Have banks become a relic of the past?
Recently, new financial instruments have gained a tremendous interest of financial institutions and bankers, claiming bigger and bigger market share. This includes cryptocurrencies, and, especially, bitcoin, the price of which is constantly going up. Moreover, the year 2020 has showed that there are many opportunities for these instruments to expand and develop into even more innovative solutions for the financial market. In this article we will cover such niches as DeFi (decentralized finance) and crypto lending and explain why these phenomena are worth attention.
Can Cryptocurrencies Become the Full Monetary Resources?
It is obvious that the cryptocurrency prices have been going up at the year end. This resulted from the arising interest of big institutional investors to the cryptocurrency market. At the moment, the high price is continuing to be stable, however, financiers predict it to go slightly down in the future, which will only demonstrate the cryptocurrency predictability. This indicates that cryptocurrency market has a quite a bright future and is worth investing in.
Hybrid solutions for online banking, killing two birds with one stone
Cryptocurrency is the universal instrument which can replace two digital finance niches: online lending and web banking. Cryptocurrency will eventually replace the fiat banking, especially lending services. Not that long ago the financial market saw a new strong player in this niche, which is DeFi.
As set out above, DeFi means decentralized finance. Their specialty is that they encompass almost every service which supports cryptocurrencies. A lot of researchers claim it to be the most promising financial instrument. However, they also point out some disadvantages of DeFi:
Transparence. Any DeFi project source is publicly available, which means that hackers may abuse this opportunity.
Scalability. The smart contracts throughput is extremely low; therefore, the scalability of the projects is merely impossible.
Consistency. When creating smart contracts, services do not use their own templates. Usually, their program code is open so different users could modify them. This often leads to bugs and errors and, eventually, to financial losses.
Hybrid financial systems have emerged quite recently, and now they claim to be one of the most efficient instruments which specialize in cryptocurrencies services and offer solutions to the following challenges in the niche:
Closed source. The source code is protected from hacking and makes the system invulnerable to malicious attacks.
Scalability. There is no need in smart contracts. The system encompasses any expansion.
Brand new technology. The system operates on an original technology which is tested constantly.
One of the most well-known hybrid services providers is BitcoLoan. Apart from cryptocurrencies lending, the service provides the opportunity to invest in crypto lending.
Investments into cryptocurrency lending
Because of the current unstable financial situation in the world, the financial market and its submarkets are unstable and volatile. The crisis caused the shutdown of numerous businesses, including some financial projects. Therefore, today we have much less safe investment opportunities than before the crisis.
DeFi still allows carrying out investment activities, especially in cryptocurrency lending field. Today, this investment type has become one of the most popular among investors around the globe. The reason for this is that this is one of the few investment directions, which are still safe in times of crisis. Moreover, crypto lending involves less risks that its fiat equivalent.
To put it simple, such services operate as intermediaries between lenders and borrowers, simplifying the lending procedure for both parties. The investor’s task is only to credit their account - everything else is in the hands of the service. Borrowers, in turn, have it almost ideal as there is no need to wait long until they can withdraw their funds.
Why you should trust hybrid financial services?
The crypto market researchers have made it clear that such recently emerged technologies, like DeFi, had become trustworthy long before they gained true potential. In most cases it takes more than five years for such technology to show all of its benefits.
We consider BitcoLoan one of the most reliable representative of hybrid technologies. As they strive to fix all their predecessors’ flaws, the trial period for such services is naturally reduced. Any person, interested in the niche at least a little, should understand that such hybrid solutions are surely worth trusting.