Ledn Bitcoin Mortgage

At some stage in your life, you will need to choose between renting a property or buying one to live in, unless you have it covered by your employment contract or are lucky enough to be gifted one! As with everything else, the choice between renting vs buying requires an assessment of pros and cons. In this article, I’ll be looking at the pros and cons of renting and outright purchases, as well as talking about Ledn, a crypto lending platform that has come up with an innovative solution of using your Bitcoin to get a loan for purchasing a home.

Renting a property

If we had to look at renting, the first benefit that comes to mind is flexibility. You get to pay a contracted amount of money per month in turn for accommodation for as long as you please, after which following a pre-agreed notice period you can easily exit and move on to another place. As such it comes with a relatively low level of financial commitment which is mostly limited to a prepaid deposit equivalent to a few months’ rentals plus the monthly rental payment thereafter. This works well for someone who does not intend to settle down in one place for too long, such as digital nomads or ex-pats on a definite contract. Another benefit of rental is that maintenance works and related costs, which can be quite a headache, are typically borne by the landlord.

On the flip side, an inevitable downside of rental is the need to adjust your style of living to any limitations imposed by the property’s finishing, layout, neighbours and location. Furthermore, from a financial perspective renting a place carries an opportunity cost in terms of foregone financial return otherwise arising from property ownership (as opposed to rental) in the form of value appreciation and if let out, in receivable rent.

Indeed the main distinction between renting and taking a home loan to get your own property is that in the former scenario you will simply be getting a place to live in while in the latter, on top of that you will be benefiting from the related financial return. And this added layer of return requires a higher level of investment, be it in money or time.

Purchasing a property

A property can be purchased for 2 reasons; habitation or renting out. If your purpose of obtaining a home loan is a habitation, you may opt to build a house from scratch and design it according to your personal preference. Alternatively, you may prefer something finished in order to move in there and then. While a finished house will be more expensive, it will save you from the effort, time and money typically required to finish it. On the other hand, when buying a property for rental, you will more likely compromise on personal taste in order to mitigate costs, thus increasing the return on investment.

Either way, investing in property through a home loan often translates into a profitable investment. Put that in the context of high inflation and it becomes even more attractive when the steeper the inflation rate the wider the spread over home loan interest rates. This is currently the case the world over (with no signs of stopping).

Before I dive deeper, I would like to identify the difference between home loans and mortgages given that this is a relevant distinction in the context of this article. In a home loan a borrower receives funds to purchase, build or renovate a property, which property is then kept as collateral against the loan. In the case of a mortgage, a borrower receives funds against a property being provided as collateral, with those funds being made available to the borrower to finance any financial obligation of his choice. Here the value of funding is determined by the market value of the property placed as collateral.

With that said, for the purposes of this article, I will be referring to the home loan described above as a mortgage.

Obtaining a home loan or mortgage

If you are in full-time employment and looking to get a mortgage, the bank will typically ask you to present your last 3 monthly payslips. If on the other hand you are self-employed and earning income through your business, the bank will typically only consider your application if you’ve filed your tax returns for at least 2 years. This is because banks rely on income forecasts (not assets) in ensuring the adequacy of liquid cash flows in view of maintaining the required debt/income ratio.

This poses a problem in that the banking system does not cater to those people who, notwithstanding their sufficient savings to afford a home loan, for varying reasons cannot provide the cited documentation. Perhaps you could have decided to quit full-time employment to unlock more free time or otherwise resigned from your job to set up a business related to your life’s passion. Regardless of your savings, it will be virtually impossible for you to get a mortgage from a bank.

Equally irrelevant to the banking system in providing mortgages are crypto holdings.

Indeed there is a growing number of crypto investors who have accumulated Bitcoin wealth worth millions and yet are unable to qualify for a mortgage in the absence of the required bank documentation. While for a number of years this issue has been very frustrating for these investors, there now seems to be a light at the end of the tunnel.

Enter Bitcoin mortgages

A number of crypto-friendly platforms are capitalizing on this deficiency from the part of traditional banks and have been introducing Bitcoin-backed mortgages which are innovative ways to service this niche. Given Bitcoin is the least volatile of cryptos, it lends itself more suitably as a means of collateral.

Ledn is the first platform to come up with this service. Founded in 2018 through a one-seed round of $3.9m, Ledn is a crypto platform licensed in Canada offering crypto HODlers (Bitcoin holders who do not intend to sell) a number of ways to leverage their Bitcoin (see more here). In other words, Ledn seeks to provide access to key financial products for those who choose to invest outside the mainstream of legacy banks.

One of these innovative products is Ledn Bitcoin mortgages.

What are Ledn Bitcoin mortgages and how do they work?

If you are looking to finance a purchase of property or to finish one you already own, Ledn will provide you with a mortgage equivalent to the value of your Bitcoin holding. Both your Bitcoin and the property will be kept as collateral and a loan is issued equal to 50% of the combined value of both assets. This effectively represents a Loan-to-Value of 50%. No down payment is needed when applying for the mortgage given the presence of joint collateral.

Anybody wishing to take out a Bitcoin mortgage needs to own Bitcoin equivalent to the property they are purchasing (or already own). So say you hold $600k worth of Bitcoin (at the current conversion rate) and you would like to purchase a house worth $600k. Ledn will provide you with a mortgage equivalent to your BTC, that is $600k which you will then invest in your property. Ledn will keep both your BTC and property as joint collateral while you gradually pay off the mortgage.

The Bitcoin mortgage is currently offered with a 2-year term. At the end of the 2 years, the status of the loan can be reassessed and renewed for another term.

Interest is payable on a monthly basis. The interest rate applicable on the loan will be determined subject to market conditions at the time of application, however, it will not be in excess of the 11.5% APY applicable on other Ledn products which I have separately reviewed, namely Bitcoin-backed loans and Ledn B2X loans. This is because the inclusion of real estate as collateral allows for a lower cost of financing.

Bitcoin mortgages will be available to Canada-based customers in Q1 2022 and then extended to US customers starting Q2 2022.

Apply for a Bitcoin mortgage today by signing up to Ledn’s waitlist below:

Concluding thoughts

The Ledn mortgages couldn’t come soon enough. While this opportunity will initially be restricted to Canada and the US, I am looking forward to this and other similar products being rolled out in the rest of the world.

The Bitcoin mortgage lets you access liquidity without needing to sell your assets, thus also avoiding taxable transactions. You no longer need to decide between holding your Bitcoin or owning real estate. And if you already own a home that is not currently financed, the equity in your home can be used as collateral to buy more Bitcoin.

Sign up for a Ledn mortgage

I’ve been following the crypto space closely for more than 5 years now, and this is the first year where I don’t really feel sure in making any predictions for the coming year.

There are several reasons for this, so in this article, I’ll be working through my thoughts in order to attempt to arrive at some sensible conclusions on how to build a crypto portfolio going forward. I strongly believe that this yearly exercise of trying to predict trends on a yearly basis needs to be done by both new investors and others who have been investing in crypto for a long time.

The idea here is not to see how many of these trends you can guess correctly, but to force you to sit down and do some serious research. This keeps your thinking fresh and helps you to take input from several brilliant minds in the space, as well as learn new things. It’s a tough exercise that takes time, but it will help you immeasurably.

Due to the crypto space being so volatile, it is essential to enter positions with strong conviction, although you should always be ready to admit you were wrong and change your mind about things.

Before we start, some quick tips.

Using Safe Exchanges

Whatever you decide to invest in, make sure to use the very best exchanges:

• Coinbase
• Kraken
• Binance (except U.S. citizens)

Read more: The best crypto exchanges and trading apps

Buy cryptos

Passive Crypto Income is Great

The past two years have seen immense growth in the crypto lending services sector. You can now do much more than buy crypto and wait for the price to go up. I would recommend you check out the following platforms that help you put your crypto to work and obtain some very interesting yields:

• BlockFi,
• YouHodler (only non-US residents)
• Ledn

Keep Good Records and Pay Your Taxes

Whatever you do, make sure you keep good records of all your crypto transactions by using a crypto portfolio tracking tool that can also double as a tax preparation tool. You can have a look at my review of CoinTracker, my favorite tracking tool.

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I’m going to start with some important fundamental points that you should base your crypto investments on and then move on to some thoughts on portfolio components.

Don’t be a Maximalist

The first thing that is becoming increasingly evident to me is that being a maximalist about Bitcoin, Ethereum or some other blockchain doesn’t pay off.

Bitcoin maximalists are the noisiest of the bunch, so let’s talk about those first. I totally understand where these people are coming from. Bitcoin has completely changed my life and way of thinking, and I feel like I owe a lot to this revolutionary project and the incredibly talented people that have worked tirelessly to make Bitcoin a success against all odds. I consider myself to be part of this “Bitcoin army”, but I’ve never seen myself as a Bitcoin maximalist. I do think of myself as a freedom maximalist, and Bitcoin has helped me in so many ways on my path to freedom, but we’re far too early in crypto to pass judgments on alternative projects and niches, let alone take the maximalist position that only Bitcoin will survive in the long run.

Over the past two years, we’ve seen the rise of the Ethereum maximalists, mostly as a reaction to the Bitcoin maximalist crowd. Again, I think very highly of Ethereum and its stakeholders, but there is even less scope for being an Ethereum maximalist than there is for being a Bitcoin one. The main reason is that while Ethereum is a very ambitious project, and there is a significant degree of uncertainty in the near future due to its impending shift to proof-of-stake that should happen later this year or early the next. Also, while Bitcoin has carved out a niche where it stands as a dominant player with no real rivals (apart from Ethereum itself), Ethereum is facing some tough competition from newer blockchains that solve two big pain points with Ethereum in its current form: gas fees and throughput.

I wanted to start off with this piece about maximalism because it really defines the rest of my thoughts. Over the past year or so, I’ve seen tremendous growth in applications, acceptance, and technology related to crypto. The crypto landscape has widened considerably, to the point where I’m questioning whether the term “crypto” really applies anymore. For lack of a better descriptor, I’ll continue to use it, but I think we’ll be speaking about this space differently in a couple of years’ time, rather than lumping everything under the crypto terminology.

Invest in Crypto Infrastructure

While protocol tokens have gotten a lot of attention over the past years, I think investors have not paid enough attention to the technological infrastructure that needs to be in place for crypto to really go mainstream.

Take wallets for example. There is a huge need for better solutions to wallets and recovery. Using seed words isn’t really acceptable if we want mass adoption – it’s too complex and prone to user error/scams/theft and catastrophic loss of funds. Even the idea of a wallet and its purpose is a bit antiquated. In Web3, wallets are not only a way of visualizing your token holdings but become your digital identity.

Then we have mining infrastructure. For Bitcoin, it requires a lot of technical knowledge and substantial investment and management in hardware. For most other blockchains, there is a need for innovative staking solutions.

There are many funds investing in infrastructure. For example, the Ten31 fund specializes in Bitcoin Infrastructure companies.

You can also look at Angellist for more accessible opportunities to invest in crypto infrastructure. I do believe that if you’re immersed in the Web3 space you will also come across opportunities to invest in new startups at a very early stage. The best way to encounter these opportunities is to build relationships with other investors and attend many conferences and talk to as many people as you can.

The bottom line on this is that infrastructure companies present a different risk/reward tradeoff compared to the protocol tokens themselves and can even outperform the tokens of the blockchain they’re catering for.

If you have the ability to build products, then you should most definitely give it a shot. It’s no wonder we’re seeing many developers leave their jobs at Google, Facebook and other big tech companies (cushy jobs) to become entrepreneurs in the Web3 space. Building the future is exciting, and I think it will also be very financially rewarding.

Due to my deep dive into NFTs over the past half a year, I’m pretty familiar with the need for products in this space. The nice thing is that many of the NFT-related tools offer lifetime passes in the form of NFTs to their early users. One easy way to get exposure to the potential upside of crypto software products is to buy up these lifetime passes at mint stage or even on the secondary market.

LooksRare is another platform to keep an eye on. As I write this, you can get upwards of 500% APR on staked LOOKS tokens. This is yet another way to invest in crypto infrastructure. As we’ve seen, there are many ways to do it, and you don’t need to be a venture capital fund to gain access.

Don’t Try to Do It Alone

I’ve made a significant shift in the way I invest over the past few months, and I expect this to be a determining factor in the future for me.

Up till now, I’ve been traveling alone on this journey in crypto investment. I’ve read a ton of books, consumed an ungodly amount of podcasts, and kept updated daily through blogs and newsletters. Sure, I’ve also blogged regularly on this website and hosted an investment podcast, which led to me meeting many interesting people, but on a daily basis, it was still just me analyzing everything and taking important decisions.

I know I’m not the only one, as crypto was such a small niche that it was hard to even find someone that understands what you’re talking about, let alone share the interest at the same level of intensity and dedication.

But things have changed completely now. Web3 is all about community and social investing. I’ve embraced this fact and during the past year, I’ve joined a few small communities focused on investing, especially in the crypto space. I also started my own group for my closest investor friends (reach out to me if this is of interest to you). Some can be a firehose of random opportunities, but the best groups can deliver an incredible amount of curated alpha and be a time saver.

I’ve also started hiring in order to build a team rather than trying to take care of everything myself. Even if investing in crypto is not your full-time job, you should think about building a team of people that can smoothen your journey. For example, having an accountant/tax lawyer familiar with all the aspects of crypto is invaluable. You can outsource all the portfolio tracking and tax preparation to them, saving you worry and time.

Solutions like Syndicate and Party Round make it easy to invest as a group. Investment DAOs are another option. Social investing will become a bigger thing, although we still need to see the legal aspects ironed out first.

Building a Crypto Portfolio

While in previous years, I felt I was able to quite easily narrow down my focus to a few blockchains that I was interested in investing in, this year feels different. I will therefore be pointing out a few niches in crypto and pointing out a few interesting plays within each niche. There is now much more nuance than simply buying Bitcoin, Ethereum and a couple of other project tokens and hodling them.

Every investor needs to think about this specific allocation based on his goals and needs. While crypto investments still sit clearly in the “high-risk” portion of a global investment portfolio that includes other asset classes like real estate and stocks, we can also talk about a risk/reward spectrum that’s quite broad within the crypto niche itself.

Store of Value

The use-case of Bitcoin as a store of value has grown significantly over the last year, in my opinion. The ‘digital gold’ narrative has clearly won out against other narratives such as means of payment. This can be seen by the biggest Bitcoin news items in 2021: El Salvador making Bitcoin legal tender, and MicroStrategy doubling down on making Bitcoin its treasury asset. I think we’ll be seeing more countries following El Salvador, while Bitcoin in company treasuries is already a thing. MicroStrategy might be the biggest buyer of Bitcoin in the corporate world, but they certainly aren’t the only ones playing that game.

What this means is that Bitcoin is seen primarily as a hedge against the significant inflation we are experiencing with fiat currencies. Any individual or company that has material wealth currently stored in fiat currency and gold should be looking at switching (at least in part) to Bitcoin as the superior alternative, due to its fundamental properties. See my list of best Bitcoin books if you want to learn more about that.

Hence, I consider Bitcoin to be the best base currency. Rather than keeping fiat currencies like USD and EUR, one can consider holding Bitcoin instead. This is even truer if your currency is not one of the major pairs, as you will probably be experiencing the negative effects of inflation even more significantly.

While it remains very volatile compared to most other assets, I don’t expect to see huge returns from Bitcoin this year (being very optimistic: 3-4x). On the other hand, for me, it is the easiest crypto asset to allocate to, as I’m very convinced of its fundamental properties and chances of long-term survival.

To wrap up this point, if you have a significant portion of your wealth in crypto, then Bitcoin will be an important allocation for you, as it provides the opportunity for long-term safety, protection against inflation, and the possibility of price appreciation that is still way better than most other risky assets like stocks.

If, on the other hand, you’re just starting out with crypto and see this part of your overall portfolio as a moonshot, you’ll probably want to go after cryptos with more growth potential, and perhaps substitute Bitcoin for Ethereum as the bedrock on your crypto portfolio.

Leaving price, risk and growth potential aside, I still recommend that people learn how Bitcoin works and immerse themselves in that ecosystem (books, podcasts, technical knowledge) before moving on to other projects, because that will give you a very good mental framework for looking at the crypto space in general and what the grand goal is all about (revolutionizing the traditional financial system and the power structures built on top of it).

I feel that an often overlooked opportunity is investing in crypto infrastructure. Grant Gilliam explains why Ten31 is investing in Bitcoin Infrastructure companies. The main argument is threefold. First, for any non-100% BTC portfolio, Bitcoin companies present a different risk/reward tradeoff. Second, some Bitcoin companies can outperform Bitcoin. Third, Bitcoin companies are not as volatile as Bitcoin is. The argument makes a lot of sense from a capital allocator perspective and we’ll see how this thesis works in a world of post-modern investing.

My last note on Bitcoin – ETFs will be a game-changer whenever they get approved in the United States. I don’t expect it to happen this year given the number of recent denials by the SEC, but keep an eye out on things to that respect. Once ETFs are available, there will be a big influx of institutional investment as well as inflows from traditional retail investors that don’t feel comfortable buying Bitcoin directly and taking responsibility for the custody of their coins.

In Europe, you can already invest in Bitcoin through your regular stockbroker, but the biggest impact will be felt when it becomes possible in the United States as well.

A Multi-Chain Present and Future

Bitcoin and Ethereum are the product of the first iteration of blockchain development, born in times were blockchains were a totally new concept. The aim in those early days was to prove that this technology can work and can provide value to the world. Thus, developers approached the challenge from a monolithic, one blockchain rules-all mentality. This mentality is what gives rise to the maximalist subculture, but it is increasingly out of fashion.

There is a popular analogy doing the rounds that I think explains the situation particularly well.

The analogy asks us to think of blockchains as nations and cities. Ethereum can be compared to a city, say New York. It’s where everybody wants to be, but as it gets more popular, problems arise. Moving around takes time as there is congestion, and physical space becomes very expensive. Scaling to cater for more users/citizens/businesses is a challenge. New York scaled upwards through the use of skyscrapers. With Ethereum, the skyscrapers are layer 2 solutions. You still, however, have a problem when you need to move from one building to another in New York, and the same goes for Ethereum. As soon as you need to go from layer 2 to layer 1 you hit the bottleneck once again. However, the idea is that there will be less traffic on layer 1, as most of the lower value activity will happen on layer 2.

This brings us to the second part of the solution: application-specific blockchains. You can think of these as other cities or other nations. They can become specialized in other industries, or in the case of blockchains, applications.

The connections between these cities/nations will be done using smart contract hub protocols like Polkadot and Cosmos.

Ethereum is itself becoming modular, with the race for a leading layer 2 scaling solution already well underway. If you have no idea what these layers mean, here’s a short primer. Layer 1 is the term that’s used to describe the underlying main blockchain architecture. Layer 2, on the other hand, is an overlaying network that lies on top of the underlying blockchain. Bitcoin is layer 1, and the Lightning Network is layer 2. Ethereum is also layer 1, while Polygon, Arbitrum and Optimism are layer 2.

It seems likely to me that modular blockchains are the future, so if you agree with me on that, it would make a lot of sense to dig into layer 2 solutions for Ethereum, and possibly allocate to them. If the thesis holds true, they should see bigger growth than Ethereum itself once they become mainstream.

We also need to consider two other big protocols that have been around for a number of years already and maybe primed for some action: Polkadot and Cosmos. They are both protocols that provide an interface for different state machines to communicate with each other. Both protocols are predicated on the thesis that the future will have multiple blockchains that need to interoperate with each other rather than individual blockchains existing in isolation.

Again, I’m a firm believer that this will be part of our blockchain reality in the near future, so I think we should spend a good amount of time digging into these ecosystems and making some bets there.

There are several projects built on Polkadot and others on Cosmos. Developers have built hundreds of blockchain projects on Cosmos, including Binance Chain (BNB), Terra (LUNA), Crypto.com Coin (CRO), Cosmos Hub (ATOM), and more. On the Polkadot front, you can have a look at Polkaproject.com for an indexed collection of projects.

Finally, we need to keep an eye on layer1 competitors to Ethereum. Although “Ethereum rivals” is the most frequently used term for these blockchains, this is not always necessarily the case. Several of these “competitors” are really trying to deliver value for a specific use-case, while Ethereum is a generic protocol meant to be used for anything.

Some protocols to keep an eye on in the layer 1 segment are Solana, Terra, Avalanche, Near, Harmony, Celo and Fantom.

While I think that Ethereum will maintain a very important position in the years to come, I also think there is a strong possibility that other specialised chains also manage to carve out a very important niche, and that the “connector projects” will thus also become very important.

Web3 – NFTs, DAOs, Social Tokens…

I’ve written extensively about NFTs; they’ve really been one of my favorite deep dives that I’ve done in recent years, and I do have a few favorite NFT projects that I’ve doubled down on. If you know what you’re doing, you can see some incredible returns. Just ask the early holders of Cryptopunks, Bored Apes, Cool Cats and Doodles who held their assets right from the start till the latter part of 2021, when valuations soared.

Timelines in Web3 are incredibly short. A long-term NFT investment can be just a year or even less. The downside is that there is a ton of stuff happening and it’s really hard to invest in NFTs in any structured way unless you’re doing it full-time. If you can only dedicate a few hours a week you’ll probably end up gambling rather than investing.

Here’s where having a group of trusted and competent investor friends can really be useful. If they are specialized in NFTs you can save a ton of time and rely on their recommendations, although you should always have your own NFT evaluation checklist to go through before investing. With dozens of projects launching daily and new NFT use-cases being discovered on a monthly basis, being able to limit the number of projects you look at is very valuable.

Due to my web development background and my love of analytics tools, I’m extremely interested in the myriad NFT trading and analytics tools that can be used to gain an edge. As I mentioned earlier in this article, I think being a builder in this space is very lucrative, and if not, you can always by up the lifetime passes for the leading products that you use.

I think it’s still a bit too early for DAOs and social tokens, but I strongly believe that NFTs will have another great year. They are easy for people to understand and we have only scratched the surface of what they can be used for. Moreover, big brands are making their NFT plays while many famous personalities have also bought NFTs, and we all know that people love to copy the rich and famous.

Gaming NFTs are widely expected to be very popular this year, although I’m not sure about my abilities to make the right picks on that front.

A Sensible Portfolio

To put all the above thoughts into practice, here’s what I would think of as a sensible token portfolio for this year. The usual suspects are in there together with some more speculative bets with potentially more upside.

• Bitcoin (BTC)
• Ethereum (ETH)
• Solana (SOL)
• Polkadot (DOT)
• LooksRare (LOOKS)
• Avalanche (AVAX)
• Fantom (FTM)
• Terra (LUNA)
• Polygon (MATIC)
• Near (NEAR)
• Cosmos (ATOM)
• FTX (FTT)
• Helium (HNT)
• Celo (CELO)

Bitcoin and Ethereum would still be my anchors, although I would lean more into Ethereum this year. It’s not really possible to get any yield on Bitcoin unless you trust centralized lending platforms, while Ethereum offers a 5%+ yield just by staking ETH.

Polygon is a good bet if you think that layer 2 will become more important for Ethereum going forward.

Solana and Polkadot are both quite well-consolidated and offer unique properties in the current market, thus they are a good hold. Cosmos could take off this year if the concern about their tokenomics wears off.

LOOKS are a play on the possibility of LooksRare taking a chunk out of OpenSea’s pie. This might be a short-term play, so I’m monitoring the platform on a daily basis, making sure that the risk/reward ratio still makes sense. If LOOKS can maintain a stable price and a high APR while the platform demonstrates steady user growth, this investment is a no-brainer.

Avalanche has already had a great run in 2021, and if the big promises made by its founder materialize, then it will continue to gain market share. He does seem too bullish to my liking though, so I’m investing with a cautious approach. I look forward to trying out the DApps available on Avalanche, however, and getting a better feel of the tech myself.

Fantom, Near and Celo are other bets on the immediate need for cheaper and faster transactions.

FTX is the token of one of the fastest-growing exchanges.

Terra has a nice chance of becoming a leading decentralized stablecoin ecosystem.

Helium is a bet on alternative wireless internet infrastructure.

As for NFTs and other Web3 projects, you can read about my favorite NFT projects, but there are new projects being released every day, so it is really impossible to make any recommendations as I’m sure we’ll see some blockbusters this year that have not been released yet. You should also keep an eye on metaverse tokens and NFTs. At a very basic level you could hold some Decentraland (MANA) and The Sandbox (SAND) tokens. Overall, I would be quite comfortable having 25-35% of my total crypto portfolio in this niche of NFTs, Web3 and Metaverse plays.

Wrapping Up

While in previous years my thoughts were concentrated heavily on where to allocate my money, with only a few real contenders to choose from, as from this year, the bigger question is where should I allocate my time.

I’m personally fascinated by NFTs and the possibilities being unleashed in that space. DAOs and social tokens are also extremely interesting, although I consider them to be a bit too early. If they manage to maintain a steady rate of growth and the legality of DAOs becomes clearer during this year, I can see myself devoting more time to those two niches next year. This year, mostly due to time constraints, I’ll be limiting my financial exposure to those sectors, unless I get some strong recommendations from my group of investors.

While much of the above has been a personal take on the crypto space and my personal strategies for the coming year, I wanted to end the post with some thoughts that could apply to other investors as well. I’ve been observing many participants in the crypto space, and thinking about how I would approach my involvement in crypto depending on where I’m coming from.

Here are a few thoughts/recommendations:

If you’re just starting off in crypto, want to learn what the hype is all about, and are not in it to get rich quick, I recommend you stick with Bitcoin and dedicate most of your time to learning how Bitcoin works. When you’re done with that, maybe think of Ethereum and continue delving down the rabbit hole (layer 1s, DeFi, NFTs, metaverse) in line with your bandwidth and financial position. If you have little interest in the philosophical underpinnings of Bitcoin or the technical fundamentals of crypto tokens, then I think it would also be a good approach to dive straight into NFTs. After all, many consider them the trojan horse that will onboard many millions into crypto.

If you’re a developer/builder, then Ethereum and other layer 1s should probably be your focus this year, together with NFTs and metaverse. These all intermingle and if you can figure out winning combinations and even build something on top of that you’re going to see big returns.

If you want to quit your current job and move into crypto full-time, I’d suggest you look at DAOs and NFTs. That’s where I see the most diverse range of work opportunities. There’s really something for everyone, and if you have good skills and are not happy with your current job, chances are you’re going to be able to make a big leap in job satisfaction by finding work in this space.

One last thing. There are many projects that are not worth your time and money, and the biggest differentiator between those who succeed and those who fail will be where they focussed their energies. It is ok to make mistakes, but you need to realize as quickly as possible, cut your losses and regroup/refocus.

An example of this for me was Cardano. I dedicated some time to it last year, and also invested in it, but at a certain point, I realized that mostly this project is vaporware and that the biggest contributor to its market price is the messianic visions of founder Charles Hoskinson. I find him to be a likable character and his ideas are captivating, but ultimately there is little substance. The devotees of this blockchain and the amount of developer activity do not give me much hope, so I decided to exit that project and focus elsewhere.

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None of the above should be taken as financial advice. I write these kinds of posts mostly to make sense of things and to take a snapshot of my current thoughts so I can look back in the future. I suggest you take the time to read widely and write your own thoughts in a journal; this practice has been one of the most invaluable tools in my investment journey.

Hope you’ve enjoyed this article, and I welcome your thoughts, whether you agree or not with my analysis.

I think that Terra is one of the best buys that should be in everyone’s portfolio.

The market’s demand for stablecoins is unquestionable, and in my opinion, Terra has the best chance of becoming the best stablecoin. Tether has a big headstart but is dogged by many issues, and I really don’t trust the company behind Tether myself.

Buy LUNA tokens on Kraken

I hope to be able to expand on the topic of Terra myself and why I invested, but in the meantime, here are a few good resources that I’ve been digging into.

Why Stablecoins matter

Terra Ecosystem

• Anchor – Earn interest
• Mirror – Wrapped stock trading 24/7
• Tarraswap – Biggest dex on Terra
• Mars – Money market
• Astroport – Another Terra dex
• Orion – Cross-chain stablecoins bank
• Levana – Leveraged trading DEX
• Angel – Anchor charitable donations
• Nexus – Automated LTV to maximize returns on collateral in Anchor
• Stader – Liquid staking and automated harvesting
• Alice – Debit card built on UST
• Kujira Orca – Buy liquidated assets from Anchor at a discount.
• ApeBoard – A dashboard for viewing your crypto across various chains including Terra

Further Reading

• Terra website
• Terra Twitter
• Terra – An Emerging Ecosystem

Earn interest on your Bitcoin

Cryptocurrencies are exponentially increasing in popularity. Since the epic rise of Bitcoin in 2017, cryptocurrencies caught the public eye. Serious investors began adding cryptocurrencies to their portfolios and exploring how to capitalise on their crypto investments.

From an insignificant start, crypto growth has been outstanding. There are now over 5,000 listed cryptocurrencies. In 2020, the combined cryptocurrencies had a market capitalisation of 193 billion US dollars. But, by the end of January 2021, the market capitalisation for cryptocurrencies was over 1 trillion US dollars.

Over the past few years, there’s been a growing number of online crypto lending providers where you can make the most of your cryptocurrencies. Ledn is one example of a digital financial platform allowing you to maximise your Bitcoin holdings by expanding how you can use Bitcoin for profits.

If you are holding Bitcoin, you may want to know how to get the most out of it. In the past, the only way to profit from Bitcoin was to sell it at a higher price than you bought it.

With Ledn, you can now earn interest on your Bitcoin and even access a loan against your holdings. You can also create a passive income stream with your Bitcoin. And you can increase your portfolio by buying more crypto assets.

Adam Reeds and Mauricio Di Bartolomeo founded Ledn in August 2018. They set out to build a world-class financial product platform with industry-leading rates to help people save on digital assets.

Their headquarters are in Toronto, Canada. They provide a global service through Bitcoin and digital assets.

In this review, I provide an in-depth analysis of the financial products available with Ledn. I will discuss the process of setting up an account with the Ledn platform so that you can start making passive income from your Bitcoin holdings or borrowing against the Bitcoin you currently own.

Remember that I also interviewed Ledn’s co-founder Mauricio on my podcast Mastermind.fm, so do check out that episode if you want to learn more about Ledn.

Ledn Products

Ledn has three flagship products –

1. Bitcoin and USDC savings accounts
2. Bitcoin-backed dollar loans
3. Bitcoin balance doubling service (B2X)

I want to guide you through each of these carefully as it is very important to understand what each product consists of and where it can be most useful. We need to keep in mind that these are relatively new products in the finance space, and therefore utmost diligence is required before you use them.

I am personally very bullish on such services, but as with anything crypto, the first investment you should do is in your own education. That will prevent you from making bad decisions.

Without further ado, let’s dive in.

Bitcoin and USDC Savings Accounts

Interest with traditional banks for fiat currency is hardly worth considering. But, if you have Bitcoin holdings, Ledn offers high-interest savings accounts, which they can do through their collaboration with Genesis.

Genesis Capital offers high-level service to elite groups of institutions, offering the ability to buy large quantities of digital currencies such as Bitcoin and USDC.

In 2019, Genesis processed over $3.1 billion in digital asset loans and has the best processing standards for lending and reporting. Ledn savings accounts have such high interest because they lend Bitcoin to Genesis.

Interest on Bitcoin and USDC saving accounts is paid monthly by Ledn with compound interest.

The potential interest on a Ledn Bitcoin savings account could be as high as 6.25% APY (annual percentage yield) paid in Bitcoin.

For USDC savings accounts, the potential interest is 9.25% APY and paid in USDC.

Note that these rates can change at any point due to market conditions.

Ledn complies with high standards of consumer protection and privacy and, as such, is incorporated under Canadian Federal Laws. Ledn provides a purpose-built, highly-qualified platform for digital assets storage and has undoubtedly one of the most comprehensive insurance policies for the crypto industry.

Note: the Canadian Deposit Insurance Corporation doesn’t cover USDC savings accounts. Nor are USDC savings accounts covered by any other deposit protection policies.

The Benefits of Bitcoin and USDC Savings Accounts

1. There is no minimum balance requirement, and your investment is not locked in, meaning you can withdraw your funds at any time. The beauty of this is the availability to all investors, not just those with significant capital investment.
2. Your savings aren’t affected by the traditional money market issues, such as market crashes etc.
3. You earn compound interest, meaning your savings account grows exponentially. Your compound interest payout is monthly.

Should you wish to send Bitcoin or USDC to another Ledn account, the transaction is free.

For the USDC savings account, there is a $10 USDC fee for withdrawals. There are no fees to use the Bitcoin savings account. When you withdraw, the transaction fee on the Bitcoin blockchain deducts automatically, and this is equivalent to the mining fee. Ledn does not charge any extra fees on withdrawals apart from the mining fee that applies to any BTC transaction. There is also a minimum withdrawal limit of 0.0005 BTC or $10 USDC.

Ledn savings accounts are available worldwide with the exception of a list of countries and a few US states. Refer to the Q&A section under the ‘Save’ menu for more details.

Bitcoin-Backed Dollar Loans

Bitcoin-backed loans facilitate liquidity for investors who are hodling (buy and hold) their assets. It’s an efficient and fast service to use your Bitcoin as collateral and receive dollars without selling your Bitcoin.

Loan terms are twelve months, but you can apply for an extension of the loan when the original loan term ends. The maximum LTV (maximum loan-to-value) ratio is 50%. So if you had $10,000 of Bitcoin as collateral for the loan, you could borrow up to $5,000.

On the Ledn website, you can access a Bitcoin-backed loan calculator. The minimum loan is $500.

You cannot pay off your Bitcoin-backed loan by instalments. When you pay the loan, you are required to pay the total amount owing. There are no penalties for early repayment.

There are multiple benefits to Bitcoin backed loans –

1. Your Bitcoin still belongs to you, and, as there is no sale, there are no taxable transactions. Most Bitcoin investors wish to hold long-term but want to access cash and build up their Bitcoin holdings. Once you pay the loan, your Bitcoin returns to you.
2. Your Bitcoin is safe. Ledn uses BitGo, the world’s first qualified, purpose-built custodian for storing digital assets. BitGo has one of the most comprehensive industry insurance policies and has recently been acquired by Galaxy Digital in the industry’s first $1bn+ acquisition.
3. Approval for Bitcoin-backed loans is fast, with funds available within 24 hours of approval from Ledn. There is no mandate for payment and no necessity for monthly installments. You can pay off your loan any time – with dollars or Bitcoin – without penalties.

How to Apply for a Bitcoin Backed Loan

It’s surprisingly simple to apply for a Bitcoin-backed loan. As you’d expect, you have to share your personal information to prove your identity. Ledn request the following four documents –

1. A copy of a government-issued document such as a driving licence or passport
2. An image of you holding the above
3. Proof of address, such as a recent utility bill
4. Your bank details

Subject to your documents being in order, the approval process is a matter of a few minutes.

What Happens if the Price of Bitcoin Drops?

Like all cryptocurrencies, Bitcoin is volatile. For instance, the Bitcoin price was $64k in May 2021 but promptly dropped to below $30k in less than a week. A similar drop occurred more recently, from $68k in November 2021 to $35k in January 2022.

Bitcoin is sensitive to media coverage by large investors.

Recently, the price of Bitcoin dropped 10% overnight, following a tweet by Elon Musk (owner of Tesla and a prominent investor of Bitcoin) regarding the energy-intensive resources of Bitcoin mining. He is concerned about the damage to the environment and consequently has removed Bitcoin payment options for vehicles until Bitcoin becomes less energy-dependant.

If a significant price drop like this occurs, Ledn asks you to add more collateral to your wallet or make an appropriate payment on the principal loan. If you fail to fulfil these requirements, Ledn has the right to sell part of your Bitcoin to meet the loan to value ratio levels. It’s similar to a margin call.

Therefore, before you consider a Bitcoin-backed loan, you must assess the risk for this potential scenario and have backup funds available if necessary.

If Bitcoin prices rise, you get to keep the gain in value, and the amount you owe for the loan does not change.

B2X: Bitcoin Balance Doubling Service

If you want to make the most from your Bitcoin, B2X is a Ledn service that allows you to increase your Bitcoin holdings through a Ledn Bitcoin-backed loan purchase and an equal purchase of Bitcoin.

The concept is simple. You apply for a dollar loan and then purchase Bitcoin equal to the value of your current holdings. The result is, you have twice as much Bitcoin and a Bitcoin-backed loan.

Who would Benefit from B2X?

If you believe in the value of Bitcoin increasing over the coming years, B2X doubles your exposure, potentially doubling your Bitcoin gains. If you already have a Ledn Bitcoin savings account, you can use funds from that. The process takes less than a minute.

You can check the B2X calculator on Ledn’s website. There doesn’t appear to be a minimum requirement for transfer, although a Bitcoin-backed loan requires a minimum of $500 of Bitcoin.

What are the Risks of B2X?

As you know, Bitcoin is volatile. If the price rises, your gains increase, doubling your Bitcoin. But, if the price of Bitcoin falls, you’re exposed to double the risk.

Should the latter happen, the procedure is the same as a regular Bitcoin-backed loan. You are required to add funds or pay off some of the principal of the loan. And, Ledn has the right to sell some of your Bitcoin holdings if you fail to take either of the above actions.

B2X is for the investor who is not risk-averse and has the capital to back up a shortfall in the price of Bitcoin if needed.

A few countries have B2X service-related restrictions. These details may be subject to change, but the current (February 2022) list is below.

• Iran
• Libya
• North Korea
• Syria
• United States
• Africa
• Uruguay

The product is thus not available in those countries at the moment.

How to Register for B2X and Repayment Process

It’s easy to access B2X by simply opening an account with Ledn and verifying your user profile.

You can deposit any amount you wish into your Bitcoin savings account to use for your B2X loan. After making your deposit, go to the B2X products page to make your selections

Repayment of your B2X loan is hassle-free because you can repay the loan at any time you wish without penalties, but Ledn payment requirements are to pay the loan in full with one payment. In addition, interest accrues daily, so the quicker you pay off the B2X loan, the less interest you pay.

Proof-of-Reserves Standards

Before investing your Bitcoin in platforms like Ledn, the first question you should ask is if your investment will be safe. Ledn is the first to launch the Proof-of-Reserves standards initiated at the beginning of 2021.

Proof-of-Reserves allows Ledn to prove how much Bitcoin they could spend without exposing themselves to the risks of moving funds and without the need to generate a live transaction.

In short, Proof of Reserves means that Ledn is financially viable, with enough Bitcoin to support their platform.

Ledn assures their clients of Proof of Reserves Standards with their statement, “Ledn is the only digital asset lending company to have performed a Proof-of-Reserves attestation by an independent top-25 public accountant, Armanino LLP. As such, Ledn clients can take comfort that their bitcoin and USDC are being properly and accurately accounted for – to the satoshi, and to the cent, at all times.”

To check whether your Bitcoin assets are in the Proof of Reserves, log in to your Ledn account and look for the report’s details at the bottom of the page, where you will find a hashed ID and a link to Armanino LLP’s TrustExplorer website.

Enter your hashed ID to confirm your balance at the time of the Proof of Reserves attestation.

If you had assets on Ledn on 31^st January 2022, you were automatically included in the Proof of Reserves attestation.

Ledn plans to conduct independent Proof of Reserves attestations every six months. Ledn clients will receive timely notifications.

Ledn Customer Service

Customer service feedback and support is essential as a measurement of what you might expect as a client of Ledn.

I’m a happy user myself, and all my support interactions were pleasant and timely. To be fair, I haven’t needed much help as I’m used to such products. So let’s take a look at the next best thing to gauge customer service levels – TrustPilot.

Ledn opened a TrustPilot account in October 2020 and since then received 433 reviews.

Overall, the reviews for Ledn’s service and support is good. They currently have a TrustPilot score of 4.5-star compared to a score of 4-star in early 2021. Happy customers are delighted with their service and customer response. Notably, if a difficulty occurs, Ledn is quick to solve it, even if it’s a user error.

For instance, Ledn quickly resolved an account holder issue when a client couldn’t access his account. The client reported the efficiency and helpfulness of Ledn support staff.

Upon scanning through the negative reviews it seems that lately there have been a number of instances where clients claimed they have not received their referral bonus. I am not sure what happened in this case but I did notice that Ledn’s customer support followed up a number of these claims. In this regard I suggest that prior to giving a referral you double check on the terms of the referral program directly with Ledn.

Other customers who posted one-star reviews failed to grasp how Ledn works, such as thinking they were borrowing Bitcoin with a Bitcoin-backed loan.  As a result, they were upset when they received dollars but admitted they hadn’t clarified the details before requesting the loan. This information is fully transparent to readers on the Ledn website. The latter negative reviews are unfair as they are due to user ineptitude rather than Ledn’s service.

I would recommend that Ledn’s customer service team keep tabs on their TrustPilot and respond to reviewers, especially those who had a perceived negative experience. This would enable other visitors to understand better what went wrong and be able to judge for themselves whether there is any valid concern with Ledn’s offering or not.

Is Ledn Secure?

Ledn is a security-centric platform, and they take the privacy of their clients seriously. They have two-factor login authentication and for specific actions on the platform when logged in.

The website has AES-256 website encryption. Ledn addresses all the layers that could possibly fall prey to security threats.

Ledn does not want to monetize client data. They offer a high level of client protection, so your data is not stored on Ledn local servers. Instead, your data is stored in private networks with strong security protocols.

What index does Ledn Use for Bitcoin Prices?

Ledn uses the  Coindesk Bitcoin price index to determine loan-to-value ratios for Ledn loans. Therefore, before investing your Bitcoin with Ledn, you can check the current Bitcoin price with Coindesk.

How do I Open a Ledn Account?

Opening an account with Ledn is easy.

To register for a Ledn account, click on join at the top of the page and enter your first and last name, email address and phone number. You then have immediate access to your account.

From that point, once you choose the desired service, you will need to provide proof of identity with the documents detailed on how to apply for a Bitcoin-backed loan earlier in the article. In addition, you may also have to provide your date of birth.

Ledn Alternatives

Ledn is one of the best options for a Bitcoin-specific loan or savings account. They are committed to Bitcoin and do not offer other crypto offerings. While this can be a negative point to some, I appreciate the fact that they are not going after the shiny (but less secure) crypto flavors of the day and focusing on Bitcoin. This allows them to focus all their energies on securing one cryptocurrency, which makes sense to me.

For other cryptocurrencies, my favourite crypto lending platforms are YouHodler and BlockFi.

Similarly to Ledn, you can earn interest on your crypto holdings with a savings account with YouHodler or BlockFi, or use your crypto as collateral for a loan. Thus, if you are HODLing other cryptocurrencies, YouHodler and BlockFi are also excellent platforms for making the most of your crypto holdings and generating a passive income.

BlockFi is a more conservative platform than YouHodler when it comes to cryptos and services offered, and so I believe they are more of a direct competitor with Ledn. Check out my head-to-head review of the two services where I determine which one is best for what.

I believe that all top platforms end up specialising in certain products or services, and therefore it’s important to understand that it’s not a winner-takes-all situation but rather a case of choosing the right platform for your needs. I personally use both BlockFi and Ledn, for example. One straightforward reason for using Ledn over BlockFi that I could mention is that rates on Ledn for Bitcoin deposits are significantly higher than BlockFi’s if you are depositing bigger sums of BTC. So if you only hold Bitcoin and have significant sums, it pays to use Ledn instead of BlockFi.

Of course, you could also play the hedging game and decide to split your holdings between 2 or 3 platforms to protect against the unlikely case of one of these platforms having problems in the future.

Ledn Review – The Verdict?

Ledn is a robust and secure platform where you can maximise your Bitcoin holdings, earn more Bitcoin or secure a loan against your Bitcoin without selling it.

With crypto industry experts predicting that Bitcoin could one day hit $500,000 or more, a platform such as Ledn is a superb way to build your Bitcoin holdings from earning interest or doubling up your Bitcoin with the B2X.

Ledn’s fees are low, but their security is high, and they have insured custody from industry leader BitGo and the backing of Genesis Capital.

Ledn is one of the leading Bitcoin lending services available today. Regardless, when investing your assets with any third-party services, you should always perform due diligence and proceed with caution.

You can access Ledn services via the website or by downloading the Ledn app from the Google Play store or Apple’s App Store.

Whilst I have described every aspect of Ledn in this guide, always check the current details on the Ledn website.

Open a Ledn account

Please note that the above information is not providing advice on tax, investment, or financial services. I offer the above information without consideration for risk tolerance and a specific investor’s financial circumstances.

Trading or investing in Bitcoin may not be suitable for all investors. It does involve risk and the possibility of a loss of capital.