Thanks for joining the fastest growing global lending platform in the world! To help you nail your bitcoin investments on Bitbond, we’ve put together this actionable 5 step plan. Without further ado, let’s get cracking! 😎
These are the steps:
- Add funds to your account
- Discover attractive loans
- Craft your bitcoin investment strategy
- Monitor your results
- Leave feedback and help Bitbond grow
For efficiency reasons, all payments on Bitbond are done in bitcoin. Thus, you need to fund your Bitbond account with bitcoins in order to start investing.
The best way to add funds varies by location. With a European bank account, you can add funds with a simple wire transfer here:
If you don’t have a European bank account and want to start really quickly you can buy bitcoins with a credit card via the Lykke app. Note that buying bitcoins with a credit card is usually more expensive than through a wire transfer.
Below we recommend providers by the most common regions on Bitbond. If your country or region isn’t there, please head over to our comprehensive list of sites to buy and sell bitcoins.
In the UK, nobody can compete with Circle as they are offering free (as of August 24th 2016) GBP to bitcoin exchanges.
Coinbase is one of the largest sites here, Circle is also popular.
Asia, Latin America and Africa
There is no single bitcoin exchange for these regions, but you will find places to buy and sell bitcoins in this list by country here. Alternatively, Local Bitcoins is available nearly everywhere around the world.
What else you should now:
- To earn money from referring Bitbond to friends or readers of your blog get your affiliate link here
- If you need help, send us an email to [email protected]
- For answers to commonly asked questions, please visit our knowledgebase
- We have a fast growing following on YouTube, Twitter, Facebook and our Facebook group. Use these to stay up to date and learn about awesome new loan listings
Now that you’ve funded your account, you will need to verify your identity before investing. Bitbond is a financial institution that is regulated by German financial regulator BaFin. Therefore we have to comply with the same identification standards as banks do. Verify your identity here. To find out more, please read our blog post.
To get started with investing, head over to the listings page. You can apply filters to find the loans that meet your personal investment criteria. You can filter by the loan term, rating of the borrower and the base currency.
When you found a loan that you like, click the INVEST button to open the bidding dialogue. The minimum investment is 0.01 bitcoin. Once you have placed a bid, the loan will be credited with the invested amount. Should the loan fail to reach the 60% funding threshold, your bid will be returned to you when the listing expires.
If you are unsure whether to invest or if your bitcoin deposit hasn’t arrived yet, you can put loans on your watchlist. That way you get notifications about their progress and get back to them later. Loans remain listed until they are fully funded or for up to 14 days.
Invest in USD or EUR denominated loans to avoid price volatility! Most loans on Bitbond are denominated in US dollars. This means that the value of your repayments will remain constant in US dollars regardless of what happens to the bitcoin price. Learn more about the base currency and exchange rate pegged loans.
In the next step I will show you how to craft your investment strategy.
To create a profitable investment strategy on Bitbond, follow these 7 steps. You can also watch this investment strategy webinar video on YouTube.
- Investment amount: define the amount of money that you want to allocate to loans on Bitbond, this will greatly help you in the next step.
- Diversification: diversification is the key to a successful investment strategy. By lending small amounts to many borrowers you spread your risk and make sure you can achieve the target yield of 13%. As a rule of thumb, don’t invest more than 4% of your investment amount in a single loan. Calculate 4% of the total that you plan to invest over the next 12 months for example to arrive at a rule of thumb number when you place bids on loans.
- Duration: loans on Bitbond run from 6 weeks to 5 years, define your investment horizon and invest in loans that tie up your liquidity only for so long until you need it again.
- Risk: borrowers are rated between “A” and “F”, with the former denoting a high creditworthiness, and the latter a low one. Understand the risk you are willing to take on before investing and search for corresponding loans. Learn more about what the rating means here.
- Region: borrowers on Bitbond come from all around the world. Internationality is one of the great advantages of a blockchain powered lending platform like Bitbond. Decide for yourself whether you want to diversify your investments all around the world or whether you focus on specific regions only.
- Loan use cases: at Bitbond we specialize on working capital financing for small business owners. Most of the borrowers are online sellers who either run their own shop (in which case there will often be a link to their online shop on the loan request) or sell through platforms like eBay and Amazon (in which case you would also find a link to their respective shops). Look out for the links under the connected accounts section of a loan listing.
- Loan base currency: although all payments on Bitbond are conducted in bitcoin only, the value of loans can be denominated in US dollars, European euros or bitcoins. Typically USD and EUR denominated loans have a lower volatility. If you lend out the equivalent of 1,000 USD you will get the equivalent of 1,000 USD back plus interest, regardless of what happens to the bitcoin price in the meantime. Most borrowers also prefer this type of loan because it reduces exchange rate exposure significantly.
After you have created your investment strategy according to the tips from our last email, it’s time to execute this strategy. After you start investing, it’s important that you keep an eye on your portfolio. This will help you to fine-tune your strategy and learn from your previous investments. The bitcoin investments overview will greatly help you:
Here is an example portfolio:
Here is how you can monitor your results with the help of the Investments overview:
The Status columns lets you know where the loans of your portfolio are in their lifetime. We have 10 loan status variants and you can read about them here. It’s normal that some loans in your portfolio are late or even defaulted as long as your portfolio is well diversified. Even if a loan is defaulted there is still a good chance that you will see part of your investment back as we send these cases to an international debt collection agency which takes care of collections.
The Outstanding Principal is the amount that is still to be repaid from your initial investment. This is an important indicator of the quality of your loan portfolio. The larger part of the total outstanding principal should be in the Current row. If you have many late or even defaulted loans have a closer look at them.
The numbers below the summary by status are also crucial. From the average investment per loan you can see whether you stick to the diversification approach that you defined for yourself. If the total amount that you plan to invest is 10,000 USD for instance, than 4% x 10,000 = 400 USD, this means your average investment per loan shouldn’t be higher than 400 USD.
The repaid principal received is what borrowers have already repaid from your initial investments. The total interest earned tells you how much in interest has already been paid out to you.
The estimated return (IRR – internal rate of return) is an estimate of your portfolio return. Since most of the time you will have loans in your portfolio that are still ongoing, we have to make an assumption about future payments to calculate the IRR. We discount loans with a lower rating more than loans with a better rating to account for expected defaults. As a rule of thumb: when your portfolio is older than 6 months and your IRR is showing something above 8% you’re doing a good job as an investor. If it’s lower, you should re-think your investment strategy.
Below your portfolio summary, you will find a full list of loans you invested in. You can sort the list by status or other columns and click on each loan and see more details about it. If a borrowers are late on their payments you can see a communication log between Bitbond and the borrower. That way you learn more about the actions we take if someone isn’t paying on time. After a loan got funded you can still comment on it and ask the borrower questions.
It’s also worth taking a closer look at the loans which are performing well. This will help you to invest in well performing loans in the future and make better investment decisions.
Read your daily and weekly email summary to stay on top of your returns, and account balance
We would love to hear your feedback. What do you like about the platform? What needs to be improved? Leave us your comments by filling in this short questionnaire.
Thanks for reading and we look forward to following your bitcoin investments on the platform.