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The big Bitcoin exchanges like Bitfinex, Poloniex or Quoinex offer their users, besides the trades with Bitcoins, Altcoins and fiat currencies, the possibility to lend their funds in form of short-term loans to day traders. The traders use the borrowed money for so called margin trading and the lender receives interest for lending the capital. At that point Coinlend offers a free service which completely automates the lending process, optimizes the interest income and takes a lot of time and work off the hands of the user.
Before beginning with the topic it is useful to understand the operating principle of the margin trading: the margin traders bet on, for example rising prices of the cryptocurrencies within so called leverage transactions. In doing that the traders often need additional borrowed capital to maximize their profit opportunities. Every user of the exchange can provide this capital within the P2P margin funding and will receive an appropriate interest in exchange. The average interest rate for lending Bitcoins was around 25% during the last 12 months, which makes lending very interesting for every investor in cryptocurrencies particularly with regard to the compound interest effect.
Coinlend.org: rates & user interface
Margin trading is offered at several crypto exchanges. Currently Coinlend supports the largest margin funding exchanges, Bitfinex.com, Poloniex.com and Quoinex.com. Additional trading places will follow shortly.
To lend coins the user has to transfer the coins he wants to lend into the (funding) wallet of the appropriate exchange and can start the margin lending immediately. At this point the service of Coinlend comes into play.
The manual lending of coins at the exchanges is very tedious and time consuming. The user interface is confusing and hardly understandable for the beginner. In addition the trading transactions often have a short duration of two days and can be paid back early by the margin trader at any time. Therefore the coins accumulate without bearing interest in the wallet until they are lent manually by the user again.
For this reason Coinlend was created. Once configured the artificial intelligence behind Coinlend automates the generation of the loans and optimizes the interest income of the user – free of costs. Coinlend is currently financed by donations of the users. After entering the API Keys of the desired exchange and establishing the parameters (like minimum interest rate, duration, etc.) the bot programed by Coinlend starts its fully automated work and lends the coins of the user at the best possible interest rate and totally free of costs. Coinlend provides comprehensive statistics and analyses of the current loans and future developments. The set up of the bots is quick and easy and in addition there is a beginner-friendly step by step introduction for every exchange. And if there are any difficulties with the set-up of the API Key the Coinlend customer support helps in a timely manner.
What risks are there for the user? In general, the risk is low. The margin trader has to deposit a security at the exchange. The moment his leveraged position is going the wrong way and the security is depleted the position is closed and the lender gets his coins back and the accrued interest is credited to him. Still, a user has to entrust his capital to an exchange which can pose a risk even though the large exchanges are operating at the market since years.
Improper use of the coins by Coinlend or the borrower is not possible as well because the necessary access rights (API Keys) allow only the lending of the coins but no sale, withdrawal or similar activities – neither by the margin trader nor Coinlend. If a user would enter the wrong access rights, for example too far-reaching access rights, the API Key will be automatically declared invalid and discarded by Coinlend.
Coinlend.org: different exchange bots
Conclusion: In summary, it can be said that margin funding is a good opportunity to increase the Bitcoins, Altcoins or U.S. dollar with low risk. If someone doesn’t shy away from a small risk, very good returns can be achieved. In doing so, Coinlend’s free service can render excellent services which saves the user a lot of time and optimally invest the coins. The handling is simple, comfortable, very clear and provides a variety of statistics.
Official Website: www.coinlend.org