Hello people of the Bitcoin forum.
I have come up with a strategy for "leasing" BTC which I will be testing over the next several weeks. I believe I could potentially market a fund to follow this strategy. Below I will explain the details of the strategy (in terms of earning potential and risks, I can't give the strategy itself away, that would be no fun
). All I ask is that you tell me if you'd be at all interested.
OVERVIEW
Bitlease's business plan is somewhat akin to that of a bullion bank. An asset, in this case BTC, is leased to speculators through various means. At the end of the lease period, the BTC is returned, along with a USD payment. Bitlease's exposure to individual leasee' credit risk is negligible. Bitlease then purchases BTC with the USD we received. This BTC is then passed onto the user in the form of interest.
PLAN BASICS
Bitlease offers investors the possibility to deposit their BTC over 1 or more 60 day periods. During these 60 day periods each depositor will earn a variable interest rate. The interest rate cannot be determined until the end of the period, but is projected to be approximately 5 to 10 percent each 60 day period. The factors affecting the variable interest rate are discussed below. When users elect to withdraw from the fund, a 1% fee will be deducted on the amount withdrawn, not to exceed the interest of the prior 60 day period, to cover various fees imposed upon us.
WITHDRAW/DEPOSIT WITHIN A 60 DAY PERIOD
Users can also deposit within a 60 day lease period; however, the interest they earn may be significantly less for that 60 day period due to additional costs imposed upon us.
Users can also usually withdraw before the end of a 60 day period, however no interest will be credited to them for that 60 day period. This is not a guaranteed feature of the plan, but should generally be available.
FACTORS AFFECTING THE VARIABLE INTEREST RATE
- A decreasing BTC/USD exchange rate over the course of the 60 period will cause interest payments to be greater. This is because, in general, leasees pay according to the BTC/USD exchange rate at the beginning of the period, but we can only exchange the USD for BTC at the end of the period as that is when we receive their lease payment. The inverse is also true.
- A large deviation between the BTC/USD exchange rates at various exchangers over the course of the 60 day period will cause interest payments to be lower.
- In general, higher interest rates at Bitfinex will cause the interest payments over the course of the 60 day period to be greater.
RISKS
You cannot hold BITLEASE or its managers or owners liable for any loss for any reason.
BITLEASE may be heavily exposed to the credit risk of any of the following entities:
BITFINEX
BITSTAMP
BTC-E
BTC.SX
Also, if stop loss orders fail to be executed for whatever reason, or if they were to be executed in a very thin market with horrendous slippage, depositor's principal could be impacted.
Thanks for any input. If any particular feature of the plan is confusing or disturbs you, I'd be interested to know specifics. But, if your simply wondering why I don't provide further details, it's for the same reason people generally don't release the source code for their proprietary software
Thanks for reading.
