Investment Types and Volatility
Bitcoin prices can be volatile, but BTCjam has taken steps to help you combat this volatility. There are two types of loans offered on BTCjam: Bitcoin loans and Linked loans.
Bitcoin Loans are denominated in bitcoin. This means if a borrower takes out a 3 bitcoin loan, they are responsible for returning 3 bitcoins plus interest regardless of the value of bitcoin. As an investor, please take into consideration that the price of Bitcoin can change rapidly and these price fluctuations can have an effect on the fiat value of bitcoin being returned.
Linked Loans are linked to the market price of Bitcoin at the time the loan is activated. As an example, the borrower is lent Bitcoin with a value at the time of the loan of $100 USD. They must now repay $100 USD worth of Bitcoin (plus interest) when their loan is due, regardless of Bitcoin’s price. This eliminates bitcoin volatility, and protects both borrowers and investors from any unexpected price fluctuations.
You may see a number of Bitcoin loans for Bitcoin mining operations (because the miners are paid in Bitcoin), but generally borrowers prefer linked loans as they provide reduced price volatility.
It’s always your choice which loans to invest in at BTCjam and Bitcoin volatility is a factor worth considering. Thanks for investing with BTCjam!