BTCJam Partners with ANXPRO

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At BTCJam we are always keeping an eye out for other companies that can complement our services and will improve the experience for our users.

Today, we are excited to announce a new partnership with one of the world’s top Bitcoin exchanges, ANXPRO!

ANXPRO is the only exchange that supports all 10 major currencies – you can conveniently fund your account via SEPA, international wire transfers, local banking, or in-store cash and ATM deposits with same day processing.

To celebrate this new partnership, ANXPRO has an exclusive offer for BTCJam members:

No trading fees in the first month if you sign up by September 19th, and you must verify your account within 30 days. (Trading fees of the first month will be rebated back to your account on October 31st.)

If you are looking to buy or sell bitcoins, we highly recommend for you to check out ANXPRO.

BTCJam Launches the World’s First Social Lending Platform

Hey BTCJam Users,

We are always working to bring new and exciting features for the BTCJam family. Today we are thrilled to announce two very important improvements to BTCJam.

On top of inventing the world’s first global peer-to-peer lending platform using bitcoin and the world’s first truly global credit score, BTCJam keeps pushing the envelope on revolutionizing and innovating the financial space.

With your help, today BTCJam will launch the world’s first truly social lending platform. Investors and borrowers can share ideas, strategies, and opportunities.

We believe this will lead to more secure, diversified, and profitable investments.

New Dashboard with Newsfeed

There is a new dashboard in town. The redesigned dashboard perserves the key features to the BTCJam experience.; in addition, it helps you stay up to date on what is happening on BTCJam.

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What is the newsfeed?

Similar to Facebook, the newsfeed highlights everything that is happening with the people you trust and follow as well as the listings you invest in on BTCJam. You can see when people publish a new listing, make investments, make payments, comment on listings, and share listings they think are particularly interesting.

How do I enable the social feed?

You can enable the feed in your settings here: https://btcjam.com/users/edit

Who will see my actions?

Currently, everyone who follows you on BTCJam will see your actions in their newsfeed.
Furthermore, all investors in a listing that you created, commented on, or invested in will see comments and payments from that particular listing, whether they follow you or not.

The newsfeed does not share anything that was not already publicly available; it just makes it easier for you to keep tabs on what is going on with your investments and comments.

Redesign

A new social platform has to be enjoyable and easy to use. That is why we are also very proud to release BTCJam’s updated design. The new design looks fresh, modern, and aims to reflect the truly innovative DNA of our company.

We hope you have as much fun using it as we do.

Check out the all new BTCJam at https://btcjam.com

Your BTCJam Team

Opportunities for Bitcoin in Indonesia

In 2005 I spent three months in Jakarta, Indonesia, teaching at a school for disadvantaged children. The school, established by the Dilts Foundation, provided among other things, education to street kids and other children who did have access to a traditional educational system.

The program I participated in was called “Children of Tomorrow.” Besides teaching the children English, our mission was to provide them the opportunity to develop their entrepreneurial and leadership skills. This enabled them to instill positive change and advancement in their lives.

Teaching through the program was a truly unique and life-changing experience. I was overwhelmed by the happiness of the local people. Although their lives were so challenging and difficult, I was touched by their generosity despite the limited resources they had. I realized that by growing up in a developed country I took for granted things like running water, toilets, and three meals a day.

These children and their families, like almost 80% of the population in Indonesia, had never been to a bank or had access to a bank account. Banking and other financial services are not readily available to the majority of the population. There are various reasons for the high percentage of under-banked in Indonesia.

First, Indonesia is a cash-economy. In Indonesia, they live by the mantra “Cash is King.” It is very much a part of the culture to receive, spend, and save money in cash. In Indonesia, most restaurants, stores, and institutions only accept cash as a form of payment. Even if you have a credit card, many places will not take it.

Another significant reason why people rely heavily on cash is that for many people, financial services are too expensive. With an average monthly income of $200, disposable resources are limited and financial services are not a large priority. Indonesia is an archipelago of more than 13,000 islands; on most islands the banking infrastructure is barely developed. For most banks, it is not profitable for them to establish branches, ATMs, and other services. This leave a significant part of the population without access to banks and other financial services.

A statement often made is that bitcoin can change and improve lives of the under banked. These people have a need for a service that facilitates small transactions in a cost effective manner. Additionally, bitcoin acts as a solution to hold value safely through a provider they trust.

Although the vast majority of the under banked are not very tech savvy and do not have easy access to internet, many have mobile phones. In Indonesia, 84% of the population owns a mobile phone; by developing mobile solutions using the bitcoin protocol, financial services can suddenly become very accessible for these people.

In the past few months, bitcoin has slowly, but steadily gained traction in Indonesia. In December 2013, the first bitcoin exchange opened, bitcoin.co.id. There are several entrepreneurs developing bitcoin applications and services for merchants that have started accepting bitcoin.

BTCJam has seen a tremendous growth of users from Indonesia: more than 1000% in the last three months! Most users from Indonesia on BTCJam are borrowers who take out loans for business activities. Some of these busiesses are even bitcoin related! Borrowers can use loans to buy mining hardware or to trade on LocalBitcoins. These BTCJam users are contributing to the bitcoin ecosystem in Indonesia and they provide liquidity to the local market.

The opportunities for bitcoin in Indonesia are immense: with a population of 240 million, where 80% is under banked, bitcoin can have a significant impact on the lives of at least 190 million people. The “Children of Tomorrow” at the Dilts Foundation and their families showed me how the banking system in Indonesia does not serve the needs of the majority of the population. I believe that bitcoin can increase the opportunities of Indonesians and people in other developing countries by satisfying their financing needs and necessities.

image – Isabelle de Clercq 

Untangling Peer-To-Peer Lending, Crowdfunding, and Microlending

In my previous post, I provided a short overview of the evolution of the lending space and the role of banks herein. Over the past years, especially as a result of the financial crisis and arising regulations, banks have pulled back from issuing loans. This has paved the way for alternative financing solutions like Peer-to-Peer lending, crowd-funding and micro-lending.

The most significant similarity between these three services is that there is no involvement of traditional financial institutions. In this post I will discuss their most important features, explain which markets they serve, and show what their key differences are.

Peer-to-Peer Lending

The core concept of Peer-to-Peer (P2P) Lending is a that a group of investors lend to one person or business without the interference of traditional financial institutions. Usually the investors are individuals who are not related to and do not know the borrower. The development of the internet has enabled this new form of lending: an online marketplace that completely facilitates the loan transaction.

An interesting trend in the P2P Lending space is the increased participation of institutional investors and banks. P2P Lending companies can operate more efficiently thanks to the use of new technologies and less overhead cost, thereby making these marketplaces very interesting for both borrowers and investors. According to Charles Moldow, a partner at Foundation Capital, P2P Lending Platforms have a 400 basis point advantage compared to traditional banks.

A notable player in the field in Europe is Zopa (located and operating in the UK). In the United States, LendingClub and Prosper are the first P2P lending platforms who service the US market. Funding Circle and OnDeck also facilitate small business loans through their marketplaces.

A new and truly unique P2P Lending platform is our company, BTCJam! By using bitcoin as a transaction protocol and a global credit-scoring model, BTCJam is the only P2P lending company that operates worldwide.

 

Crowdfunding

Crowd-funding is based on the same principle as P2P Lending: funding takes place by a group of investors. There are significant differences between the two:

First, crowd-funding is typically used for specific projects or ideas and not for personal loans. The second distinct difference is that investors who contribute to a project do not get interest–instead they’ll receive rewards, special perks, or gifts. For example, they may get the first release of an album or the product they supported.

A new development within the crowd-funding industry is the so-called “Equity-Based” crowd-funding: as a reward, investors receive unlisted shares of the company. Equity crowd-funding has been a popular way of raising capital for companies in Europe and Australia for several years. In the United States, equity crowd-funding is only accessible for accredited investors, but this could change soon based on the JOBS Act. The JOBS Act would let non-accredited investors gain access to equity crowd-funding which would dramatically expand the possibility for startups and entrepreneurs to raise capital. Seedrs is an Equity crowd-funding marketplace that operates only in Europe and has been very successful.

A well-known crowd-funding platform is Kickstarter; people have pledged over $1 billion, funding 65,000 projects. Kickstarter is not equity crowd-funded, which prohibits individuals from making long term equity on the products they invest in.

 

Microlending

The main goals of micro-lending are to financing poverty stricken areas of the world and reach underbanked communities. The loan amount is usually very small and the purpose of the loan is usually for personal use. Many of these loans help to finance medical bills, small businesses, education, and agricultural development.

In P2P lending and crowd-funding, there are multiple investors contributing to the loan, whereas in micro-lending, you often see that also the borrowers team up. Loans are provided to a group of people who will vouch for each other, thereby, minimizing the risk of default.

The first micro-lending initiatives did not have profitability as a driver, but over the years some micro-lending institutions have argued that doing good shouldn’t stand in the way of making profit. Opinions remain divided on the subject.

Grameen Bank is one of the first and leading Microcrediting organizations. Besides micro-lending it also offers other financial services. Kiva created an online marketplace to connect investors with borrowers in developing countries. Kiva works with local field partners who assess, distribute, and monitor the loans.

In the chart below I summarized the characteristics of the three financing solutions. The alternatives to traditional banking loans all serve different markets and it’s strongly recommended to research which solution suits your needs.

image – Isabelle de Clercq 

The Evolution of the Lending Space

Nowadays there are dozens of ways to attract money for either personal or business purposes. Besides traditional financial banks, there are various alternative financing solutions that have experienced tremendous growth in the past decade, all serving different groups and targeting their specific needs. When considering these alternatives, you have to think, what is the origin and development of lending?

How It All Beganimage

The first traces of lending and borrowing go back to 12.000BC. Our ancestors implemented a system where they swapped goods in exchange for foodstuffs or tools. In Japan, for example, rice was used as the predominant form of currency for thousands of years. 3.000 years later, societies began to use coinage as a transaction method and pictographic tablets of clay to record economic transactions. Borrowers would receive a loan in coins (ie: to buy a cow) and the lenders would receive payments in goods (ie: milk). Eventually it was the ancient Romans that laid the foundation for the banking system, formalizing the administrative aspect and creating rules and regulations for financial transactions.

From the Romans to Medieval Times

In Roman times lending was primarily carried out by private individuals. Over time, large wealthy families replaced individual lenders as their own sort of “institution.” The Jewish played a significant role in the development of the banking industry in Europe and Africa since charging interest was forbidden by Christians.

Charging interest was commonly used in ancient times, but with the rise of new religions its moral basis became questionable and sometimes forbidden. Jewish people were not allowed to charge other Jews interest, but this restriction didn’t apply to people of other faiths. In contrast, the Christian church initially banned interest and kept this policy for centuries.

From the Middle Ages and thereafter, lending and other financial services were more formalized. These activities became predominantly carried out by budding banking institutions. Although the first bank was established in Venice, Italy, the banking industry spread to northern and western European countries soon after. The English and the Dutch established the first modern banks in the late 17th century, which were in many ways similar to how we know banks to be today.

21st Century

For decades, banks have been the main resource for capital investment; unfortunately, their reach does not go far enough. Banks have proven to be hesitant to service higher risk groups such as: start-ups, entrepreneurial enterprises, and people with an irregular income. To add to this, the strictness and limitation of banks worsened after the financial crisis of 2008. Financial institutions abruptly cut back on issuing loans, therefore, making it significantly harder, and in some cases impossible for people to get loans.

In reaction to the turmoil banks were facing and the new restrictions they implemented, alternative-financing companies stepped into the lending space. The three main new resources for people and businesses to attract capital are: peer-to-peer (P2P) lending, crowd-funding and micro-lending. These concepts have similar characteristics, the most importantly, they all avoid the intervention of traditional financial institutions. Often there are significant differences, which are sometimes forgotten, therefore, leading to confusion and misuse of the terms.

In the next blog post I will discuss these three alternative financing solutions, their key characteristics, and main purpose.

image – Isabelle de Clercq 

BTCJam Hires New Chief Product Officer

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We are happy to announce that Gustavo Guida is joining BTCJam as Chief Product Officer. Gustavo is a seasoned entrepreneur with over 15 years of experience running marketplaces.

In 1999, months after graduating in Economics, Gustavo co-founded Bondfaro, a price comparison company in Brazil where he worked as CPO. In 2006 the company merged with Buscape, creating one of the largest e-commerce players in Latina America. Gustavo was Buscape’s Product Senior Vice-President and managed Customer Service and the Product pipeline for the company that had back then over 10 million monthly unique visitors and was servicing millions of dollars in transactions per month. With offices in Rio de Janeiro, São Paulo, Mexico City and Buenos Aires, the company was finally sold to Naspers in 2009.

After working briefly at Naspers and investing in a few start-ups, Gustavo co-founded the medical booking platform HelpSaude.com. The company recently merged with NetCom, turning the resulting company the absolute leader in medical bookings in Brazil. Gustavo moved to the Board of Directors and is still a shareholder and a believer of the company.

At BTCJam, as CPO, Gustavo will be mainly responsible for Product Design and Customer Service. He will work remotely from Rio de Janeiro and will move to San Francisco soon to work at our SOMA office.

“Since my first contact with BTCJam, I became fascinated with its business model. By using bitcoin protocol, BTCJam can connect investors and borrowers from all over the world. The result is the empowerment of borrowers to fulfill their needs while at the same time, providing excellent returns for investors. I am very excited to join BTCJam and help the company to revolutionize finance on a global scale!” – Gustavo.

By the way, we are hiring! Take a look at the opening positions we have.

Announcing New Connected Wallet Features

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That’s right. It’s here, it’s fast, it’s efficient, it’s a connected wallet where you can automatically withdraw and add funds to your BTCJam account from Coinbase without having to leave BTCJam. We are happy to present the first of many new features that will come with connected wallets.

  • You can withdraw from Coinbase without leaving BTCJam
  • Your automatic payments can withdraw from your Coinbase wallet to make a payment

If you have a connected Coinbase wallet, you can view your balance and withdraw from that wallet in the Add Funds window on your BTCJam dashboard. For our borrowers, you no longer have to stress about adding your funds to BTCJam from your wallet provider! Enabling automatic payments and withdrawals from your Coinbase wallet will be automated to make payments for you.

Go to your settings to configure your wallet!

Wallet providers, we are looking to add more add wallets! Read our partners page here.

Introducing NAR: A Useful Tool for Successful Investors

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What is Net Annualized Return?

NAR (Net Annualized Return) is the measurement of the performance of your total investment on BTCJam. It reflects the funds actually received each month.

You can now view your NAR of all your investments on BTCJam in your Investments page.

What makes NAR useful as an investor?

As an investor, you need to eat, sleep, and breathe NAR. (Also, expected APR – see more here).

If you were a painter, the paint would be your invested bitcoins, the brush would be BTCJam, and the NAR would be the painting. NAR is the most accurate measurement to monitor how you have grown your bitcoins on BTCJam.

How does BTCJam calculate NAR?

To calculate NAR, the numerator is composed of interest received, plus late fees received, minus the amount in default. The result is divided by the total mature principal. The mature principal is the investment that has already a related payment or default.

For notes, your notes sold also affect your returns both positively and negatively. If you sold a note for 1, but invested 1.2, you will have a -0.2 loss. If you bought a note for 0.1 and received 0.4 in payments you will have 0.3 in gains

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This is a live calculation so every event that can change it is automatically performed.

BTCJam started using this calculation from April 1st, 2014, so this only reflects your return starting with funds invested on or after April 1st, 2014.

Get g’nar’ly,  and start investing today.

What Bitcoin Means For Peer-to-Peer Lending

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Endophytic fungi are primarily an altruistic fungi that partner with many plants–from grasses to trees. Their mycelia, the vegetative part of fungi that look like a network of threads and are vital to both aquatic and terrestrial ecosystems for their role of decomposition, weave through plant’s cell walls but do not enter. The mycelia enhances the plant’s growth and ability to absorb nutrients, while starving off parasites, infections, and predation from insects, other fungi, and herbivores.

In this same way, Bitcoin, an autonomous, decentralized payment system, entwines and connects people from around the world while improving the mode of transaction in an efficient and fast way despite where the sender and receiver are located. At the same time, it renders traditional modes of transacting as antiquated and unfit for the modern world. Bitcoin protects from ill-intended third-parties and negligent intermediaries; you can store your Bitcoins so only you have access, take an unlimited amount across borders, and send/receive with anyone anywhere around the world.

Bitcoin has weaved itself through many different industries, a profusion of people, and has fostered not only a sense of community, but also, a growing force of change and equality amongst its’ users.

When Bitcoin is incorporated with peer-to-peer lending, it accentuates and globalizes all of the benefits that lending and borrowing on a peer-to-peer network has to offer. That is customizable terms, easy application, lower interest rates, and faster funding rates for borrowers. Investors can spread risk, receive higher returns, and have the power to choose who they want to invest in.

Like how endophytic fungi on cocao tree leaves decrease leaf necrosis and mortality by a threefold, users on a P2P lending platform powered by Bitcoin will inherently be immune to the aches and pains that are structural of the orthdox payment and lending systems of today.

Typical payday loan providers charge $17.50 for every $100 your borrow, with late fees of the same rate for every full term period you are overdue, you could quickly find yourself in debt. (1) BTCJam, the first peer-to-peer lending platform using Bitcoin, allows borrowers to set their own interest rates that cater to them. Investors will then review the loans and decide if they want to invest or not.

The speed of funding on BTCJam is at an average of 6 days. This is due to the network of lenders based around the world using the decentralized, peer-to-peer cryptocurrency! The archetypal structure this follows resembles that of mycelia, the web-like Internet, neurological arrays in the mammalian brain, and so on. The advantage of P2P Bitcoin lending platforms is an inevtiable consequence of previously proven evolutionary models.

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The Milky Way also follows this archetype.

image– Alexis Aiono

Introducing APR, Expected Loss, and Expected APR

We are very proud to introduce an important new feature for investors: Expected APR. With this new feature, you will be able to have a better estimate of how much you will earn with your investment. In the browse listings page, you can now filter by the expected APR, and on the specific listing page you can view the effective APR and estimated loss.

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What is APR?

APR (Annual Percentage Rate) tells you how much your bitcoin will grow at an annualized rate when invested in a loan. For a 1 month loan, imagine re-investing the Bitcoin you got back in another loan with the exact same terms 12x over the period of 1 year. It is a standardized computation that provides the bottom-line number that reflects how much an Investor can gain.

What is Expected Loss?
BTCJam calculates the probability of loss determined by historical repayment rates, the borrowers information, and repayment behavior on BTCJam.

What is Expected APR?
APR – Expected Loss = Expected APR
This calculation is the expected gain determined by the APR minus the Expected Loss. This is the estimate of how much you will gain.

For example, a loan of a $100 has:

APR: 8.20%

Expected Loss: 0.11%

Expected APR: 8.09%

And you invested the Bitcoin equivalent of $10.

The APR is 8.20% so you could grow your bitcoins to the equivalent of $10.82 with an Expected Loss of $0.01.

If you invest a total amount of $10,000 with each invesement at $10 in 1000 of loans with those exact numbers, it is expected that 1 defaults (1000×0.11 ≈ 1), so you lose 1 and 999 loans grow with 8.2% a year. 999x10x1.082 = $10,809.18.

Now, your effective return is ($10,809.18-$10,000)/$10,000 = 8.09% which matches your expected APR. Be aware that the expected APR is based on the historical performance of BTCJam’s repayment rates and that your actual performance may vary.

Remember, having a diversified portfolio significantly lowers the risk of your investments! Learn more about diversifying here.

Excited? Check our newest listings!