Category Archives: Lending

How to Automatically Lend your Bitcoin

Having put your Bitcoin on a trading exchange like Bitfinex we can set it to lend out the Bitcoin for interest. Rates of interest vary widely between exchanges and coins, and over time. However, they can be surprisingly generous – for example you can currently lend Bitcoin on Bitfinex at an annual rate of up to 40%.

Cryptocurrency lending, however, is typically over short durations – for example a non-compound annual rate of 36.5% really means a rate of 0.1% per day for a certain number of days. In fact crypto loans are typically quoted as being for a minimum of 2 days and in my experience nearly always last exactly 2 days.

That could make things very inconvenient if every 2 days you had to start another loan manually. However, there are bots that you can do this for you – I always use CoinLend and I highly recommend it. Not only does it work really well – it’s an online bot with nothing to install – but it’s completely free!

Start by going to CoinLend.org and creating a new account by selecting Setup Bot. Enter your email address and a password and selecting Register. Then login.

Coinlend Home Page (Image: BIUK)
Coinlend Home Page (Image: BIUK)

You will be taken to the Bots screen where you can set up bots for three different exchanges: Poloniex, Bitfinex and Quoine. Bitfinex seems to consistently give the best interest rates so that’s the one we’ll use.

Coinlend Bot screen (Image: BIUK)
Coinlend Bot screen (Image: BIUK)

Go to your Bitfinex account and login. Then select the Manage Account (a head-and-shoulders icon) in the top right of the screen, then API. An Application Program Interface (API) is a software call that allows a third party program – our bot – to communicate with the Bitfinex exchange directly without us needing to be involved.

Bitfinex API screen (Image: BIUK)
Bitfinex API screen (Image: BIUK)

Click on Create New Key. Make sure the following permissions are ticked and no others:

  • Read: Account History, Margin Funding and Wallets.
  • Write: Margin Funding.

Make doubly sure that Write permission is off for Withdraw so that this API cannot be used (by Coinlend or some other party) to withdraw your funds. Enter a name at Label Your API Key such as Coinlend lending key. Select Generate API Key. Check your email and confirm creation of the new key.

Your new API Key, and a secret key to access it, will now be shown in Bitfinex – copy both of these somewhere safe to record them.

Bitfinex API screen with keys (Image: BIUK)
Bitfinex API screen with keys (Image: BIUK)

Copy both keys into the Bitfinex Bot section of the Coinlend Bots tab and click Save. If you’ve done this correctly you will get a confirmation message, it will display Bitfinex credentials valid, and the button will go green and say On.

Coinlend Bot screen - Bitfinex On (Image: BIUK)
Coinlend Bot screen – Bitfinex On (Image: BIUK)

Coinlend will generally start working very quickly, almost immediately. To see your loans underway just switch to the Loans tab and wait a minute or two – here it’s showing our first loan has gone out, and it’s at 16.62% (the display defaults to annual, compounded interest):

Coinlend Loans screen (Image: BIUK)
Coinlend Loans screen (Image: BIUK)

You can also confirm your loan status by going to Bitfinex and selecting Funding -> Bitcoin. Your active loans will be shown under the PROVIDED pane – click the drop-down icon to open. The interest rate shown in Bitfinex is the daily one – so here it’s 0.04214 per day.

Bitfinex Funding screen (Image: BIUK)
Bitfinex Funding screen (Image: BIUK)

If you want the interest rate shown in Coinlend to be the same then you can change this on the Settings tab – the options are Daily, Yearly, Compounded.

Tip: If you think you might want quick access to your Bitcoin then in Coinlend in the Bots/Bitfinex Bot tab under the On/Off button select Settings -> BTCExtended and switch on the option for Always lend at the minimum duration of 2 days, and then Save Settings. This setting doesn’t always ‘stick’ so check it by going back into Settings and repeat if necessary – once it has set successfully the Extended button will show orange.

And that’s it done – the Coinlend bot will keep lending out your Bitcoin until you set the Bitfinex bot to Off on the Bots tab. Your Bitcoin stake will grow, and all for free.

How to Put Your Bitcoin on a Trading Exchange

Once you’ve got some Bitcoin what can you do to make it grow? The obvious answer is to put it on a Trading Exchange. Then you have the options of Trading, Margin Trading and Lending. These will be covered in more detail later; here we’ll look at the process of getting your Bitcoin onto an exchange.

The five biggest exchanges by trading volume are Bitfinex, Bithumb, Bittrex, GDAX and Poloniex, in that order. Here we’ll use Bitfinex.

Bitfinex Home Page (Image: BIUK)
Bitfinex Home Page (Image: BIUK)

Go to Bitfinex.com and click on Sign Up. Enter your chosen Username and Email address. Enter a strong password, e.g. from Passwords Generator. Set the Timezone (e.g. to (GMT+00:00) London). This will create you a new account.

Bitfinex Welcome Screen (Image: BIUK)
Bitfinex Welcome Screen (Image: BIUK)

Find the email you’ll be sent and verify your email address. Login at Bitfinex.com. You will start in the Trading screen, likely showing a Bitcoin – Dollar chart (‘BTC/USD’).

Bitfinex Trading View - Dark theme (Image: BIUK)
Bitfinex Trading View – Dark theme (Image: BIUK)

By default it will be dark. If you prefer a lighter colour scheme go to the top right user icon and select Interface, then Theme and choose Light.

Bitfinex Trading View - Light theme (Image: BIUK)
Bitfinex Trading View – Light theme (Image: BIUK)

To transfer some Bitcoin from your Electrum wallet into Bitfinex select Deposit -> Bitcoin. You may then get a warning about there being a fee on small deposits (less than $1000) that you need to acknowledge.

On the New Deposit screen select Bitcoin. You may then get advice to set up two-factor authentication (e.g. using your mobile phone to confirm withdrawals) – it’s a good idea but for simplicity we will ignore it at this point. You will see options for Exchange Wallet (for trading), Margin Wallet (for trading with leverage) and Funding Wallet (for lending). Under Funding Wallet select Click to generate address. This will create you a Bitcoin address where you can send funds; click on the Copy to Clipboard icon next to it.

Bitfinex Deposit Screen (Image: BIUK)
Bitfinex Deposit Screen (Image: BIUK)

Sending from an Electrum Wallet

Log into your Electrum Wallet and select the Send tab; paste in the Bitfinex address. Add an optional Description (e.g. Transfer to Bitfinex). Enter the amount of Bitcoin to transfer (or press Max if you intend all of it).

Electrum Send tab (Image: BIUK)
Electrum Send tab (Image: BIUK)

If you hover over the Fee slider you can see what the mining fee will be – moving the slider to the right will speed up the transaction and increase the fee – this can usually be left at the default. Press Send, re-enter your password to confirm. You will see a brief message about signing and then Payment Sent.

Select the History tab and you will see the transaction there. Once it has been confirmed (which may take from minutes to hours depending on how busy the network is) it will show here with a green tick.

In Bitfinex select Deposit and once confirmed the deposit transaction will also show here. Initially it will be marked Unconfirmed.

Bitfinex Deposit screen - transaction unconfirmed (Image: BIUK)
Bitfinex Deposit screen – transaction unconfirmed (Image: BIUK)

Once confirmed it will show as Completed, and the new balance will also show under Funding in the Balances area of the sidebar.

Bitfinex Deposit screen - transaction confirmed (Image: BIUK)
Bitfinex Deposit screen – transaction confirmed (Image: BIUK)

Your Bitcoin is now on the Bitfinex exchange ready for trading or lending.