The altcoins and other "investments" I like, Part I

Author's note: This article is part of an ongoing blog about my adventures in the world of alternate currencies.

Disclaimer: I am not a financial adviser. This should not be taken as financial advice. I am merely sharing some coins and other opportunities I like. Please do your own research and only invest what you can afford to lose.

The second half of 2015 has brought one interesting development. From my perspective (which is definitely not exhaustive) it seems there has been a decrease in half baked new coin launches and a few launches of new coins which come with a full fledged and well funded development team and a comprehensive plan of action. In other words these coins are approached more like a business venture. Just as importantly, some coins which launched one or two years ago with those solid fundamentals in place are continuing to progress and gain traction and value, looking good as long term investments.

Another great development of 2015 has been the emergence of solid places to park Bitcoin for growth at a decent rate of return. This allows for a Bitcoin holder to profit from more than mere speculation (buying low and selling high). This article will summarize some of these opportunities first.

BTC Jam: How does your Bitcoin grow?

BTC Jam is a crowd sourced loan service for people who have a good idea that needs funding and who are willing to take the loan and make their payments all in Bitcoin. Any user can request a loan, and they get a page in which to pitch their own credentials as well as the soundness of their idea. Other users can then pitch in small or large amounts to fund their loan request. If the loan funds at 70% or more within a specified period of time (usually ten days), then the loan is issued.

I invested in various loans in the early days of BTC Jam. As with anything in crypto, some of the loans paid back at handsome profits and others defaulted. BTC Jam has since greatly improved its credit rating system, giving lenders the opportunity to selectively invest their funds. But back then the big issue was that choosing and then monitoring all those loans was quite time consuming.

A few months ago, BTC Jam came up with the autoinvest program. A lender can choose a program based on criteria such as borrower credit rating, length of loan term, and whether or not the repayments are a set amount in Bitcoin or tied to a Bitcoin/USD index. The lender also sets the total investment amount, whether funds from repaid loans get reinvested, and how much will be contributed for each loan. The end result is that once you've set up your investment program all you need to do is deposit funds and the rest is automatic. Your funds will get put into loans that match your criteria, and you can sit back and collect the payments. The projected rates of return are pretty decent, from around 10% to 35% APR depending on the level or risk you are willing to take. The actual rates of return are determined by how many borrowers actually repay vs. default. A certain number of defaulted loans is to be expected, and when BTC Jam projects a rate of return, it takes this into account.

If you need to withdraw some of the BTC instead of reinvesting it, all you have to do is turn off the autoinvest program for a while. You can turn it back on anytime you want. The minimum amount you can invest in an autoinvest program is one Bitcoin. However, you do not have to deposit that entire Bitcoin all at once. You can start off with a small amount and gradually add more over time. Your funds will be sent to loans that match your criteria as the loans are requested and the funds come in.

I personally have found the BTC Jam autoinvest programs to be a great mostly hands free way to grow my Bitcoin. After trying various types of programs I have for the time being settled on a conservative one which only invests in loans that repay in straight Bitcoins (no indices) since it's my stash of Bitcoins I'm hoping to grow. One disadvantage of this opportunity is that liquidity is low unless you specifically invest in only short term loans (I invest in all term lengths). Some of the loans can last for as long as a year with monthly payments, which means it will take an entire year to get your principle plus interest out unless the borrower repays early (which some of them do). BTC Jam autoinvest program should be viewed as a long term investment, but once you are invested in a large number of loans, some funds can be skimmed off as payments are made.

Lending to margin traders on Poloniex

I've written about this lucrative opportunity before and it is still a viable option for growing your Bitcoins. The advantage is that the repayment rate is as good as the trading platform, which so far has been excellent. When a borrower takes out a loan in order to participate in margin trading, the repayment is automatic. If the borrower's balance drops to the point where he won't be able to make good on the loan, the platform automatically closes his trading position and repays the loan. Then your funds are free to go to another borrower. In other words, as far as the loaning itself goes, your risk is extremely low. The only thing you really have to worry about is the entire exchange defaulting, which unfortunately has happened far too often, but again, Poloniex has thus far showed no signs of that being imminent.

The other disadvantages of this opportunity are that interest rates fluctuate wildly. They can run as high as 0.18% a day for Bitcoin (which would amount to over 700% return a year!) and as low as 0.02% a day. Sometimes you get a good return, and other times you don't.

Because the rate of returns fluctuate so wildly, you have to monitor your loans a lot more intensely. If you put out a loan offer at 0.15% and the going rate plummets to 0.03%, then your loan will most likely get closed by the borrower (who will be looking to borrow at a lower rate), and then your offer will sit in the open offers section until either the rate goes back up or you cancel the offer and reissue it at a lower rate. On the flip side, if you keep a loan offer out at a low rate of return and the rate goes up, then you will not be able to take advantage of the higher rate. Barring the use of an automated bot, you have to log into your account at least once a day and keep an eye on what's going on, making adjustments as needed.

Rental Starter Fund on Havelock Investments

This fund is run by a real estate investment company in Ohio. The owner of the company, Brandon Schlichter, frequently buys, rehabs and rents out properties, or he buys, rehabs, and resells them. Profits from his activities are distributed among shareholders as quarterly dividends. I've had money in Rental Starter for over a year now, and have been happy with the transparency and frequent communication from Brandon. He conducts most of his communication with investors through a proprietary channel on Slack which all shareholders are invited to join. In the Cryptoworld, good communication is much rarer than it should be, and Brandon goes above and beyond the call of duty in this regard.

The current annual rate of return is low, currently around 2% according to Havelock, so this isn't exactly a Bitcoin growth stock. However, Brandon is always looking for ways to improve his profits and share them with investors. He's currently considering expanding his offerings into managing properties for large real estate investors.

The price of the stock is currently fairly low at 0.0065 BTC, so this is a decent time to buy in. I've seen the stock as high as 0.014 BTC in the past. I suppose some profits can be made buying and selling the stock. However, I consider it to be a long term buy and hold asset.

The three opportunities I mentioned are not the only ways to grow Bitcoin, but they are ways that have worked for me for a long time and that I feel comfortable recommending. With that said, this should not be taken as investment advice, but merely as information. If you want to try one or more of these possibilities out, please do your research, start small, and only invest what you can afford to lose.

In Part II, I will talk about altcoins that I consider to be good investments at the moment.

Next entry: The altcoins and other investments I like, Part II

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