Bitcoin Margin Funding
Bitcoin margin funding is a form of peer to peer Bitcoin lending. You lend your Bitcoin to margin traders. Margin traders use the funds to trade with leverage. To get the leverage they need to lend money which is done in a peer to peer manner. The funds are secured by automatic liquidation at certain levels. We have never experienced any loss and never heard of it either.
Peer-to-peer lending by Bitcoin means that many people lend small amounts to a borrower. However, we have experienced that it´s very hard to make proper controls of the borrower. The lending is often over borders and in many different countries which make it hard to control ID´s and paybacks. Also, many loans are in USD which and not in BTC. This is good if BTC decreases in value but not if BTC increases in value.
Peer-to-peer lending as passive income
Peer-to-peer lending is a very good choice for a passive income. All lending companies listed have an auto function that can make the investments for you. You can choose predetermined criteria and then it´s a self-going bot. Peer-to-peer lending is possible with Bitcoin, Litecoin, and USD. We wrote an article about this topic, Bitcoin peer-to-peer lending.
Bitcoin Lending on Bitcoin Exchanges
The bitcoin exchanges which have margin trading offers Bitcoin lending. Traders use leverage and consequential they need borrowing money. Leverage is when you hold a position worth $100 but only use $20 of your money. This is 5x leverage. As a result, the trader needs to borrow $80 from somewhere. You can supply liquidity with your money and earn interest. This is also called peer-to-peer lending. See our bitcoin exchange reviews. The exchanges with this service are Bitfinex and Poloniex.
Bitcoin Lending companies
Bitbond is a pure bitcoin lending company. This is their main feature. The company has a platform that connects lenders and borrowers. The loan purposes are very diverse but all loans are defined. All borrowers and lenders also have a profile.
Bitcoin Lending risks
Bitcoin lending as investment involves certain risks. To clarify, any type of investment involves certain risks, so this is normal. For the most part, the risk is usually comparable with the return. If there is a big upside there is also a deep downside. Bitcoin lending we would say is a medium risk investment. The biggest risk you take is to loose your money. You can never lose more than invested. This will happen if your borrower can´t pay back the loan. In the long run, the best solution for this problem is to spread the lending to many borrowers. This is perfect for bitcoin since you can make micro transactions almost for free. To sum up, always remember to diversify your investments.
Best Ethereum Lending 2017
Best Ethereum Lending platform 2017 is Bitfinex. Poloniex is also good but has some disadvantages compared to Bitfinex. Bitfinex also has lending opportunities in all large cryptocurrencies and USD. The interest rate is generally good to very good. We describe Ethereum lending more in this post, Best Ethereum Lending 2017.
Lending as passive income
Lending Bitcoin and other cryptocurrencies is a perfect choice for earning extra passive income. The only thing you need to do is to deposit any amount to an account and start automated lending. Read more about passive income in our blog post, Bitcoin passive income.