Invest in Cryptocurrency (Bitcoin, Ethereum and other) Peer to Peer Lending - Poloniex.com

Seems that crypto currencies are a hot thing on this blog during this Summer, though it was just recent, not even a month ago, when I decided to diversify my investment portfolio and allocate up to 5% space in it for crypto currency investments (buy and hold here).

From my initial investments in crypto at the start of July (see: First Investment In Crypto Currencies - Bought 0.2 ETH for EUR 50) I've lost in value more than -50% in just 2 weeks, see: Crypto currency volatility, lost -54.42% in just two weeks

Now, despite the pretty serious loses here, I still feel pretty optimistic about crypto currency future, and plan to invest there once in a month using dollar average cost approach by the end of 2020. 

For about last 6 month I've been investing in a more casual form of peer to peer lending - mintos.com, focusing my investments in Georgian loans. See: Invest in Georgia - Peer-to-Peer (P2P) lending - Mintos.com 

As I'm already familiar with peer to peer lending concept, and currently in the exploration phase for crypto currency investments, I thought it would be cool - if I could lend out some or all of my coins and earn some income on that. The solution was just around a corner (Google search) - I did find a few bitcoin lending sites, but chose to stick with one at the start, meet Poloniex.com an US-based digital asset exchange offering maximum security and advanced trading features. 

Poloniex.com website

Poloniex.com website

The sign up process is simple and pretty straightforward, in couple of minutes my account was ready and setup. Now Poloniex.com doesn't offer direct fiat deposits, you will need to have some coins already purchased in other service, which you can then transfer to your poloniex.com address.

I've a coinbase.com account, where I'm purchasing coins (see: How & Why To Buy Crypto Currencies (bitcoin, ethereum, litecoin) Online - Coinbase ) and I just transferred my coins from coinbase to poloniex.com. Actually this was first time I transferred crypto currencies from one address to another. It was fun.

Depositing bitcoin to poloniex.com

Depositing bitcoin to poloniex.com

I just copy/paste my deposit address and transferred coins from coinbase.com to poloniex.com

Sending bitcoins from coinbase.com

Sending bitcoins from coinbase.com

Coinbase took a small network fee for this transfer and after about 5 minutes my coins were deposited on poloniex.com. That's damn fast, how blockchain technology actually works. 

Balance on poloniex.com

My balances on poloniex.com

Now I was ready to start lending bitcoins for a margin traders, but before that I had to transfer my funds one more time inside the poloniex.com from exchange account to lending account:

Quick Transfer

Quick Transfer

I decided to split my initial investment into two loans and experiment with two different rates, first rate I set about the same as most of the other lenders offered at - 0.0473% while for other loan I set it a little bit higher yield at 0.0485%. For my surprise both loans were taken instantly and I started to watch fees rolling in:

Active loans

Active loans

For the record:

  • 0.0473% daily rate would be 17.26% annually
  • 0.0485% daily rate would be 17.70% annually

Those are awesome rates. On the other hand it seems that daily rates can fluctuate a lot, as they are driven by demand and changes quickly. 

I deposited and lent additional litecoin coins, unfortunately I was not able to lend ethereum at this time, as minimum amount for deposit in ETH required is 0.5. As of writing this I've just 0.2. Most probably I will add ETH next month here, after will purchase more coins. 

For litecoin I lent at 0.040% making annually - 14.6%

The Bottom Line: 

Now, by the start of the next month I plan to purchase more crypto coins, making a total value for my investments there at about $250, let's assume that I could manage to lend them at 0.040% daily rate (that's 14.6% annually, or 1.21% monthly).

If things will turn out nicely for the August dividend income report I'll add another revenue stream, reporting about $3.02 income from crypto currency lending for the next month. Humble, but still pretty cool. 

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