For those of you catching up with my crypto journey please be aware that this article follows on from:
How likely is it that I will I ever own a full Bitcoin?
One year on - How likely is it that I will I ever own a full Bitcoin?
As I explained in the latter I have recently broadened my Bitcoin investment strategy into lending - in particular using LEDN.
I found setting an account up very straightforward but in common with lots of other online financial products these days it was necessary for me to verify my identity using official photo ID and a photo taken from my webcam. Now, I'm well aware that this is a necessary part of reducing incidences of money laundering, however, I don't know about you but the first time I had to do this I was a little uneasy. Nowadays it seems routine and quite quickly the account was up and running.
Other lending platform are different but on LEDN it is only possible to lend out BTC and USDC. They currently attract interest at 6.25% and 9.5% respectively, and interest is paid in whichever coin you have lent. This has a couple of main advantages to me. Firstly, I'm not going to pay any transfer or trading fees converting my interest back into BTC - I hate fees as they can really nibble away at your margins over time. Secondly, not converting my BTC for the investment means that I can still expose myself to the widely predicted forthcoming rises. For this reason my choice has been to lend BTC - of course I am exposed to the downside risk too, so if you are looking for some protection from this you could easily choose to lend some USDC.
Next step for me was to transfer some funds into the account. Easiest way to do this was to withdraw some BTC from elsewhere straight into a unique wallet address given to me by LEDN. Being a little cautious I only did this at first with a small amount - about 0.005 BTC just to be on the safe side. A good job I did too as the transfer seemed to take and inordinately long time - perhaps only a few minutes but it felt a lot longer. This worried me enough as it was but with a larger amount I would have been worried stupid.
That was it - job done and my BTC was earning interest. It's always nice to see this reported on the website daily, but unfortunately it only seems to be properly added to your account monthly.
Earning daily interest while still exposed to the upside is good enough but now for the even better bit.
As I may have previously mentioned I am a follower of the FIRE philosophy who survives largely from passive income - mostly from low cost tracker funds that I have accumulated over years of disciplined saving - only recently having dipped my toes into the crypto-verse.
One of the key tools that I use to keep track of where I'm at with my index trackers is average cost per unit. This is just the total money I have paid into the fund divided by the number of units I now hold. Comparing this to the latest price gives you quick feedback on progress.
Here's the good bit for me. With my tracker funds, unless I actually get the chance to buy more units after a slide in price the average cost will never go down.
However, lending my BTC will over time increase the amount of BTC I hold without costing me anything. Take the example of 0.1 BTC purchased for £3500 is a unit price of £35000 per BTC, yet after 1 year on LEDN it would be 0.10625 BTC still for £3500 but a reduced unit price of only £32941. I truly wish I could do this with my fiat based index trackers.
Of course this article is an account of my personal experiences and is in now way financial advice - my BTC holding represents a small amount of my well diversified porfolio and your circumstances may be very different.
Nevertheles, if you have found this infomative or useful in any way then please like/tip/follow and I'll keep you informed of the next steps in my journey.
