BTCjam is a peer-to-peer lending website, which basically means it connects people who want to borrow bitcoin with people who want to lend bitcoin. I must admit, I was hesitant at first, but as I gained more knowledge and experience, I now see it as a very versatile and rewarding investment vehicle. So, let’s take a closer look.
The idea of peer-to-peer (P2P) lending has been around for a while, so BTCJam is not new in that regard; however, it is one of the most popular bitcoin-oriented sites, and it has pioneered many of the features which are now common on P2P lending sites. Since 2012, BTCJam has funded over 18,000 loans worth around $16 million.
The site is pretty simple, and anyone, anywhere in the world can join and apply for loans. Although you can borrow money on BTCJam, I will be focusing on the lending side of it as it relates to bitcoin investment.
So, why would we want to lend our bitcoin? The simple answer, as for any investment, is to hopefully get a greater return on our initial bitcoin, but with P2P lending, it is actually much more than than.
The P2P nature allows great flexibility and also gives investors a significant amount of control of their bitcoin should they desire it. Basically, it can range from a simple ‘set-and-forget’ investment, to a complete user-controlled experience. The choice is yours to make.
In terms of lending, the interest rates are no better than banks, in fact they can be a lot higher which is why the loans are popular as an investment vehicle. This is not so great for the borrower; however, the accessibility of loans makes the P2P model very popular and enables many people who would not qualify for a bank loan to access money (bitcoin in this case).
Although not risk free, P2P lending has come a long way in it’s short life and sites like BTCJam significantly reduce the risk to the investor. To assess a borrower, the site uses a comprehensive modelling system which incorporates the standard bank, credit card, and income information as well as new technologies like data from services such as Facebook, LinkedIn, and Paypal. This risk-based pricing model then assigns an interest rate to each borrower which in turn determines the return an investor can expect.
Obviously, there is much more to it. As such, this is really just an introduction to BTCjam and P2P lending as an investment, so stay tuned for many more detailed blogs. I’ll leave you with the following diagram which shows the average annual return for the BTCJam AutoInvest compared to major investments over the last 10 years.
Yeah, it’s an easy choice isn’t it?