Bitcoin is a bit like the wild west of finance. If you want to be the one walking away towards the setting sun when the dust settles, you have to be extra careful as Bitcoin scams and ponzi schemes are everywhere. Unfortunately, these scams often work and many “investors” are left at the bottom of the pyramid holding an empty wallet where their bitcoins used to be. We want to make sure that this does not happen to you, and as so we are going to show you some examples on how to get interest on your Bitcoin without falling victim to these elaborate schemes that seek to rob you of your beloved coins.
Before we start, a few guidelines would be to stay away from any model that offers ridiculous interest rates like 1% per day or 10% per month. The same can be said for any model that is not transparent on how they get this interest or that simply state that profits comes from trading. Finally, do your research. A simple google search can make the difference. There is also a very good thread on Bitcointalk listing some known scams.
This is a four part guide on how to earn interest on your Bitcoin from reliable sources. We are going to start with Poloniex lending, then move to Magnr lending, then to P2P loans.
Be aware that these websites are third party services and that you will be entrusting your funds to them. Although these are very reputable sources, there is always the possibility that your funds will be lost in the evenf of an hack, inside theft, etc.. So if you want to take no chances, just keep your Bitcoin in a private wallet, and keep your private keys safe.
Poloniex is a multi-cryptocurrency exchange, and the most popular of its kind. It has been active since x and has a reputation for being trustworthy. Poloniex suffered an hack in 2014, and was successful in repaying all customers.
Poloniex offers margin trading for certain cryptocurrencies (not just Bitcoin), which means that users can take “loans” to trade with inside the exchange with leverage. These loans are sourced from other users that are willing to lend their funds to traders (like you). You may be wondering what stops them from losing your coins in a bad trade? Poloniex does. If the account gets close to not having enough balance to repay your loan, his positions are terminated and the funds are returned to you.
You can set the maximum duration of your loan to a time of your choosing, but the person that takes your loan is free to return it at any time. Lets say you set a loan for two days with interest of 0.0135% per day. If the user chooses to terminate the loan in the first hour, you will receive 0.0005616% of the investment, which is proportional to one hour at a 0.0135% per day.
Lending on Poloniex is simple.
Part 1: Lending on Poloniex manually
Step 1: Go to Poloniex and log in. If you have no account register one.
Step 2: Click “Balances” (1), then “Transfer Balances” (2)
Step 3: Once you’re there, you’ll want to transfer the funds you want to lend from the exchange account to your lending account. Choose the amount you want to lend (1), then choose “Lending” (2), and click “Transfer” (3)
Step 4: Go to “Lending”
Step 5: You can now create your loan order, or take a loan demand. To create a loan order just place the rate % you want to receive, the amount of Bitcoin you want to lend and the maximum duration of your offer. You can use the auto-renew option to keep the offers going automatically, but we have a better plan!
Up until now, this process is simple. However, these loans can often last for just a few hours or less, which means that you have to either place loans manually or to let them reset themselves with the “Auto-renew” feature which means your loan rates may be too high or too low after the first loan is settled. So if we want to create a truly passive and continuous income source, we need to automate this process. How? Say hello to your new best friend, the Poloniex bot!
The lending bot sets your loans for you with the best possible rates according to the market, allowing your loans to be taken constantly without the need to reset them manually.
There are more than one Poloniex bot out there. Some, like this one, offer an intuitive user interface which makes the process simpler. These, however, charge a fee on your profits, so if you want to make the most out of your investment, you’ll want to use this simple Python Poloniex Bot.
This specific bot has no graphic user interface, so we are going to show you how to install and use it. After configuring the bot, using it is pretty straight forward.
Part 1: Lending on Poloniex manually
Step 1: In order for the Lending bot to work, we must first install Python. Click here to download it, then run the setup (Choose C:\Python27\ as the directory for Python).
Step 2: Download the Lending Bot. Click here to go to the Github page and click “Clone or Download” (1) and then “Download ZIP” (2)
Step 3: Extract the contents of the .zip file and open the “poloniexlendingbot-master” folder. Then click “lendingbot.py“ to generate the “default.cfg” file
This file will be the configuration file that will allow you to set certain specifications regarding the loans you make. You will also need to place your API keys on this file in order to allow the bot access to your Poloniex account. It’s very important that you do not share your API key information with anyone, as it will allow them to interact with your account.
Step 4: Go to Poloniex and click the Wrench icon (1) and then “API Keys” (2)
Step 5: Click “Enable API”
Step 6: After the API access is enabled, click “Create New Key“. An email will be sent to your address, follow its instructions to create your API key.
Step 7: If you want to be extra safe, Click on “Enable Trading” only. Do not click “Enable Withdrawals”. This ensures that even if the bot tried to steal your coins (somehow) it would not be possible.
Step 8: Now configure your Bot with your Poloniex API key, you’ll want to give the public and private key information to your bot, through the configuration file. Open the “default.cfg” file with your notepad and place both keys on the file as so:
(You have to click “Show” in the “Secret” field to reveal your secret API Key.)
Step 9: Save the changes on the file and double-click “lendingbot.py”. Your bot will access your Poloniex account and place the loan orders according to the specifications you have set in the configuration file.
So far, you’ve only changed the API keys, but you can check the Github page to get more information on how to further configure your lending bot. In order for the loan to take place you must transfer your funds to your lending account as seen in the first part of the guide.
The APY received with Poloniex lending will depend heavily on market forces. Bitcoin is usually the most profitable coin to lend with an APY ranging from 4-10% under normal circumstances. Keep an eye on your bot and on the lending markets.
On the next part of this tutorial, we are going to cover lending on the Magnr website. Stay tuned!