Cryptocurrency loans, one of the fastest growing industries in the blockchain ecosystem, have made it possible to make profits and borrow capital with digital assets.
According to a report by the research company Credmark, The volume of cryptocurrency-backed loans multiplied seven more in 2019, eventually reaching $ 8 billion.
Experts speculate that crypto loans will bring more investors to the market with increasing liquidity.
“You can think of credit as this amazing lubricant that just pushes things much faster.”says Paul Murphy, CEO of Credmark.
However, Borrowing and borrowing with cryptocurrencies is a risky practice due to the high volatility of digital currencies.
Actually, A significant portion of cryptocurrency-backed loans are used for margin trading.
“If the market drops more than 50% and you have guaranteed margin trading, you can lose all your capital,” says Brock Pierce. a well-known cryptocurrency entrepreneur.
While most cryptocurrency credit companies rely on centralized custodians to manage their customers’ funds, DeFi credit platforms enable peer-to-peer lending and lending transactions without the involvement of intermediaries.
However, We are in the early stages of this technology, which means that these platforms can have a number of usability disadvantages.
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