to enable investing in loans secured by bitcoins:
''P2P investing in loans is becoming increasingly popular. To increase security, loans are usually secured by, for example, movable property or real estate. From now on, people can also invest in bitcoin-secured loans on the Czech investment platform Bondster.cz with a 10% return.
The advantage of such an investment is that it is hedged against bitcoin price fluctuations and investors get a stable return from it every month. This way, they achieve an annual return of 10-11% with the duration of the investment being 1–12 months. Thanks to this, investors can quickly appreciate their savings and then reinvest them.
The principle of investing in these loans is no different from other types of secured loans on Bondster. The only difference is in the method of securing, where instead of movable or immovable property, borrowers pledge their bitcoins.
Moreover, investors are protected in the event the value of bitcoin on world markets falls sharply. In such a case, borrowers have to make up the difference otherwise they lose their bitcoins. Should such a situation nevertheless arise, the loan originator, which is the Czech company Acema, immediately sells the collateral on the exchange and pays investors out.
Here lies one of the advantages of cryptocurrencies - bitcoin, unlike other types of collateral (e.g. real estate), can be immediately and easily converted into money.
Loans secured by bitcoins are also subject to the so-called buyback guarantee, which is applied in the event the borrower ceases to repay the loan. In such a case, the originator pays the investors the entire amount invested, including the interest earned.
''The number one priority for us was maximum safety. The LTV ratio for this type of secured loans is therefore 50-70%. At the same time, loans come with the buyback guarantee which applies both to the event of default and early termination, so that investors will not lose their money or interest. These will always be paid out to them in full, “explains Bondster’s CEO Pavel Klema.''