Ripple says cryptocurrency-based lending represents a powerful, early use case in the emerging world of digital assets.
In its latest Q4 XRP Markets report, the San Francisco-based payments company says the multi billion-dollar industry is just getting started.
“The digital asset borrowing/lending market saw substantial momentum throughout the past year as this market is now considered a $5 billion industry…
The momentum has been fueled by several factors: low interest rates in many fiat currencies, a growing number of digital asset market participants seeking working capital, and an increasing number of long-term digital asset holders looking to generate yield. While concerns over a ‘crypto credit bubble’ have started to emerge, the growth potential for this market remains substantial into this year and beyond.”
XRP, the third-largest cryptocurrency, is now available on some of the largest crypto lending platforms including Celsius, Genesis, SALT, and Nexo, alongside Bitcoin (BTC), Ethereum (BTC), Litecoin (LTC) and other digital assets.
Ripple’s sentiment is echoed by a recent Graychain report on the crypto credit industry. The research reveals that new loans surged from 5,462 in the first quarter of 2019 to 18,562 in the second quarter – a 239% jump. Graychain says Genesis and Celsius dominate the industry with 65% of loan origination.
The nascent industry is being fueled mostly by professionals who take out crypto loans for leverage, arbitrage and tax deferment, according to Graychain.
In contrast to the traditional banking system, crypto lending is a highly automated process. Lenders use smart contracts to track payments and interest rates. This allows borrowers to avoid going through credit checks and scoring to get a loan.
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/fuyu liu