Arcane Research, bitcoin collateral, BTC, cash securities, collateral asset, collateral market, Crypto asset, crypto market, decentralized finance, government bonds, portable asset

According to the findings of a joint Arcane Research and Bistamp study, bitcoin’s unique characteristics, which include it being “the most portable assetâ€, are the likely contributing factors behind the increasing use of the crypto as a collateral asset.

Bitcoin Unmatched

This is evidenced by the study’s data which shows that approximately “420,000 bitcoins were used as collateral in various loans in the lending markets in Q4 of 2020.†This figure is nearly double the 213,000 bitcoins that were used as collateral in Q4 of 2019.

In another boost to the case as the best collateral asset, the study findings suggest when compared to traditional assets like “government bonds and cash-based securities,†the leading crypto asset is unrivaled. For instance, the findings assert that only bitcoin (BTC) “is an asset without both counterparty risk and credit risk.†Additionally, BTC is “available for trading 24/7, 365 days a year, all over the world.â€

In touting the superiority of some of these characteristics, the Arcane Research and Bistamp study states:

Bitcoin Share of Collateral Market Still Negligible

Meanwhile, despite the crypto asset’s immense potential, the study findings suggest that BTC only accounts for a minuscule of the $20 trillion collateral market today. To illustrate this fact, the researchers from Arcane Research estimates that “around 625,000 BTC are used as collateral in the crypto market today, or approximately $30 billion.â€

According to the researchers, this number is based on “estimations of collateral held in the derivatives market, in relation to bitcoin collateralized lending and tokenized BTC in decentralized finance (defi).†When compared to the total collateral market, this number suggests that “bitcoin collateral only accounts for 0.15% of the total collateral market today.â€

Nevertheless, the study still asserts that BTC’s share of this market is growing rapidly and that the potential for a trillion-dollar market remains.

What is your view concerning BTC’s share of the total collateral market? Tell us what you think in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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