If you have some spare bitcoin just hanging around in a wallet some place and you’re looking for an investment opportunity then you may have came across Bitbond. I will take you through my experience that I have had with this crypto investment platform. I don’t invest here anymore, but I was very active for over a year and I had invested over £1000 GBP so hopefully I can give you some tips from my experiences to give you an insight on some peer-to-peer bitcoin investing on Bitbond.
Who and what is Bitbond.com?
Bitbond is centrally located in Berlin, Germany and is an online platform which allows bitcoin investors to invest in peer-to-peer loans.
Bitbond primarily offers loans to people who are wanting capital for their start-up business’s.
When you first create an account you will need to show your identification to an online admin assistant before any money can be sent in your direction. I had used my passport to verify my identity and it was slightly uncomfortable so say the least as I had never done anything like this before.
I guess this is just part of the platforms fraud prevention measures although I’m not certain that a government body is also overlooking these personal details too and it certainly wouldn’t surprise me.
Ever since the crypto-currency Bitcoin took the world by storm, there have been countless numbers of website’s and mobile applications popping up all over the net with various new idea’s on leveraging this new technology.
Bitbond is no different. The idea here is that you can either invest you money by lending it out to others who may be looking for a loan for various reasons, or you participate as the borrower who pitches your investment proposition to the lenders and hope you get the funding that you are asking for.
I can honestly say that I have tried various peer-to-peer bitcoin lending platforms and if you were to lend your money via this route and become an investor, I would highly recommend Bitbond. The problem with these sites is that they usually don’t hang around too long before they close down. This can be very frustrating if you have money owed to you. Bitbond has stood the test of time so far, and hopefully isn’t going anywhere any time soon.
One reason for these sites getting shut down maybe government interference. But who knows the exact reasons as to why this is happening to much with these crypto lending sites, but I must have tried around four other platforms before I ended up at Bitbond.
Two sides to the story
With Bitbond you can either be a lender, or a borrower. You can not be both in the same account. Meaning, that if you have money invested on the platform then Bitbond will not allow you to apply for any loans.
I have not gone down the route of being a borrower on this site so I can only take you through my experiences to what I have been through as a keen investor and bitcoin lender.
When you’re going through tough times and all it seems is that every investment you’ve made is defaulting on you, there are others who are in your exact same boat. Usually these people have invested much more than you and they stand to loose a lot.
I wouldn’t recommend investing too much into one borrower. I remember one investor who was doing really well, he was investing thousands of dollars worth of bitcoin into single borrowers and it really hurt me to watch his loans get defaulted and to see him loose so much money.
When a payment is due and isn’t made you can guarantee the investors will become uneasy and start asking questions so I usually just observe but it can’t be helped to vent out some anger at times with some of these borrowers.
It’s when the borrowers becomes very quiet and then they don’t respond to any questions after a late payment is due, that’s when you can probably say goodbye to your investment.
It is impossible to determine who will be trustworthy of an investment and who is not. Someone with a really good rating and a business that’s looks successful can so very easily default on you. On the other hand, someone with a bad rating and a good sob story may sway you to invest in them and you will be surprised that the borrower has kept up with payments for so long, and eventually repay the whole loan.
A word of caution here. Some borrowers do set out to get a loan and intentionally not want to pay it back. They usually start out with a low rating. They will repay the loan all on time and they will work hard at getting their rating higher. The higher the borrowers rating, the more money they can get in a loan. This is where they hurt you. They eventually get a big loan then disappear, never to be seen or heard of again. These people need a close eye on them.
Bitbond does inform you via email that they will try and recover your money back if you have a loan default on you. But I wouldn’t hold your breath. I have never had any money payed out to me due to any loan being recovered through any legal means as of yet.
Risks of lending out your money
When you are deciding on weather to lend your money you will see the rating that Bitbond has given the borrower. This is ‘A’ through to ‘F’.
In my experience, I would not take this rating seriously at all. As you can see from the screenshots below, ‘A’ and ‘B’ rated borrowers do not always pay what they owe and end up defaulting on you. With contrast to that then the ‘E’ rated borrowers can still pay in full:
When I first started investing with Bitbond you can see from the screenshots that in 2016 I was investing in ‘D’ and ‘E’ rated loans, but then I changed my approach by playing it a little safer in 2017 and went for more ‘B’ and ‘C’ rated loans. This however didn’t really provide much safety as you can see from the images above.
I guess the thing to take away from any of this if it had to be one thing, would be that absolutely no one is a sure thing. Sometimes the borrowers will say in their pitch that they are “a sure thing”. Do not listen to them and always use your own judgment.
What really got me down about some of these defaulted loans was that these people had really good Ebay stores with huge sales and a great reputation. I guess this is their ugly side that no one usually sees.
One of the downsides to Bitbond is that there is no buy-back guarantee from the platform if a borrower defaults on you. I have used other peer-to-peer money lending platforms (albeit not in crypto-currency) in the past and this was certainly missing here which would give the investors more of a reason to take risks.
I have never had any problem what so ever from Bitbond when it comes to withdrawing my bitcoin from the platform. I’ve never withdrawn any money to my bank account in pounds sterling or any other government fiat currency so I can’t comment on this but it is still an option that Bitbond provides.
The platform is very transparent when it comes to borrowers payments and you can see when any payments were made and also how much you have received from them that day.
USD vs BTC
It is possible to lend your bitcoin in two ways. You can invest in US dollar denominated or in Bitcoin denominated currency.
What this means is that when then borrowers makes his/her repayments, they are either repaying the bitcoin as it is worth at that time, or as US dollars are worth at that time.
US dollars is a much more stable currency so you can almost guarantee that one dollar today will be worth one dollar next month, or even in six months time.
This changes dramatically with bitcoin however. Say for example, a borrower get a loan worth 1000 dollars. If the value of bitcoin was worth five thousand dollars at the time of the loan, but is then worth ten thousand dollars next month, then the borrower would have to repay twice the amount back that following month! Of course, no one knows what the price of bitcoin will be at any time in the future so this is a very risky method of borrowing.
This can of course work both ways. The price of bitcoin could go down. This would mean that the borrower would need to repay less that following month than originally thought.
Some people were even going as far as borrowing money in hopes that the value of bitcoin would rise in the near future. They would then repay the loan and make a tidy profit themselves. Obviously this is a very risky strategy but one that a large amount of people were doing at the time. At the time of writing, bitcoin has been quite stable throughout 2018 so not much of this kind of dangerous investments would have been taking place I’m guessing.
Investing of any kind is always risky and you should always know what you’re getting into before making any huge desicions. But wheres theres no risk there’s no reward right?
I don’t think I will be getting into peer-to-peer crypto money lending in the near future and I have had lots of bad experiences on other platforms as well as Bitbond in the past.
But if I do return then I will be sticking with Bitbond as they have stood the test of time compared with other bitcoin lending sites and it is an all-round worthy platform if you’re looking into some crypto investing.
Another important point to note here is this: When I started using Bitbond, one bitcoin was worth around £400. One year or so later it was worth around £5000! If I had just held onto the money and stored it safely in a wallet someplace, I would have actually made a much bigger profit than actively investing into peer-to-peer money lending which included lots of defaulted loans. I guess this is the most important thing I had learned about this whole thing.