Don’t Let Your Bitcoin Be Lazy: Invest It!

Screen Shot 2014-07-14 at 11.47.02 amI'm not a fan of having large amounts of cash sitting around.  Some people believe Bitcoin is more like Gold or Silver then cash, and it should be sitting away in a vault somewhere.  But that is a risky investment strategy.  There is absolutely no guarantee the price of BTC will rise.  Just like cash, you shouldn't leave it sitting around.  Put it to work!

It's time for you to learn about how you can invest your bitcoin and start earning interest.  I've already earned a 60% return on BTC balance these past two month – unless you've also been investing your BTC, then your return over the past two months would have been in the low single digits (and possible zero).

Your Cheatsheet For Investing Bitcoins

  1. Grab yourself a BTCJam Account.  BTCJam is a Peer 2 Peer investment network.  borrowers can create listings and investors can choose to invest in individual projects, ventures, etc.   This means that people can borrow capital without needing to go through a bank.  These peer to peer networks have existed for a while with fiat currency.  But they are relatively new with BTC.  There are huge advantages to using bitcoin for a lending network.
  2. Start small.  One awesome advantage to BTCJam is there doesn't appear to be a minimum amount you need to invest.  That means you could invest as little as $0.01 in a listing.  If you're new to p2p lending then I recommend you start small.  Even just a few dollars.  This way you can get comfortable browsing through listings and picking the right people to invest in.
  3. Diversify.  Don't put all your cash into one listing.  p2p lending works best when you have a diverse portfolio.  Although as of yet, no one I have invested in has failed to make a repayment, I've factored in this risk.
  4. Invest only in A and B graded listings.  Investments on BTCJam are given a credit rating (A-E).  I use the filter tools to filter out any listings below a B grade.  This reduces the risk.
  5. Chose a range of long and short term listings to invest in.   Each listing has a term.  Some are 30 days, some are for much longer.  I choose to invest in a range of listings which feature various terms.  As BTCJam is quite new, I don't have enough data to figure out what is the best strategy for term length.  therefore I have a diverse portfolio.
  6. Be Smart.  Each listing has a grade and associated data to help you make an informed decision.  Due to the possible anonymous nature of Bitcoin, you can't expect every listing on BTCJam is going to deliver.  Therefore you need to use common sense.  Look at what your money is going to be invested in – is it just a pump and dump or is there a strong business case?  Does the borrower provide lots of details? Don't rush.
  7. Don't keep BTC uninvested on BTCJam.  Don't keep BTC just sitting in your btcjam account.  I recommend only transferring money into the network when you are ready to make an investment.  This is about risk management.  If anything happens to BTCJam you want your bitcoins to be somewhere else.
  8. Keep Reinvesting.  When a borrowers sends you a payout, use the payout to invest in something else.  Remember you can invest fractions of a bitcoin down to tiny amounts.  Keep your funds ticking over.

Have you been investing your bitcoin – make sure you let me know how you've been doing in the comments.  Remember, don't be a fool – put your cash to work!

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