What is Bitcoin lending?
Bitcoin lending is quite similar to the universal investing. Although, funding bitcoin loans has some features not share properly by other assets classes. In this article, we will read about principles of lending bitcoins and beginners guide to bitcoin.
The first and foremost cited principle of the investing is diversification. Here, mathematical details will show its effect very confidently. But we want to give you information that you can easily understand or digest. And, there is no need to study heavy statistics, you can easily apply as a lender on Bitbond.
Diversification in finance is allocating process of the finance. where the exposure will be reduced to one particle, whether it is a risk or asset. A simple way toward distribution is to decrease the percentage of the risk by investing in the verity of the assets. So, finance diversification means you are placing small bets instead of big ones. As a result of this strategy, you’ll get the decent yield. Whereas, in a case of a big bet, chances of potential return and potential loss are equal.
Bitcoin lending yield is approximately 10 p.a. in bitcoin loan’s portfolio. So, how you will diversify,
Amount per loan:
Accordingly, per loan minimum invest is 0.01 BTC, currently a small amount. This small amount is kept by us on purpose. In addition, with 1 bitcoin you have the option to build 100 loans portfolio. Here, we recommend you, not to invest too much into one loan. Two basic rules are as follows;
- If it is a small amount loan of 0.1 BTC, don’t place more than 0.02 BTC into loan means to put 20% or less than requested loan amount.
- If you are lending 2 bitcoins then do not put more than 0.1 BTC (2 X 5% = 0.1), means loan comprises only 5% or less of your portfolio.
Diversify other aspects of your loan is another good feature. It is very imperturbable that bitcoin lending is listings to the country to country. As the economic environment varies from country to country. A country might be in recession period while other may a part of a dynamic economic activity. Accordingly, time gets changed and creates the impact on the economy as well. Therefore, this makes sense that loan portfolio is directly affected geographically.
Bitcoin lending is quite new in this technology era. So, that all the technology seeker countries are not listed here, listing process is in a process as well. As opportunities are growing on the daily basis, we suggested you a portfolio where a countries’ makeups are at 30% or less of entire portfolio value.
Commonly, Loan with long duration has high default profitability mostly. Its depend on your luck because long durations are always uncertain. It may bring high-interest rate or default loss. Moreover, Bitbond has term bitcoin 6 weeks and 5 years.
If you have short term loans you need more effort to manage your portfolio. Holding different loan investment tending directly toward that your capital is not concentrated to one definite term. Your flexibility lies only in a term when your basis of long-dated loan whereas, other are shorter dating ones. If you are not ready for immediate liquidity than you need to re-invest cash again.
Rating categories have the list of different risks. Higher interest tends toward higher risk. Therefore, an average return will be in the same range. You just have the option of 20% for each rating category (A to E).
Keep the concentration category below 40% in one rating category. This may consist of valued instead of loans.
Two things will happen on loan default.
- The lender will receive the identity details and take the action by his or her own. And, Bitbond will free to sell the claim to this loan to debt collection agency.
- Recovery amount will be higher because debit agencies will collect the amount instead of individuals.
Small amount loans are difficult to collect. But the one thing is most important, a small amount is not small in front of the world. Purchasing power varies from country to country. In addition, loan of 0.8 BTC may be small in Switzerland whereas, may have worth in Chile.
We mention here to invest in loan up to 0.1 BTC or more in established world. Whereas, in emerging markets, this amount is up to 0.5 BTC or more. You are free to check the details of the borrower from a country flag.
Meanwhile, diversification principle is to make small invest loans.
Purpose of The Loan
You need to check the description and notice what the borrower needs the bitcoin for. Each borrower has the option to write 1000 characters. Grammar, spelling might not be perfect always but the main thing is the purpose of borrowing bitcoins. Be thoughtful, if there are just a couple of words and borrower do not mention the main reason or purpose.
Bitcoin lending is new in the technology market and a number of things are still in working. If you follow the bitcoin lending principle properly, asset class will deliver the return of 10% p.a.
But we recommend you to invest bitcoin you can afford to lose. Furthermore, With the passage of time, you’ll come to know, how to invest and you can plan your strategy easily. Because this technology system is unpredictable.
Keep check of your results on daily basis. In addition, collect the pattern performance and apply them in future investments. Meanwhile, on statistics page, you have the option to download the entire history.
Buying bitcoin is simple. As simple as signing up for a mobile app. The first step to buying bitcoin is signing up for a bitcoin wallet on sites like blochchain.info by filling up a form with essential details. once you have the wallet, there are different ways through which you can fill it up with bitcoins. Here we are going to fill you in on the 4 most common ways to buying bitcoin.
Follow these simple steps to buy bitcoin locally:
- Find a seller in your area who sell bitcoin for cash
- Select the desired amount of coins
- Place the order and receive seller’s account number
- Deposit your cash in seller’s account
- Upload the receipt as a proof of trade
- Receive bitcoins in your wallet
Buy Bitcoin Online:
The best way to buy bitcoin instantly is to buy bitcoin with credit card or debit card. SpectroCoin is one of the reliable coins that accept credit / debit card payments for bitcoins.
But there’s a catch. SpectroCoin only offers $50 worth of bitcoins to its new customers. However, as they grow into reliable customers, the limit is stretched out to $200 and then $500 by the following few days.
Buying With PayPal:
Although PayPal doesn’t facilitate the direct Bitcoin purchase, there is a way around for those looking to buy bitcoin with PayPal:
- Visit Virvox
- Deposit money with PayPal to your account
- Buy SLL on the exchange
- Buy bitcoins with your SLL
- Withdraw your bitcoins
These are few of the quickest ways to buy bitcoins. Good luck with your purchase.
Bitcoin’s price has rebounded to $11,997 with a 4.9% gain after falling to $10,000 recently and is now affecting the whole market with its momentum.
Bitcoin Once Again Hits its All-Time-High:
The daily trading volume of the cryptocurrency market including the top-cryptocurrency (bitcoin) has been comparatively strong over the past 24-hours. The daily trading volume of the top-cryptocurrency remained strong across all major cryptocurrency exchanges including; Bithumb, Binance and UpBit, which demonstrates signs of another recovery towards $13,000, as many experts have highlighted it.
The daily trading volume of bitcoin has hit a monthly high in South Korea, as around about 80,000 bitcoins were traded within a single day. South Korea’s largest mainstream media outlet “HanKyoReh” reported, that for the first time since January, the demand for bitcoin is rapidly growing.
Multiple investors have started to invest in the bitcoin market out of the fear of missing out, as the top-cryptocurrency has continued its rising momentum throughout the past few days. Another South Korea’s mainstream media outlet “Chosun” highlighted that bitcoin has built flexibility just within a month, as a lot of investors have started to enter the cryptocurrency market once again.
According to Chosun, strong cryptocurrency (bitcoin) remains above $10,000 mark even though it has been through many adverse issues, criticisms, and huge corrections. At this time, the crypto-market is seeing similar prices as it has seen only two months back, preceding to bitcoin’s enormous bull run that permitted the top-cryptocurrency to achieve its all-time high at $19,000.
CEO of venture capital firm Pantera Capital, Dan Morehead said last week, that the price of bitcoin would be expected to surge by the following week after it recovers from the bear market. He highlighted that most bear markets have a tendency to last 71-days and from now, bitcoin would be in a perfect position to see an upsurge in its price in the coming week.
He added, the past doesn’t predict the future, however, it looks like this is the right correction. It had been on a 71-day bear market so, it looks like within few weeks, everything will go back to normal.
Other major cryptocurrencies (including Ethereum) with ICO tokens have been following the trend of bitcoin for the past 2 weeks, however, it just dropped to $945 on February 20th. Just few cryptocurrencies have been able to exceed the gains of the top-cryptocurrency bitcoin, and most cryptocurrencies have recorded declines in their worth. Ethereum has declined by 2% against Bitcoin. However, it is also essential to perceive that Ethereum is only down by 0.52% over the past 24 hours.
Bitcoin is a decentralized, peer to peer cryptocurrency which is used to make anonymous transactions without leaving behind any traces. Bitcoin is the first cryptocurrency to gain this much public attention and is being largely accepted by merchants as a form of payment all around the world.
In terms of usage, Bitcoin investment is no different from traditional currency. The users can buy, sell items through online as well as trade goods/services in physical stores. However, not everything is same. There are several factors that differentiate Bitcoin from traditional currency.
Let’s take a look at some of the major ways in which Bitcoin is different from paper money.
How Is Bitcoin Different from Traditional Money?
- Unlike fiat money, bitcoin is decentralized. There is no clearing house or authority (Government, Visa Network, MasterCard, Central Bank, etc.) to regulate the flow of cryptocurrency.
- Bitcoin network is peer to peer and is managed by users/miners around the world.
- The transaction fees are much lower because the money is transferred without going through a clearing house.
- The coins are earned by a process called Bitcoin mining. The miners around the world assemble blocks and are given mathematical problems to solve using Bitcoin algorithms. Those who are able to solve them correctly are rewarded with bitcoins.
- All Bitcoin transactions are stored in a public ledger called “Blockchain”. Anyone can visit this ledger to verify a transaction. This openness makes the cryptocurrency more transparent and reduces the possibility of any kind of fraudulent activity and double spending of the same coin. (Find out more on what is Blockchain and how does it work here)
- The currency can be obtained via Bitcoin exchanges or mining.
- For now, just handful of merchants on the web and in physical stores accept Bitcoin as a method of payment. However, the trend is increasing each day.
- A downside of bitcoins is that they are not insured by the government agencies which ultimately makes them irrecoverable if lost. If an owner somehow loses a hard drive or any other device in which the currency was stored, the coins are gone for good.
These are some of the facts about bitcoins that make them different from traditional currency. Now let’s go and look for the answer of” “is Bitcoin a good investment?”
Is Bitcoin A Good Investment:
Although bitcoins are gaining more acceptance and increasing in popularity each day, investing in Bitcoin is never considered a good idea. This because the currency is highly volatile and unpredictable.
For example, the Bitcoin price skyrocketed from $14 to $1200 and then dropped to $632 per BTC within a year. Such high instability in value makes Bitcoin a risky investment.
The best way to invest in bitcoins is to buying bitcoin with Paypal when they are being sold for less than $10 per BTC as this will give investors a larger margin of safety.
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OKEx is known as a cryptocurrency exchange giant. This crypto-exchange is pushing back against accusations that the exchange is responsible for the manipulation of the market which triggered the price of Bitcoin to drop below $5,000 on its futures exchange last week.
A statement was released on Wednesday, in which the Hong Kong-based exchange repudiated allegations about its involvement in the futures market’s manipulation to settle the positions of optimistic traders.
Last week, OKEx got criticized following the Bitcoin price crash as the value of its Bitcoin futures dropped to $4,755, in a fevered sell-off, even with the average price of Bitcoin globally, which flitted around $7,000 during the same time.
The statement says:
“OKEx provides a platform to allow customers to trade in our order books, but we are not directly involved in the trades. Moreover, all the transaction details are public. We, as a trading platform, do not make a profit from the price volatility but generate income from trading fees. We have not reasoned to, and have never and will not, manipulate the prices of any of our market.”
Merchants whose positions got settled during the sell-off time were incensed, and one of them was so distressed that he went to the headquarters of the company and even threatened that he would take his own life.
Eventually, during the 90-minute incident, the exchange inverted trades that occurred, mentioning this unconventional movement as a planned attempt to deploy the market, and since then, it has added the price limit rules to help in preventing the manipulation in the future market.
Moreover, OKEx warned that it will take legal action against those, who falsely accuse them for the manipulation of the market and disseminate false charts to that effect.
What does the company have to say about it?
The company says:
“We reserve the right to take necessary legal action against any parties who libel our company and reputation by any means.”
However, the event following negative press coverage doesn’t seem to have a constant influence on the popularity of the trading platform of the company, as OKEx is still on the fourth most popular spot cryptocurrency exchange in the ranking, with almost $750 million, 24-hour trading volume.