and invest in Bitcoin, their understanding of various concepts in the virtual asset space, such as blockchain, Web3, and decentralized finance (commonly known as DeFi), remains limited. In today's program, our guest host, Ding Zhaofei, Chief Analyst at HashKey Group, Yu Jianing, Honorary Chairman of the Hong Kong Blockchain Association and President of Uweb, help us understand the connections behind these complex concepts in a simple manner. Now, let's turn the time over to Mr. Ding.
【Anchor】Hello, everyone. I am Ding Zhaofei, the Chief Analyst at HashKey Group. Today, we are fortunate to have Mr. Yu Jianing, the President of UWeb and Honorary Chairman of the Hong Kong Blockchain Association, to provide us with relevant insights. Mr. Yu, many people actually don't quite understand the relationship between Bitcoin, blockchain, Web 3.0, and DeFi, despite Bitcoin being around for over a decade. Could you explain this to everyone?
We believe that Bitcoin is actually the ancestor of all virtual assets. It initiated a truly decentralized financial era. As we mentioned earlier, DeFi and public chains are essentially extensions of Bitcoin. Specifically, Bitcoin was invented by a person known as Satoshi Nakamoto, and the network was officially launched in 2009. On this network, all assets are jointly issued and maintained by the global community, without any central entity controlling them. This ensures that everyone has complete control over their assets, protected by a cryptographic mechanism that guarantees that all assets on the blockchain are sacred and inviolable.
This has supplemented many regions and countries where financial services are underdeveloped. Many people want to access better financial services, but it is often difficult due to high costs or limited availability. However, based on the Bitcoin blockchain, as long as you have a wallet and a computer or a mobile phone, you can achieve global transfers and remittances at a relatively low cost.
Of course, we say that Bitcoin's blockchain has also revealed some issues during its early development. Many people claim that blockchain can facilitate peer-to-peer payments. Initially, Bitcoin was also positioned as a peer-to-peer electronic cash system, but we found that due to Bitcoin's significant price fluctuations—early on, it might have been worth a few dozen dollars, now it has surpassed a hundred thousand dollars—this high volatility causes problems for both buyers and sellers. If the price increases in a few days, the buyer seems to be at a loss, and if the price falls, the seller is at a loss.
Therefore, there is a need for more virtual assets similar to Bitcoin but with better characteristics to meet global payment demands. DeFi, which is based on smart contracts, leverages blockchain technology to allow virtual assets not only to be transferred but also to engage in financial activities such as lending and trading. All these actions aren't conducted through a bank account; instead, they are completed entirely on the blockchain with a program.
For instance, in the past, if a person, especially someone relatively poor, wanted to apply for a loan, a bank might ask for collateral or his income history. Additionally, if a foreigner visits a country without a credit history, it can be very difficult to obtain a loan. However, in the blockchain world, all data is public and transparent. The transaction records and ownership of virtual assets are accessible. Therefore, based on DeFi, everyone can access loans and financial services. It provides a low-threshold, inclusive, and equitable new form of digital financial service.
【Anchor】I understand. To summarize, Bitcoin is the ancestor of all, thus its asset has the greatest consensus. The various blockchains that emerged from it serve different purposes. On top of blockchain, we can build different applications, especially DeFi, which has recently attracted much attention.
Let's discuss concept by concept. For example, some people say that blockchain technology is another milestone in this information revolution. What are your thoughts on that? What do you see as the value and significance of blockchain technology?
Absolutely, it can certainly bear that title. In recent years, besides blockchain, most people have also paying attention to AI technology.
Nowadays, we cannot complete many of our tasks without AI, as we leverage various chatbots like ChatGPT to assist us. There is now an emerging concept called AI agents, which is a smart entity in Chinese. This smart entity has increasingly penetrated various work scenarios. For example, among the many influencers on TikTok or Douyin, not all of them are real people behind the scenes; some are AI smart entities.
But we have found that in this era, there has begun to emerge a demand for transactions between humans and AI, as well as between AI and AI. However, it is nearly impossible for an AI agent to open a bank account. Then, if we want to pay a small amount of money to AI in the future, what good way do we have to pay? We need a new payment path and a new payment infrastructure.
In fact, blockchain and virtual assets are playing a crucial role in this technological transformation. It is very similar to when smartphones emerged; many applications came up, but mobile payments were not yet popular. It was not easy to tip a streamer or make quick online payments. Later, with the emergence of mobile payment platforms like Alipay and WeChat Pay, we could easily make various payments using our phones, which spawned many new applications, whether in live commerce, short videos, or micro-dramas. All these developments rely on the widespread adoption of mobile payments. We refer to this phase of technological revolution as the third generation of the internet, Web 3.0, which features a revolution in productivity.
AI agents are starting to change our relationship with the Internet, evolving from merely using the Internet for technology to collaborating with AI. However, the development of this kind of productivity needs, on the one hand, a match with the so-called production relations, and on the other hand, the support of a new financial system. Therefore, blockchain serves as a new financial infrastructure that meets the future needs of human-AI collaboration. It is a part of the construction of the next generation of the Internet, alongside AI, blockchain, and other technologies, including the Internet and recent discussions around quantum computing, etc., that together build a new era of the next generation of the Internet, that is, Web 3.0.
【Anchor】This brings us to an interesting question: It seems that Web 2.0 is for humans, while Web 3.0 is for humans and AI. Well, in blockchain, there are various elements, including consensus algorithms, public chains, etc. Let's discuss some important methodologies. What exactly does 'encryption' in cryptocurrencies mean?
Essentially, all of Web 3.0 is built on cryptographic principles. Cryptography has always been a crucial technology. For example, when we use online banking, why do we trust our funds in various digital or virtual banks in places like Hong Kong?
They don't have any physical stores, yet we are willing to deposit our money because we trust that their app is secure. What makes us believe that our money won't be stolen and that someone won't impersonate us to log into our app and transfer our funds? It's because we trust that there is a security mechanism in place, which is also based on cryptography.
However, in the so-called Web 3.0 era, that is, in the era of virtual assets, cryptography plays an even more crucial role. In the past, when verifying our identity—whether logging into online banking, WeChat, TikTok, or Facebook—we often had to provide information like our email or phone number. However, most of our emails are registered on platforms like Gmail or Yahoo. If you look closely at the terms of service, you'll find that these email accounts do not actually belong to you; they belong to the service provider. Similarly, if you stop paying your phone bill for a while, your phone number could be reclaimed, and someone else might get the same number and access your accounts, which is quite frightening.
So, in the past, cryptography was an auxiliary tool to make accounts more secure. However, now it has gradually become essential to our identity. Each person essentially has a private key, which serves as a marker of identity. For example, many times when you need to log onto a website, it sends a notification to your phone for confirmation. This is essentially using a private key or a cryptographic key stored on your phone to verify your identity.
In fact, cryptography is not distant; it is already playing a vital role in ensuring our online security in our daily lives.
However, in the era of virtual assets, cryptography is emphasized even more in terms of its use, whether it's for the issuance of assets, the use of assets, transfers, or a series of financial services. Therefore, we must emphasize to everyone that if you want to start investing in virtual assets or using Web 3.0 services, it is crucial to safeguard your private key, as it represents your identity. Whoever has access to your private key can control your account, and no institution can help you recover it. If you accidentally leak your private key, you should immediately transfer all your funds to a new address to ensure the safety of your assets.
Another well-known concept in blockchain is the smart contract. What exactly is smart about a smart contract? While it sounds like a contract, it is actually a program, often related to finance or funds. The core features of a smart contract are that it runs on the blockchain and, once activated, cannot be stopped or arbitrarily changed. Because, as we all know, in the past, there have been some so-called illegal financial services. These financial services often lure people in with high interest rates, promising high returns. But for example, many people who invested money in these so-called illegal websites might find that the sites become inaccessible a few days later, and they are unable to withdraw their funds. This situation occurs frequently because those websites also run on a program, but these programs operate on one or a few computers. Once the administrators or controlling parties shut down those computers, ok sorry, all the money becomes inaccessible, which is terrifying.
However, the benefit of a smart contract running on a decentralized blockchain is that no administrator can control or shut it down and take the money within it. Unless in extremely rare circumstances, smart contracts at least provide a level of certainty. For example, if a smart contract is a lending contract where I deposit money to earn interest, or borrow money, this service is relatively stable and secure, meaning it won't just shut down, cut off the network, and stop providing services.
I understand now. So, decentralized finance (DeFi) is based on smart contracts. Many people wonder how DeFi differs from our existing financial systems, which include banks, brokerages, and exchanges. Will decentralized finance integrate into people's lives or construct a new financial lifestyle as a parallel world?
First of all, decentralized finance encompasses a wide range of areas, but ultimately, it manifests through individual smart contracts or financial services based on these special programs. The first point is that DeFi, based on smart contracts, isn't about overthrowing the financial system or creating an entirely new one, which is not very realistic. However, we are seeing more banks and international organizations embracing DeFi.
The DeFi system is actually a technology, and we are indeed witnessing many positive and substantial applications in this area, allowing countless people globally to access financial services at very low costs and low thresholds, whether it's lending or currency exchange services. Of course, there are also some projects that resemble fraud or Ponzi schemes, masquerading as smart contracts or DeFi services. So, for our audience, I think it's very important to pay special attention to the pen. Don't be confused by these terms. Look at the core of it all and see if it's truly compliant, legitimate, and has a license. It has a wide range of global users and has been widely audited by various companies. This is very crucial.
As for your previous question regarding whether DeFi will be a completely parallel financial system or integrated with the existing financial system, I personally believe that it will definitely be deeply integrated in the future. Recently, there has been a concept within Wall Street called PayFi, which refers to payment finance. This payment finance service should be familiar to many friends from the mainland, as it resembles products like Yu'e'bao on Alipay or similar offerings on WeChat Pay, which allow you to earn interest on your idle money and instantly use it when needed. However, such services are not widely available in many places around the world. For example, in Hong Kong's banks, there are not many products that allow your money to earn interest and be used for immediate payment at the same time. This is actually a combination of so-called funds, fund shares, and funds that can be converted for payment at any time.
But, of course, this can be easily implemented on the blockchain, right? Because now we are saying that there are many so-called stablecoins on the blockchain. The characteristic of stablecoins is that they maintain a one-to-one value with the US dollar, Hong Kong dollar, or other mainstream fiat currencies. Their prices do not experience extreme volatility like Bitcoin; instead, they generally stay consistent with the price of the US dollar or other fiat currencies. You just provided a detailed introduction to how PayFi is integrated into traditional finance and our daily lives. Is it possible that transactions, lending, and even future insurance could gradually be incorporated into our lives?
Yes, to be honest, many people want to invest in US Treasuries, as their yields have been quite high recently. However, many friends find it difficult to buy US Treasuries because it often requires opening an account in person at a US bank, which is quite challenging.
In Hong Kong, it might be relatively easier, but if you want to open an account at a major bank in some smaller Southeast Asian countries or even in some African nations, it can be quite challenging. But is it fair to say that those with less money cannot invest? This is a significant issue in the world today—due to the financial system not being truly inclusive, most financial institutions focus on serving the wealthy. This creates a Matthew Effect where the rich receive better financial services and can earn more money, while the poor cannot even open bank accounts and thus cannot manage or grow their wealth.
As a result, the rich are becoming richer, and the poor are becoming poorer, which is a very unfair situation. In recent years, many people have begun to tokenize U.S. Treasuries through compliant methods, holding them as tokens. This allows individuals to invest in U.S. Treasuries with a very low threshold and minimal funds, enabling them to earn returns. We are even seeing projects that tokenize U.S. stocks and ETFs, making it possible for more people to invest in quality global assets. Essentially, this is a way to make the financial system fairer.
【Anchor】You also mentioned that U.S. Treasuries can be tokenized and become an important asset in DeFi. This introduces a new concept called Real World Assets (RWA), which includes assets like gold and potentially stocks through Security Tokens (STOs). In 2025, how do you think assets like RWA will develop, and how will regulations in Hong Kong embrace these new types of assets?
I believe RWA will be a major trend in 2025. If we look back at 2024, the emergence of a bull market for virtual assets can be summarized in two phases: the tokenization of securities and the securitization of tokens. Earlier this year, a significant event occurred when the U.S. approved Bitcoin and other ETF products, allowing top asset management companies like BlackRock and Fidelity to issue Bitcoin ETFs and list them on mainstream exchanges like NASDAQ and the NYSE.
Essentially, Bitcoin ETFs turn Bitcoin into a security, and some have even referred to the listing of Bitcoin ETFs as Bitcoin's IPO moment, which I think is quite accurate. The benefit of this is that it connects the digital finance ecosystem of virtual assets with traditional and mainstream financial systems, enabling more capital to invest in Bitcoin and other virtual assets, which significantly drives up asset prices. On the other hand, can securities also be tokenized?
Absolutely. This year, BlackRock, which we all know is one of the world's most important asset management companies, not only issued Bitcoin ETFs, but also holds more than 500,000 BTC, making it one of the largest holders of BTC in the world. This company not only issued Bitcoin ETFs but also launched a tokenized fund. It actually tokenized a part of its fund's trading method, moving it from the traditional stock market to the blockchain, to the so-called token platform for trading.
What are the benefits? First, it greatly lowers the trading threshold for these assets. For instance, in recent years, the Fed's high interest rates made U.S. Treasuries very attractive. However, many people found it challenging to invest in them. Now, BlackRock has tokenized its fund called BUILD, backed by U.S. Treasuries, effectively creating a fund from U.S. Treasuries and issuing fund shares as tokens that anyone around the world can trade. This allows individuals with not much capital to invest in U.S. Treasuries and earn returns.
Through this method. But from this perspective, there are actually a series of other benefits. For example, in the past, if you wanted to build your own investment portfolio, you would have needed a relatively large amount of money. For example, a wealthy family office could diversify its configuration for you. But if we don't have much money and want to diversify our configuration, we would find it very difficult. Most financial products have high minimum limits.
You might spend a considerable amount of money just to meet the minimum requirement, and if you buy several financial products, on the one hand, the fees are very high, and on the other hand, you actually can't achieve a truly diversified configuration. However, after the so-called real-world assets are tokenized, these assets are divisible and can be traded in very small shares. Even if you don't have much money, as long as you have a thousand US dollars, you can build a very diversified investment portfolio for yourself. As we all know in finance, there is a saying that diversification is the free lunch in asset allocation. Through diversified configuration, you can reduce the overall risk of your assets and increase the returns.
Listening to this, DeFi, with the help of the blockchain network, makes various RWA assets, such as government bonds and other assets, more inclusive. As long as there is an internet connection, DeFi services can be used without the need for large banks or large exchanges to support them. Whether it's Africa, Latin America, or other relatively underdeveloped financial areas, it naturally becomes easier to obtain some high-quality assets. This is the first very important point.
Another important point you mentioned is the sharing economy. Tokenizing asset rights and ownership is a form of RWA. In the previous internet era, it was challenging to distribute fair returns to everyone. Now, if individuals wanted to participate, they could do so without being monopolized by large companies like Uber or Didi. DeFi is indeed bringing many changes to our lives, even if people might not have encountered them yet.
【Anchor】Now, throughout our discussion, I've been particularly curious about AI. In 2025, we might see two major narrative threads: blockchain, Web3, DeFi, and AI. Whether it's innovations from companies like NVIDIA or advancements in AI computing and large models, many people are optimistic about these two fields. So, is there a way for these two fields, particularly DeFi and AI, to integrate?
Undoubtedly, technology is converging. In the Web3 era, AI and blockchain are already merging. For instance, there was a Twitter account backed by a large language model that issued its own virtual asset, which at one point had a market value exceeding $1 billion and received support from many prominent figures. We're seeing that as AI is used in an increasing number of scenarios, it is becoming more independent and capable of performing certain tasks on its own. In the future, AI may even need to issue its own assets for fundraising.
On the other hand, blockchain helps to solve issues related to asset issuance and trading for AI. Currently, many market makers are utilizing AI for trading, which significantly boosts market credibility and lowers the cost of market-making. Moreover, as more people engage in building large models, we see that more and more people are engaging in so-called large-scale models, but we may not train our own large-scale models. We may use some open-source or ready-made large-scale models for applications, but the applications themselves also consume a lot of computing power. For someone wishing to set up an efficient lab and purchase several graphics cards, that can be impractical, costly and the difficulty is also very high.
But if I wanted to access cloud services to obtain some computing power, is it possible? Now there are some possibilities, but also some impossibilities. If it's possible, it's true that cloud service providers offer some AI computing power, but you will find that this kind of computing power, first, if it's a very small and temporary application, you might not be able to get this computing power. Secondly, this computing power may not meet your needs. For example, I may only need some application computing power, not the computing power required for training. I only need reasoning computing power. Cloud service providers may think this is not profitable and will not provide it. So, the diversification and differentiation of computing power do not have a very good market to provide.
However, we see that some projects are based on a model of virtual assets, creating various differentiated computing power. For instance, if you need some CPU power, or if you require some early-generation GPU power, or even the latest high-end GPU power, you can obtain related services in a decentralized computing power trading market. The final settlement is also conducted through these virtual assets, which significantly reduces the operational costs of the entire network, allowing for everyone to participate. For example, if I want to monetize my unused GPU today, I can plug it into this system and earn money; if I need it tomorrow, I can withdraw it without having to sign a service agreement with a cloud service provider.
Moreover, cloud service providers do not procure computing power directly from individuals, which leads to a significant amount of computing power being idle and wasted. On the other hand, this also addresses the demand for smaller, atypical computing power industries. Therefore, I personally believe that, in a nutshell, AI has indeed improved productivity and brought about a revolutionary change in production capacity, while Web3 and blockchain are solving distribution issues—whether it's the distribution logic between people and people, between people and AI, or the distribution and trading of computing power. This decentralized network model is increasingly playing a vital role in the AI era.
【Anchor】Thank you very much to Principal Yu for the wonderful sharing today. Through Principal Yu's insights, we have gained an understanding of concepts such as Bitcoin, blockchain, Web3, and especially DeFi, along with its applications and its integration with AI. I believe everyone still needs to learn more about these related concepts, and hopefully, we can provide a more detailed interpretation next time.
【Anchor】Thank you both for your analysis. After experiencing significant fluctuations in 2024, what does the cryptocurrency market outlook look like for 2025? How will Bitcoin, blockchain technology, and decentralized finance integrate with AI, and how will this impact ordinary people's investments and daily lives?
That's all for this episode. Remember to follow us on YouTube or download our APP. I'm Yunfei Zhang, thanks for watching, and see you next time.
Anchor: Laura Cheung | Edited: Kelly Yang, Laura Cheung, Jerry Wang | Translate: Kato Ip | Proofread: Chris Liu
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