Topic: Checking for interest: Bitfinex lending fund (Read 2591 times)

I think it could be interesting.

Claiming something is potentially buggy + insecure is a valid concern, claiming that something is buggy and insecure leaves me wondering when you did a code and security audit...

Just as you would rightfully call anyone a liar who says "MPEX is unusable, the website is down" since you can do trades on IRC for example, also you could maybe understand a less tech savvy user who says "MPEX is unusable for me, I only know how to use the web interface and it's down atm". You seem to like generalizations and final/absolute statements, but this does not lead to useful discussions in my experience, so please refrain from that further on in this thread.


True, though a lot of "investments" so far on various platforms are passthroughs to other, more risky investments. Also at least this one has a sound, easy to understand business model that also pays in BTC, not USD converted eventually to BTC at some exchange rate determined by the operator. I don't see a way how the idea behind the investment could fail - the platform/execution itself can fail, yes, as I outlined in the OP already.


Yes, you don't need to pay 30 BTC (or a broker commission), have a huge opening balance (lolpirate) or get verified (though maybe this might change?) and compared to other "funds" I don't plan to diversify into other areas, so it's kinda specific. Maybe the entry into that market is too low to warrant a passthrough operation, but maybe there are other motives that might warrant a passthrough that I didn't think of, also a reason why I opened this thread.
So far I got: The investment itself is insecure, Bitfinex is insecure and passing through me is insecure - also doing the stuff on your own is too easy to warrant a PT...

I don't think there would be much interest in this. People would just put the bitcoins on bitfinex themselves, it's not exactly rocket science.

my pendulum says this is going to end badly.
you are making a risky investment even worse by adding a layer. It seems most bitcoin investments fail and this bitfinex definetly fits in that category. So somehow we should all learn, and for now, do the exact opposite.

Bitfinex is a buggy insecure RoR implementation of an already failed "forex" site (ie, Bitcoinica). They stole most, if not all of the code, they have no redeeming qualities, stop pushing it already.

Another idea of mine, that might give relatively small but relatively well secured payouts:

Lending BTC on Bitfinex.
Bitfinex is an option platform offering amongst other things to open an account and lend out BTC or USD deposits to its users who want to do leveraged trades. Even though the interest is usually lower than what traders can/do(?) earn, the interest is guaranteed and secured.

I'd like to offer to open a fund in BTC which get deposited to Bitfinex and pay out interest to its members periodically (interest on Bitfinex is credited daily).

Current numbers from lending out BTC show quite jumpy returns (in 14 days I had 1 day with 0 interest and 2 days with more than 10% APR - averaged over that timeframe I'm at ~3% APR) which are of course higher if the USD price falls (or trader think it might fall), as people borrow BTC to sell them and buy more later at cheaper prices.

As interest compounding is actually quite a nice feature of Bitfinex (since it is paid daily, I already have ~0.1% more funds to lend out and I gain interest on these as well already) I'd probably look for people who don't want daily dividends or something like this - it would anyways only create bitdust. Maybe a payment once a certain treshhold in interest has been reached? Also withdrawals are not immediate at all, on one hand you can of course only withdraw coins that are not currently actively lent (d'oh!) and also Bitfinex has all coins in offline storage and processes withdrawals on business days, so it might take a while (= up to a few days if you request a withdrawal on friday before easter for example) until a request is processed. This fund should be viewed as long term investment, not for day trading.

Potential risks mainly include Bitfinex going bankrupt (unlikely due to trading activity as they get a cut on every trade, unlikely as well due to being hacked as BTC are supposedly stored offline), MtGox going out of business suddenly and taking Bitfinex' money with them (which would not be Bitfinex' fault but still I guess they have quite some funds over there to execute the user's trades) and me scamming you willingly () or unwillingly (e.g. I die + destroy my phone with the GAuth key in the process and don't have a dead man's switch in place).

Your benefit over lending directly at Bitfinex is that you don't need to set up and secure an account over there, as you can participate in the whole thingie here just by submitting BTC and an address that will be used as payout address, your "alias" in reports and to sign any payout requests. Also you get nice stats/graphs done by me.

My benefit from all this would be that I gain a part of the interest generated (5% seems like a reasonable amount) and that I didn't create all my nice statistics and graphs just for myself.

If you are generally or especially interested in something like this or have found a major flaw in my idea, please feel free to let me know in this thread!

tl;dr: Interested on earning a few meager % on a relatively conservative investment? Express your interest in this thread!