Announcement: The BTC AutoInvest Experiment

When people find out I have some expertise in Bitcoin based lending, one of the most common questions I get is about the AutoInvest feature offered by the big 3 lenders.

For infrequent readers, the big 3 Bitcoin lenders are BTCJam, Loanbase and Bitbond. They are the Big 3 because they have gotten outside funding and enough funding and legal advice to ensure they are at least legally compliant with Bitcoin in their home jurisdictions. All other Bitcoin peer lenders (other than exchanges) are still too new or too underfunded to be trusted with too much of your coin.

Personally, I have been against the idea even though the big 3 all push it as a great service for us lenders as well as for them as platform operators. We know its good for them as it means money is consistently invested in loans to keep loans in various stages of funding.

It's been nearly a year since I added a new portfolio, and that was my successful (so far) High Rate Lending Club portfolio

After numerous discussions, questions and speculations about AutoInvest, I have decided that the only way to be sure of what it does is to test it myself.

The Theories

There are lots of assumptions made by us lenders and by the platforms regarding AutoInvest so we are going to test them. They include:

Are autoinvest returns higher?

Are autoinvest statistics accurate?

Are autoinvest funded loans 'protected' or otherwise looked after by the platform differently than Open listings?

Are some listings favored for AutoInvest over others and why? Are some borrowers favored?

Are defaults lower?

Are the credit models accurate if we use them as a basis for filtering decisions?

These 6 questions are what we are looking to clarify and answer with the AutoInvest experiment.

The Methodology

How are we going to answer these questions?

I am going to start with 1 BTC. It's not much however, across 3 platforms AND with small amounts invested in each, it should be a large enough sample. I'm going to be investing the following:

BTCJam: 0.4 BTC

Loanbase: 0.4 BTC

Bitbond: 0.2 BTC

My amount of investment per loan is going to be 0.01 BTC so I should be able to fund 100 loans.

I will also examine ease of use, filtering and other factors used by the 3 platforms.

I will be reinvesting all proceeds in more AutoInvest loans for a minimum of 3 months.

I will start February 15 going through May 15.

I will measure monthly returns like usual for this portfolio both combined and by platform.

What would you like to see in my analysis of AutoInvest?

About the author

Stu Stu Lustman, the author of this post, is a Credit Analyst by trade trying to bring Commercial Credit Analysis techniques to the world of Peer to Peer Lending. Check me out on Twitter, LinkedIn and Google+

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.