Getting started in crypto currencies with a small bank.
I’ve looked at quite a few low-cost options in the past, but there’s really not a lot I could recommend. Most of them were simply too good to be true. Slick but vague websites promising ridiculous compounding interest rates, with nothing substantial to convince me I’d ever see my money again.
There were a couple that I consider worth further investigation and testing, and I’ll post additional information here if they stand up to scrutiny. For all the looking though, there were only two options I’d recommend at this time… if you’ve got a small amount of bitcoin to invest and aren’t in a hurry to see a return.
As always, you should do your own research and assess the suitability of the options below to your situation, risk profile and expectations.
And always remember you have the very viable option of simply waiting and saving up some additional cash first!
If you’ve been working the free Satoshi systems though and you find yourself with a bit of a bank you’d like to put to work, here are two possibilities that might work for you…
BitBond Investing & Lending Platform
BitBond allows you to lend money to other members for short-medium term loans and very competitive interest rates. You can start with as little as 0.01 Btc which is approx US$25-30 at present.
The general idea is to spread the risk around multiple lenders, so lending small amounts to multiple borrowers is actively encouraged. Lenders are credit-checked and rated, so it’s not blind lending, though there’s obviously some real risk there you’ll need to assess for yourself.
Short term loans are for 6 weeks, to be repaid in full after that time, plus interest. Medium term loans are repaid in monthly installments… principle and interest… over 6, 12 or 36 months.
Loans are posted for ‘auction’, a process that allows multiple investors to bid an amount they are prepared to lend each borrower, and if the total reaches 60% or more, the loan is made. All loans are made in Bitcoin, so you will need to fund your BitBond account as such before you can bid on any loans.
So if you have $30+ in bitcoin and you’re looking to put it to work while you save up some more, this might be a useful option. You can register a free account below… no obligation… and check it out more thoroughly for yourself.
Low-Cost Cloud Mining Operations
These are worth a quick mention as they are about the only other option I found where you can easily move a small amount of Satoshi into an account to start work.
The theory is good… get a small amount saved up, put that to work in a cloud miner and then go back and keep working the free options… rinse and repeat…
The problem is, PROFITABLE Currency Mining is an expensive proposition these days. There are plenty of miners who will let you start with a very small investment, but rest assured, the returns will be proportional to your outlay.
And reading through the various forums, it’s clear there’s another thing a lot of people overlook…
When you start cloud mining, you are not investing, you are purchasing a contract… so your initial investment is not returned.
A lot of people seem to think they’ll get it back… and are always very unhappy when they realise it doesn’t work that way… so you need to understand when you pay a cloud-miner to start, you are purchasing a non-refundable mining contract.
They agree to give you access to a portion of their mining processing power (the hashrate) and you give them your money.
The mining operation will pool the returns from every member’s efforts, and the profits will be divided among everyone, proportional to their hashrate contribution.
So you have to hope that the returns you get on that mining operation will eventually cover your initial outlay and turn a profit.
And that can take a very long time, especially if you start off with a low cost contract, where your hashrate is a tiny proportion of the total pool.
So while you will find a number of miners that will let you get started super-cheap… $5 or less in some cases… the hashrate you purchase will represent a vert small percentage of the total pool…
So it could take months to recover your initial outlay.
I tested several of these with small investments… of approximately $10… and almost without exception, after fees, I was making a couple of cents per day at best.
In most cases, the returns weren’t much better than the free software we mentioned in the ‘free options’ section.
As a comparison, with a couple of these, increasing my hashrate purchase by 3 to $30 led to a ten-fold increase in my return. ie. $4-5 monthly return on a $30 outlay.
You don’t want to jsut keep increasing your hashrate though… there is going to be a point where more power won’t increase your returns, but we look at that in more detail in the Bitcoin Mining section.
What’s important to understand is, there is money to be made here, but you do need to get your hashrate up to a viable level. So you need to use a miner that lets you add to your existing hashrate.
Be aware that not all miners let you do this, but if your miner lets you purchase additional hashrate AND add that to your existing, each time you do this, your mining *should* become a little more profitable.
The catch is all mining becomes less profitable over time, by design… so it’s important to monitor your results and be prepared to walk away from a contract that has stopped being profitable.
So the game plan here for a no-cost investor would be to work the free options to raise $5-$10 worth of Satoshi, and buy a mining contract.
Set that to work and go back to earning the free Satoshi to raise another installment.
Upgrade your contract and then go back to work on the free options again.
Rinse and repeat for as long as you can stand it!
Just always remember, your payment if the hashrate contract is non refundable… you can only withdraw your profits, so you need to be in this for the long haul.
So realistically, most people will reach their goals a whole lot faster through a simple savings plan, but if you have the time and inclination, this could be an option.
MinerGate Desktop Mining Software
This does work for free, but it uses considerably more resources than the free Bitcoin Miner we recommended without producing a significantly better return, so I doubt it would be profitable once you paid for the electricity.
It’s very low cost for to purchase upgraded hashpower… for about US$2.00 you can buy a mining contract for 20GH/s… but my tests suggest you’d want about 50GH/s (~$10) to breakeven after daily maintenance fees have been deducted, and about twice that to see a consistent return.
Miner Gate does add your additional hashrate purchases though, so it could be a useful option to start when you’ve got about $5-$10 of Satoshi, and keep adding to it over time.
There are two things I particularly like about MinerGate…
You always mine the best currency. MinerGate automatically mines whichever currency is generating the best returns. You can view the stats and choose yourself or just start the software and let it decide.
You can mine multiple currencies. You can even mine a couple at once if your computer is up for it. Be careful though, if you overload your computer it will lock up!
These days I see this as a very useful diversification tool and as such this it’s now a permanent part of my strategy and I usually purchase additional hashrate about once a month. It’s a relatively small investment that runs more or less unattended. I could reinvest the profits for even faster growth, but for now I’m happy to let it build a balance in a large number of different crypto currencies.