With More Risks in Trading, Bitcoin Investment Funds Rise

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With the decrease in the profitability of cryptocurrency mining, and trading being as risky as ever, people are looking for new ways to invest their Bitcoins. This has created a demand for companies such as CoinsCrypt, which offer to take the risks from the users onto themselves, and still deliver a profit.

Large companies take over mining

Ever since the launch of the Bitcoin network in early 2009, mining has been its defining characteristic. Calculating hashes on their CPUs at first, and then moving on to more specialized ASIC equipment, miners would ensure the propagation of fast and secure payments through the network, and receive Bitcoin rewards in return.

People quickly figured out how to turn the process into a viable business, which lead to the appearance of big players. They would invest in professional rigs, boasting a level of computational power unavailable to the simple PCs of amateur miners.

Even larger players still have began setting up vast mining farms in regions of the world with the lowest electricity costs, benefitting from economies of scale.

Now, mining is becoming less accessible to regular people. It is only profitable if you’re willing to invest very substantial amounts of money in highly specialized equipment, and even then, it is still risky.

Risky Bitcoin trading

On the other hand, we have Bitcoin trading, which appeared along with mining. Just as the miners were generating new coins, they had to trade them for fiat currencies in order to recoup their equipment investments, and operational costs.

Bitcoin trading, just like the business of trading any other asset, was a risky affair from the start; it was only made worse by the lack of regulation of cryptocurrency exchanges, which was evidenced by the infamous collapse of Mt. Gox, when the money of an entire userbase went missing without any real hope of compensation.

A new paradigm

Among all these stories, a regular user may be wondering just how and where are they supposed to invest their bitcoins in relatively small amounts, and without the risk of losing everything due to one sharp price change.

It didn’t take long for a new type of companies to start appearing, which aspired to fill the demand for secure, small-scale Bitcoin investing.

These are Bitcoin investment funds or trusts, which consolidate users’ resources and use them to profit from all kinds of operations: mining, trading, and others. Such companies include Grayscale, Bitcoin Capital, and GABI.

Another prominent example is CoinsCrypt, which was founded in May 2016 in the UK. It is involved in professional mining of the most popular cryptocurrencies and allows every user to invest in their operations.

The company went to great lengths in order to ensure the security of the investment process, creating a website which is resistant to DDoS attacks, and scanning it for malware and other threats on a daily basis.

The deposits are lifelong, can start at as low as 0.01 BTC, and have an advertised interest rate of up to 5% daily, accrued in ~0.2% hourly increments. Users can withdraw their funds at any moment for a 5% commission, or for free, after the first week of a deposit.

Companies such as these, which provide an opportunity for small-scale Bitcoin investors to increase their capital, while taking care of most associated risks, may be a new trend in the cryptocurrency industry.

Bitcoin is still young, and its ecosystem is evolving rapidly, so the coming years will show if this new approach if viable, or a new, another paradigm of investing will take the lead.