Bitbond is an interesting new way to invest your bitcoin. Bitbond is a P2P lending marketplace – meaning you lend money directly to the borrowers and in this case it's all done through Bitcoin. Unlike other p2p platforms, Bitbond focuses on small business loans.
Fund Online Sellers
There are lots of different p2p lending marketplaces, and there are only a few that deal exclusively in bitcoin. Bitbond is one of them. What I like about Bitbond is there focus on small business. This makes a lot of sense. Bitbond doesn't use traditional credit reporting mechanisms, they are instead using metrics like PayPal, eBay and Shopify sales to figure out the risk. So the people you'll be investing in on Bitbond are usually online sellers. These are people who are trying to expand there online businesses and many of them already have sales.
How much money can you make?
The interest rate varies from loan to loan, but it's around 20%. This is high, but does help reduce some of the investor risk. The reality is some loans will default. I imagine that if you have a diversified portfolio you could make around a 5-10% return on your investment p.a. I'm only just starting to experiment with the platform so this is my educated guess based on other p2p platforms. The Bitbond website lists 13% as the investor return. This could well be the case.
What is the minimum investment?
If you're looking to autoinvest – which is where loans will automatically be filled if they match your requirements – the minimum is 1.0 BTC. Which at the moment is over $1k. Less bitcoin is required if you want to invest manually.
Is this a good way to earn interest from Bitcoins?
At the moment, there aren't a lot of ways to reliably grow your bitcoins through investment. This is one option that I hope will succeed. At the moment it's early days, but from what I've seen so far I'm impressed.
Remember one important factor is Bitcoin itself. It may keep gaining in value which means you'll not only earn interest but appreciation as well.
I'll be investing around 1btc into the platform to test how it works, and like all my experiment will keep you posted here. Bitcoin investing is still highly risky and is probably the highest risk investment I write about on this blog.
What are your experiences with P2P lending? Would you ever try lending Bitcoin?