Btcpop's "Risk Free" Interest Bearing Bitcoin Wallet
"Btcpop’s Instant Pool interest bearing wallet should not be overlooked as a financial tool. Where else in the world can you gain 5-15% risk free interest on freely withdraw-able Bitcoin deposits?"
In a world with central banks artificially manipulating interest rates to around 0% the concept of risk free interest has vanished from our minds. But, back in the "good ol' days” saving interest rates of 5% were pretty common and before that 10% or higher could even be expected. I won’t go delve into the tremendous failure of central banking or fiat money. But the point is, a relatively risk free good interest rate does exist for Bitcoin deposits at Btcpop.co.
The instant pool works like this. When you deposit into Btcpop’s instant pool, you receive interest the pool generates proportionate to your percentage of the contribution to the entire pool. So if you invest 1 Btc in the Instants pool which has a total of 100 Btc, you will receive 1% off all the interest the instant pool generates. The key thing about the pool, is that your Bitcoin is backed by Btcpop, and Btcpop assumes the risk of default. Your Bitcoin may be used and lent out as instant loans, but it’s backed up fully by Btcpop’s Bitcoin stored in a cold wallet. You can learn more about taking out instant loans at this blog post.
Btcpop does still offer an interest bearing savings account with interest paid daily. The current rate is 4% APR but this will slowly decrease to 0% over the next 10 months as Btcpop focuses its "Risk Free" deposits on higher interest instant accounts. Savings accounts rates are scheduled to lower to 3% on 6/1/17, 2% on 9/1/17, 1% on 12/1/17, and 0% on 3/1/18
How the pool generates Money
Btcpop offers the unique service of Instant Loans and Instant Collateral Loans. These loans are mathematically calculated by Btcpop, and if you choose to accept the terms you receive the loans instantly. You must first verify through Btcpop’s system, and the amount you can borrow depends on certain variables. So for example, a verified user takes out an instant loan of .1 Btc over 2 months with .01 Btc of interest being due on repayment. When he pays back the .11Btc, .01 Btc of interest is paid out to the pool as reward. So following the 100 Btc pool example above, you would receive 1% of that .01 Btc interest. So your 1 Btc deposit in the pool earns .0001 Btc in interest for being on deposit when the user paid back their loan.
Check out this blog post if your interested in taking out an Instant Loan or Instant Collateral Loan.
Your Bitcoin is not at risk
So I can already hear the skeptics saying “what about defaults? If people don’t pay back Bitcoin will be lost regardless of whose Bitcoin it is”. And they have a valid point. Bitcoin is finite and 100% ownership exist, so anything lent receiving interest has risk of not being paid back. Again the pool is backed and risk is assumed by Btcpop and consequently Btcpop’s owner. In reality the Instants Pool has actually lost Btcpop a significant amount of Btc with prior management (250 Btc+), but with improved coding, it is now profitable again. Depositors have never lost a Satoshi of their deposit during this time, and funds have always been withdraw-able.
“Risk Free” doesn’t exist here on earth
I want to make it a point to dispel the myth that risk free exist anywhere here on Earth. There is always risk where you store your value. If you store your value in gold, the gold can get stolen or the price can drop. In the fake money fiat world, there is a version of risk free, but its still not risk free. In the US for example bank deposits are FDIC insured up to $100k. However, its still not completely risk free holding USD on deposit. Besides being a infinite money that can be decreased in value at the whim of a politician. Theft of your money also decreases its value. If a bank got robbed, FDIC would make a payout to you in full, but on the back end a small portion of that value would be stolen from you in increased taxes or new printed money. So it is less risk, but there is still risk.
All funds in Btcpop, or any other Bitcoin site carry platform risk. This is why you can get .5%/day returns margin lending on Poloniex. Even though margin lending is protected with liquidation of borrower's assets, there is still always a chance the whole system goes down, or that Poloniex gets hacked and your funds stolen. This is the same for any platform. So there is always the risk that Btcpop fails, and when you deposit here you assume that risk. However, even when you hold a private key there are risks that key is lost or stolen. My point is there is a small risk that Btcpop fails so your deposits are not risk free. However, I would argue the platform risk for Btcpop is much lower than most anywhere else. In the end Btcpop, is backed by a wealthy Bitcoin owner and his partner. Over the years his competence, trustworthiness, and philosophical ideals has lead me to trust him with my private keys almost more than my ability to securely store keys and passwords myself as an amateur computer user. You have to make this risk assessment yourself, but if the past events of Btcpop are any indicator, your funds are safe at Btcpop.
Another thing to remember, that Btcpop is a P2P bank. So besides the Instant Loans, which Btcpop calculates and sets the rates for, Btcpop doesn't hold that terribly much financial risk. Investors hold most if not all of the lending risk, which is why they also receive all of the interest for taking on that risk. So as long as Btcpop keeps control of its processes (which it does) and continues its extremely high security measures for handling coins (it also does). The platform risk for Btcpop is very limited.
Using the instants pool
Using the instants pool is very easy. Simply deposit your Bitcoin into the instants pool and earn interest. You can deposit directly into it via the wallet address, or just transfer from your regular Btcpop account. Withdrawing can be done instantly moving Bitcoin from your instant account to your main account.
You can watch your holdings grow right from your dashboard. Above is my account statistics. I have held a varying amount of Btc in that account for the last 5 months (most of the time 5Btc or less) and I calculated my actual APR rate somewhere roughly between 7%-12% for the last 5 months.
On your dashboard you can also track the total outstanding amount of instant loans the pool has lent out. The amount goes up and down and people take out and payback loans. When the amount goes down, you will see your interest go up. When the amount goes up, there will be more interest coming in the future.
General statistics are kept via INST1 shares. INST1 is a correlated share on the Btcpop market that represents a .0001 Btc investment in the Instants pool. So the share statistics are very similar to actual pool performance. As you can see APY based on IPO price is 11.28% over the 30 days, 12.44% last 90 days and 9.42% over the last 120 days. **Please note these rates are historic not guarantees for the future as the rate varies depending on use.
If your motivated enough and it matters enough to you, you can view your statement and manually track ROI.