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LINKS FOR ADDITIONAL READING FOR THIS VIDEO & ALL INFO IN TEXT DOWN BELOW
Reviews of Lending Sites: https://coinscage.com/best-bitcoin-loan-sites/
Both lending sites and exchanges: https://www.disruptordaily.com/best-bitcoin-lending-platforms/
Information on Bitbond: https://www.cryptocompare.com/spend/guides/how-to-lend-and-borrow-bitcoin-with-bitbond/
Lending BTC for Margin Traders: https://www.bitcoinmarketjournal.com/bitcoin-lending/
Basic tutorial on how to lend BTC on Poloniex: https://www.youtube.com/watch?v=ZRyJ-KbiWUk
Although I am a fan of holding Bitcoin, and that particular game plan has reliably paid off in the long term, I’m well aware that many people are hurting in this bear market. Those who are very desperate to see any kind of gains during this down trend may be open to learning about how to lend out Bitcoin in return for interest payments.
There are a couple different ways you can lend your Bitcoin you hold and receive passive income in the form of interest paid by the receiving party.
We’ve got platforms that bring together small/medium businesses who need loans and lenders. Platforms like these include Bitbond, BTCPop and LoanBit.
You can investigate who you are loaning to and choose how much and for how long you will provide the loan.
Here are some things to consider if you want to take part in these types of lending platforms:
Pay attention as a lender if you have the ability to choose the base currency. so if you lend in USD and Bitcoin goes up, you’ll receive less BTC but the USD amount will be the same
Borrowers will need to disclose their personal information and will often need to verify it with social media accounts and or live video chats.
Interest rates are decided based on the riskiness of the loan, if you want to earn more money through higher interest rates you’ll have to come to terms with the fact that the loan associated with it is very risky and very well may never be repaid.
If your loan is unpaid by the borrower you can be provided information suitable for pursuing legal action. Or you can sell it to a debt collection agency. Neither of which are guaranteed to getting your money back.
There is another way you can also lend your bitcoin to traders and that is by using exchanges like Bitfinex and Poloniex. Here, you can lend your bitcoin or other cryptocurrencies like Ethereum to traders who will use your coins to perform the stress inducing act of margin trading.
Margin trading is when traders borrow funds to make trades. When they do it right, they make exponentially more money than they would have been able to with their own funds, but if the trade goes south, the traders will find themselves owing exponentially more money than they are capable of repaying.
In the case of lending bitcoin on an exchange, the interest rates are determined by the market, those wanting to borrow will choose the least expensive interest rates. Also, you are relying on the exchange to margin call these traders if their trades have become far too risky and have reached the threshold set in place by the exchange. It’s been said that you can expect to be paid anywhere from 3%-10% interest annually by lending on Poloniex, but this I’m sure is subject to change and is in no way a guarantee that you’ll have that same kind of payout.
Keep in mind that if you use either of these lending options you are placing your trust in the borrowers and in the platforms to pay back your loan. Not to mention the fact that you will be unable to trade the coins you’ve lent out. So if the markets start swinging heavily in the red or the green again, you’ll have to be patient to regain access to your bitcoin before you can do anything with it yourself.
