Bitcoins as an Investment

Bitcoins have recently become a hot topic as the exchange ratio of USD to Bitcoins has gone up at a respectable rate and continues to flirt with $50. I think that Bitcoins are a relatively risky investment, but the potential returns are still huge. I could easily see buying in now and selling after a couple percent gain, but I am in it for the long haul. The number of people who have Bitcoins now is still pretty small which is easily less than one percent of the population of the US. As the price continues to go up I think that the media attention will increase.

As the Bitcoin community and infrastructure has matured and developed, the price of Bitcoin has become more resilient to price shocks. While still varying in exchange rate much faster than most other currencies Bitcoin is much more stable now than its drastic price spike and crash of 2011. In March there was even an issue in the Bitcoin system that was quickly resolved by the decentralized authority of the Bitcoin miners. The price temporarily dipped around 20% but took little time to return its previous price.

Also worth mentioning is that the publicity, Bitcoin is receiving, is much more positive than past strong criticism. The price has not responded as drastically, as before, to the increased media attention. In the bubble of 2011 the price went up very quickly then crashed. Since then the price of Bitcoins has gone to new highs much slower than previously. These recent circumstances indicate a healthier infrastructure and a gradually maturing market presence for Bitcoins.

I repeat Bitcoin is a risky investment. I happen to believe that the potential return outweighs the risk; however I make no guarantees. I own a few Bitcoins myself. Please do your own research.

My Attempt At Being More Active In The Bitconomy And Making A Bitcoin Profit At It

Saving Bitcoins and just sitting on them is actually taking part in the Bitcoin economy; but there are definitely ways to be more active.  In my last post I talked about how I would either sell half of my Bitcoin or loan it out. Considering the recent upswing in price I decided not to cash out the dollar value of my Bitcoin and see if I could invest or loan my Bitcoin and end up with more.

While searching among the interwebs for ways to invest Bitcoin I found a couple of sites where one can buy stock in companies that are involved in the Bitconomy. Most of the value of those stocks seems to come from the fact that they pay Bitcoin dividends. Those sites are btct.co , mpex.co/, cryptostocks.com, and picostocks.com/ . What really got me interested in Bitcoin investments was the Bitcoin lending website btcjam.com. I lent out half of my Bitcoin out at 4.5% interest a month for 2      months. That is a phenomenal rate of return.

The lending terms are fairly straight forward and the potential returns are tantalizing. An average return is any where  from 2 percent to 8 percent a month; but the caveat is that there is a high chance of default. The last default rate on btcjam that I saw was about 30 percent of the loans made. The borrower’s credit history on the website can be viewed by potential lenders. I lent half of my Bitcoin out to BTC Quick a company that enables people to easily buy Bitcoins with a credit card. This borrower had their website up as well as a phone number. I contacted them and talked a bit with someone from the company. I also looked at their borrowing history and it is perfect.

I think that a lender on Btcjam who applies a little rigor and good judgement on Btcjam can make a very nice return with out too much worry.

Cha Ching and until next week (hopefully),

Alex