Why Investors Should Be Paying Attention to Ripio Credit Network
Finding efficient ways to distribute capital to those in need is one of the top problems in the world. The difficulty is that not everyone should be granted the capital, so you need to develop a way to improve lives without losing a lot of money along the way.
This is where a lot of the peer-to-peer lending industry originated from. However, there are several “hiccups” in current P2P lending business plans that make them inefficient in the long term. These risks mainly have to do with certain exposure the lenders are left with due to structural issues in the platform.
Introducing Ripio Credit Network
As the name would suggest, Ripio Credit Network aims to tackle these problems using blockchain technology and a more intelligently designed P2P lending network. Founded in May 2016 out of Argentina, the goal was originally to democratize the digital economy in Latin America. By giving more options to the unbanked, significant economic prosperity could be unlocked.
This is done by cosigned smart contracts to facilitate the connection between lenders and borrowers. Right now, there is a significant risk for the lenders of not being repaid, and Ripio has several methods of mitigating this.
First, the network verifies ID and provides a credit score for the borrower. But it also uses cosigners to insure the loan in case of a default and even gain access to the borrower’s legal system. This gives the lender far more recourse on the loan than is normally present in P2P situations.
How Does the Network Function
The RCN token is used to execute all loans, and the borrower and lender are connected using the Ripio Credit Network credit exchange. Additionally, as demand for the RCN service increases, the price is likely to go up as well.
The benefits of Ripio are huge to both lenders and borrowers. We talked about the benefits to lenders up above, but borrowers also benefit from more convenient methods of obtaining capital, as well as more capital itself.
Borrowers often have the issue of only being able to borrow money in one of a few national currencies. If RCN is the medium of transfer for the loans, then anyone can convert their money into that cryptocurrency using the price feed oracles to determine the exchange rate at the time the loan is executed. This is a huge improvement on the limited payment options which are normally offered.
Investing In RCN
RCN is available on Binance and has already had a very active month. There was a big move around the 22nd of February, and since then there has some continued upward motion. It may be a short-term play, but if you look at how stagnant the performance was up until this move, I think it’s likely we’ll get some more action on this.
Ideally, this pops hard above 600 satoshis and a quick scalp can be executed. I would wait until there is a slight drop before making a move, and maybe set some price alerts around 550 satoshis.
With credit markets not even reaching a fraction of the world’s population, it is clear that a solution is needed. Assuming Ripio can deliver on a solid method of assessing the risk of borrowers, it is likely they will be able to continue to scale and reach more people. For now, I am looking at it on the short-term, but if there is some strong fundamental progress in the near future, I could treat this as a buy-and-hold.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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