In order to encourage more and more people to use their bitcoins as an investment vector, every quarter I publish a report showing the total returns that I made via my invested bitcoins.
As this is the first report of this kind on the website, you will note that the returns are not amazing. Indeed, I started a brand new account at my favorite lending website, BTCJam, to illustrate my investment strategy. The goal is that anyone following the advices found on this blog can follow along by using similar numbers.
When the Bitcoin protocol was first introduced, the first and only method to get some bitcoins was to mine them, using your own computer, as the mining difficulty was very low. Then, Bitcoin mining difficulty grew, and people started using GPUs, and then FPGAs & ASICs to mine.
People started to gather into mining pools, to have more chance together to mine some bitcoins. However, and while mining pools still exists and are going strong, it’s not the ideal situation. You still need to own your own hardware, pay the electricity bill and try to sell the hardware again when your mining efficiency starts to go down.
Cloud mining proposes to solve all these problems, by allowing people to buy Bitcoin mining power from some piece of dedicated hardware that is hosted remotely. Is it a good investment vector? That’s what we are going to see in this article.
Peer-to-Peer (P2P) Bitcoin lending is my favorite way to invest my bitcoins. P2P lending is when you give somebody money, and expect to get it back over a given period of time with interests. Compared to investing in cloud mining for example, you can know exactly how much you can expect to get back from your investment, and over which period of time. You also have the possibility to talk directly to the people you are investing in, talk about their projects and drive in life, and even make some friends in the process.
However, lending money always comes with risks, whereas it’s with bitcoins, dollars, or any other currency. People can have problems paying back the loan, they can just disappear suddenly, the website where you lend money can go bankrupt … In this article, I will share with you the strategy that I use to reduce the risk that comes with Bitcoin lending.