Boom or bust? Welcome to the freewheeling world of crypto lending

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LONDON (Reuters) – It sounds like a surefire bet. You lend money to a borrower who puts up collateral that exceeds the size of the loan, and then you earn interest of about 20%.

What could possibly go wrong?

That’s the proposition presented by “DeFi”, or decentralised finance, peer-to-peer cryptocurrency platforms that allow lenders and borrowers to transact without the traditional gatekeepers of loans: banks.

And it has exploded during the COVID-19 crisis.

Loans on such platforms have risen more than seven-fold since March to $3.7 billion, according to industry site DeFi Pulse, as investors hunt returns at a time when central banks across the world have slashed interest rates to prop up economies battered by the pandemic.

Proponents say DeFi sites, which run on open-source code with algorithms that set rates in real-time based on supply and demand, represent the future of financial services, providing a cheaper, more efficient and accessible way for people and companies to access and offer credit.

But with the promise of high rewards comes high risk.

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Bitcoin, Etherereum, Bitcoin Cash, Litecoin and Ripple make up 70% of crypto market

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Bitcoin, Ethereum, Bitcoin Cash, Litecoin and Ripple dominate the cryptocurrency market, representing $241 billion or 70% of the total market cap. The entire cryptocurrency market cap is currently $343 billion, up from $10.5 billion in 2014. The aggregate market capitalization increased by more than 2,500% in 2017 alone.

However, research conducted by Axa Investment Managers shows that despite the massive growth, cryptocurrencies still pale in comparison to the $100 trillion global bond markets and $80 trillion in global equities.

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Wall Street firms to move trillions to blockchains in 2018

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When blockchains first appeared nearly a decade ago as the technical backbone of Bitcoin, the world’s leading cryptocurrency, they seemed to offer the masses a way to cut out the financial middleman. But now the big banks and other industry players are finding ways to spin the new tool to their advantage.

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7 cryptocurrency predictions from the experts

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Fortune convened some top cryptocurrency entrepreneurs, venture capitalists, bankers, and others to chat about the future of digital money at Fortune’s Brainstorm Tech conference in Aspen, Colo. last week. A select group met at the Aspen Institute for a breakfast roundtable discussion on Wednesday morning.

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After the IPO comes the ICO, a revolutionary new way to get funded

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A few days ago, a startup called Bancor raised around $153 million in two hours and twenty-five minutes.

The ICO, short for initial coin offering, followed several similar, equally successful funding events, and the numbers are rising. Prediction market Augur raised around $5.2 million over two months in 2015; this year, its competitor Gnosis raised $12 million in just 15 minutes. And we could only be getting started.

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Dash Passes Litecoin and Monero to Claim Number 4 Cryptocurrency Status

In a major price surge, Dash has nearly doubled market cap over the last month, overtaking Litecoin and Monero to become the fourth most valued cryptocurrency.

This week one year ago, Dash was the #7 ranked cryptocurrency with a market cap of about $23 mln. This number grew steadily over the course of the year, finishing out the year with a market cap of $69 mln and maintained #7 ranking. Over the course of 2017 so far, however, Dash’s growth has significantly picked up steam, exceeding $100 mln over January. This month Dash has risen to a nearly $200 mln market cap, currently with a value of over $27 and 0.23 Bitcoin at present time.

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