After deciding that I wanted to take a portion of my Bitcoin savings and invest it I began to search for more places like Bitbond. Again, I wanted to focus on decidedly Bitcoin things in which to invest. These things specifically needed to accept Bitcoin directly, have Bitcoin at the center of their product, or something of the sort. As I said in my Bitbond review, I haven’t really set the parameters down in stone, I just wanted to start with those basic guidelines. The next opportunity I looked at was BTCJam.
UPDATE: As of 10 March 2016 BTCJam has decided to stop offering both borrowing and lending to users within the United States. See the bottom of this review for details. Users outside of the US, I still stand by this review.
The premise of BTCJam is the same as Bitbond. You can apply for loans and invest in loans. As they put it, they are a marketplace where people from around the world connect to borrow and lend using Bitcoin. They started with a vision to provide affordable loans to people in places like Brazil, where interest on personal loans can reach 200% per year. To facilitate this BTCJam decided to start their own credit scoring model and help people all over the world build a credit rating on the platform.
The team at BTCJam is impressive as well. Although they don’t have links directly to their social media feeds I was able to look up several of them on LinkedIn. Again, I’m not going to say much about them individually. Take a moment to look up their individual pages for yourself.
BTCJam is slightly older and more established than Bitbond, but only by about a year or so. Still, being one of the first in the space has its advantages. BTCJam has funded over 18,000 loans totalling over $16 million USD. They also provide a statistics page with a lot more data, but it appears that you cannot download this data and do your own calculations. This is less transparent than Bitbond, but it’s not exactly closed, either.
The downside to being one of the first in the space is that it has already been scammed pretty hard. A quick Google search will reveal this. One of the largest was a user that truly played what scammers refer to as the long game. This individual created a fake identity that fooled some of the best. He was employed by a legitimate company and worked in an office. He established a profile on the site, verifying with social media links, and created a credit rating with several loans. He had a history of paying off his loans in full and on time. Even his employer vouched for this guy. People met him face to face and shook his hand. In the end he scammed everyone involved, disappearing with $160K worth of mining equipment from his workplace and left a $35K (at the time of the crime) worth of Bitcoin loan from BTCJam unpaid. You can read more about it on CoinDesk.
I’m going to mention this again despite the fact that you agreed to my earlier warning in order to even read this review because I can’t stress this enough: Do not invest more than you can afford to lose. There have been several scams reported on the platform BTCJam is providing. It has to be noted, however, that the reported scams were never with the platform itself, but always with the borrowers. As good as any vetting system is there will be some that slip through the process unnoticed. And there are some who recommend avoiding BTCJam. If you agree to the responsibility of your own actions, then let’s start to look at the services BTCJam provides.
BTCJam approaches loans a bit differently than Bitbond. Instead of filling out a loan application you fill out your profile. You can choose which information you wish to provide and verify. The more information you provide the higher your credit rating will be. Having a higher credit rating means you’ll have access to lower interest rate and higher volume loans. After your information is verified you create a listing for a loan, selecting the type, term, and repayment plan. Once your loan is created you wait for funding. Once your loan is funded you can withdraw the funds. You then just have to make payments according to the plan you set up.
Investing is pretty much the same as Bitbond. You add funds to your profile and then you choose whether to invest manually or automatically. If you choose manually you can go to the Browse Listings section. You can sort by term, credit score and currency type. You can also filter by things like “similar age” or “shared employer”. Again, this is a peer to peer lending system. Finding your peers may be of interest.
You can click on each loan and see the full details of the loan. You can see a description of the loan direct from the borrower. You can also see details of the borrower. If you wish to help fund a loan, click on Invest, put in how much you’re willing to loan, and then place your bid. Your amount will be added to the fund of the loan. If the loan expires or is canceled you’ll get your capital refunded to your account. If the loan is realized you’ll receive payments on the schedule set.
BTCJam has an AutoInvest program like Bitbond. It is handled slightly differently, however. You can set up multiple plans. If you want to take a portion and invest it high risk you can. If you want to take another portion and invest it low risk you can. Again, you have to allocate at least 1 BTC to each auto-invest plan. Go into the AutoInvest section and choose Create Plan. Choose your allocation profile, AKA risk profile. Then choose how much you wish to allocate to this profile. Under Advanced Options you can limit the number of loans, the loan currencies, the terms of the loans, and whether or not you wish to reinvest profits. Once you’ve set up a profile, just activate it. It will do all the work for you. The only thing I dislike here is that you can’t edit plans. You have to deactivate them and then create new ones. I think this needs to change.
Like Bitbond I initially allocated 1 BTC to to BTCJam. I put it all into an AutoInvest profile. I chose moderate risk, all currencies, all terms, and to reinvest profits. So far I’ve invested 21% of my capital in 32 loans: 6 in funding and 26 current. I have an expected return rate of 12.8%. In fact, I’ve already started to receive payments. They’re not huge, mind you, but as more loans are offered and my profile broadens I’m sure that will change.
Overall I have to say that I really like investing with BTCJam. If I had to choose between BTCJam and Bitbond I’d choose BTCJam, but I like that my profile is diversified through investing in both. In fact, I plan on reviewing another peer to peer loan platform soon. Again, the loan process at BTCJam is easy for both borrower and investor, especially if you choose to automate it. I’m happy with the site, the service, and the options so far. If you’re looking for a way to invest your Bitcoin and make some money I recommend BTCJam as an option.
UPDATE: As of 10 March 2016 BTCJam has decided to stop offering both borrowing and lending to users within the United States. I logged in to find this notification posted to US users:
BTCjam’s vision has always been to connect investors and borrowers in emerging markets. We are deeply committed to this vision and in order to fulfill it we have made the difficult decision to discontinue investments from the United States. At your earliest convenience, please withdraw any remaining bitcoin from your account. If you are currently invested in loans, BTCjam will continue to service those loans but you will not be able to make any further investments.
I am saddened by this turn of events but there are other options out there and I will divert my funds to those in future reviews.