My BTCJam Investment Just Went Bust


BTCJam is a Bitcoin peer to peer lending platform. About 6 months ago I reviewed BTCJam and concluded it to be  a solid option for people who are willing to take calculated risks on their Bitcoins for higher rewards.

I concluded my review with 3 different investments I’ve chosen in order to see how Bitcoins can be leveraged long term. These were my 3 chosen investments:

All of these investments had A+ ratings, positive feedbacks for the borrowers and most importantly their issuers repaid their debts 100% of the time.

So I took 0.9BTC (at the time worth around $200) and decided to invest them in these 3 loans. The loans were all long term, meaning it would take about a year to get back the money. But hey, where can you get a 20% APR (Annual Percentage Rate) these days?

So two of my investments are still pretty solid and are paying on time. However one of the investments seems to have defaulted. This investment was supposed to make the last payout around February. You can read the borrowers “final words” on the comment section”:

BTCJam response

Hey guys. I apologize but due to a personal emergency I’m going to be late with this months payment by a week or two. I will keep everyone updated and get the payment in as soon as possible.

Ever since then, the guy and the listing has gone silent. All you can see are people ranting about the payment and desperately trying to get their money back. This has been going on for 3 months now…

If you look at the borrower’s profile you’ll see he has another loan that hasn’t been repaid – the total of his unpaid debt comes up to 34.1BTC which is roughly 15.5K USD.

On May 4th I got the following email from BTCJam:


Dear Ofir Beigel

This notice serves to inform you that [borrower’s name] is delinquent on the Additional working capital for new crypto-based business — loan #3 loan in which you invested 0.3 Bits/BTC (“Loan”). In order to enforce the obligations due under this Loan, the Loan will be sent to arbitration 14 days from the date of this notice.

To avoid arbitration you can still negotiate repayment of the Loan by contacting the Borrower through the comments page for the Loan (“Website”). However, under no circumstances, should you attempt collection outside the Website as you run the risk of personal legal liability. Additionally, attempting to collect from the Borrower outside the Website is a direct violation of BTCjam’s Terms of Use. BTCjam cannot be held liable for any violations of the Terms of Use.

In the event that the Loan is sent to arbitration, the Borrower shall have the opportunity to request a hearing. If the Borrower declines a hearing, an award will be issued to you that can be enforced in a court against the Borrower.

So basically this listing is going to arbitration. If the borrower declines the hearing we will be issues an award which I can then use to claim back my 0.3BTC (or actually 0.19BTC) that is left in this listing.

The way I see, there’s no way I’m getting back my $80 (the money remaining in BTC at today’s exchange rate). Even if I will be issues this award I don’t have any interest to invest any more time or money in chasing this.

The lesson to be learned here is very very simple. High yield = high risk, and in this case I didn’t manage to escape from the risk in the investment. So what are my options?

  1. Don’t invest in BTCJam if you don’t feel you have the time and experience to choose a diversified portfolio.
  2. Use the “auto-invest” feature in BTCJam which is supposed to diversify your investments for you.

If you’re still looking to invest in BTCJam I think this second option would be best for you since it should give you a more diversified portfolio than what you’ll create on your own. However since I haven’t tested it out I can’t say for sure.

Why BTCJam just lost some of its credibility

While I know BTCJam doesn’t have full responsibility for this loan defaulting I still think the way its system is built really causes confusion. For example, I tried to write some negative feedback about the guy who defaulted however the system didn’t let me write anything. So this guy can just continue to pick up loans without people giving their opinion about him. I’m not sure why I wasn’t able to write negative feedback and whether this is a bug or a feature, but if I were BTCJam I’d be much more proactive about getting users to write feedback about their loans.

The Second issue I have with BTCJam is that they seem to not care that much that so many people (730 to be exact) just lost their money. Other than that email about arbitration which was sent automatically I haven’t received any communications from them. As a startup I’d expect some more guidance to their early adopters about this kind of situation, as this sort of thing will make you lose users forever. I’ve even sent an email to the company about this 3 days ago and haven’t received any response.

UPDATE: I’ve just received an email from BTCJam stating the following:

After 90 days of a borrower missing a payment, the borrower and investors go through the process of arbitration. Arbitration is a legally binding contract in which the investors of the defaulted loan receive all of the borrower’s personal information via an arbitration award. The investors may then use this information to pursue legal action if desired. The borrower technically has 14 days from the date their case is escalated to arbitration to file a dispute. If no dispute is filed after that period, then yourself and the rest of the investors will receive the arbitration award with the borrower’s information automatically via email.

Nothing new under the sun here really..

So all I can do now is wait a few more days and see what happens with this arbitration, although I’m clearly not getting my hopes up. In the meantime, unless you like to gamble, I suggest staying away from BTCJam as an investment vehicle. If you’ve read my previous review you know that my first investment also had a hard time with being repaid.

If you’ve had any other experience with the company I’d love to hear it in the comment section below.

Ofir Beigel

Owner at 99 Coins ltd.
Blogger and owner of 99Bitcoins. I've been dealing with Bitcoin since the beginning of 2013 and it taught me a lesson in finance that I couldn't get anywhere else on the planet. I'm not a techie, I don't understand "Hashes" and "Protocols", I designed this website with people like myself in mind. My expertise is online marketing and I've dedicated a large portion of 99Bitcoins to Bitcoin marketing.


  1. Hi i wanted to share my experience with BTC Scam so that other people will not get burned. It is not a good idea at all. I used auto-invest as well as invested in all the A-rated loans manually. I invested over a long period of time, up until USA residents were banned.

    I have several issues.

    1) the fact that USA residents cannot sell notes. this is not fair at all, since it was part of my strategy. Lets say a listing was A+ rated and yielding 5%. I would sell the note at a 2 or 3% profit immediately instead of waiting a full year for the pay out. When they stopped letting me sell notes I lost my shirt.

    2) my wife is a Mexican citizen, has a Mexican drivers licence, a Mexican passport and we travel to mexico on a regular basis. I emailed BTC Scam and asked them to transfer my account to my wife and they would not.

    3) BTC Jam obviously does not verify identities. It is probably really easy to use a fake ID due to all the scammers. These people are not honest people who just happened to stop paying due to hardship. their intent the entire time was to run off with the money. BTC Scam has no in-house collections. Its really really bad, i want to sue them rather than the scammers. If got in trouble for facilitating prostitutes, the BTC Jam should face legal action for facilitating theft.

    here are my investment results, copied and pasted from BTC Scam. as you can see i lost over $5,000 in principle, which if i had just used a buy and hold strategy, my coins would have more than trippled in value

    In Funding (0) $ 0.00
    Current Receivables (162) $ 204.24
    Fully Paid (104) $ 7,337.00
    Late 1-30 (83) $ 241.25
    Late 31-120 (116) $ 1,172.88
    Default (135) $ 4,105.19

    • I just wanted to clarify, i wrote the above comment. BTCJam actually did end up letting me transfer the notes to my wife, so i have to give them credit for that, maybe the owner of the website can modify or delete my previous comment

  2. Do not invest in BTCJam.
    It is infestated by scammers.
    Admins are not doing enough to ban dubious profiles.

    Avoid it. I lost some BTCs in it.

  3. on


    I have been a client of several PBTC based 2P lending clubs and after more than than one year, I lost money due to scammers. I would say you can’t be a winner on the long term with those sites. just my 2 cents.

  4. Well,
    My Credit Rating was calculated as D+ when tried to receive loans. As a result I stopped using it, and went ahead with the few funds I had available. The funny thing is that I achieved 5000% ROI…
    Bottom line.
    I am better investor than they are Credit Rating Calculators…

  5. l invested on btcjam before americans were banned — I thought it was an initially ok implementation of a very interesting concept. I actually disliked how it all developed over the last 2 years. I stopped initiating loans (and almost exclusively buying notes) as I felt that A) their policy of setting standard interest rates was way off B) with the inclusion of contracts hedged to certain exchange rates (without allowing note sellers to sell prices based on changes in this rate), they effectively introduced some much more profitable situations.

    Btcjam often quoted stats with a relative basis like this in their numbers for ‘auto-invest’. I wouldn’t use the feature because of this (my opinion is that their team is not incredibly financially savvy) . They also never compare the returns you receive to the strategy of just holding your bitcoin (bitcoin relative to the usd appreciated nearly 100% from feb 2015 to feb 2016) — so if you earned 15% interest investing in btc based loans you still lost — if you were going to hold the bitcoin as an alternative (I wasn’t as I expected the price to continue to fall).

    After all investments are finished paying I’ll have likely earned 14-20% relative to the dollars I invested. Most of the money I made was on the few days when the price of btc/usd rate dropped dramatically (5%+) and I would hold dollars and buy notes based in btc/usd (this made them effectively 5%+ cheaper than the sellers initially listed them for). It was sort of like the line suddenly moving in your favor in sports betting. This strategy would have profited whether btc rose in value relative to dollar ( and ever more so if it fell).

  6. Randall Newton on

    I was a BTCjam lender for two years, until residents of the US were shut out recently. I avoided this kind of loss by making many microloans, rarely more than 0.02 BTC. I still have failed loans, and my rate of return suffers every time a loan defaults, but the damage overall is snaller.

  7. Hello mate i invest in BTCJam for some months now and i always get PAID but after reading this i will not invest again.I Invest some yesterday.

    Is there any alternative?

  8. They are asking US investors “to withdraw any remaining Bitcoin from your account, at your earliest convenience”. I just did, without problem. (They will continue to service the loans you are already in, but won’t let you lend anymore.) Too bad. I think their service is useful to the Bitcoin space. I guess they will carry on without US borrowers or investors…

  9. High reward always means high risk. So whats the problem? This is typically of a high risk investment. You know what they say if its too good to be true its too good to me true. If this was such a solid option, you and me wouldnt be the ones making investments in this

  10. I can offer some insight from the other side of the equation – as a borrower. I started a company in the call center business in 2002 which grew too fast, without any financial backing, and failed after some mismanagement of funds and resources. Entirely my fault, due to ignorance and honest mistakes; it being my first go-around in that business. I had to go through bankruptcy to manage IRS debt that persisted after that failed endeavor; I’m in a chapter 13 bankruptcy payment plan now. I’m starting “fresh” in the same business, except with substantial lingering monthly debt payments and a chapter 13 that is completely inhibiting my ability to get any sort of working capital, save through Bitcoin lending which is very limited.

    My first experience as a Bitcoin borrower was through BTJam. I took out one small reputation loan, paid it on time and then wasn’t able to apply for a new loan because of the above-mentioned regulations which went into effect. So I looked further, and have taken out loans with BitBond and Loanbase. I just repaid my first BitBond reputation loan, and hours ago created a listing for the largest loan that system will allow (only $3K ). I completed a second loan in Loanbase and am about half-way done repaying it; but it, too, is too small to do much with (only $1,100).

    As a “been there, done that” borrower I can state unequivocally that there are solid investments through these Bitcoin crowdfunding platforms. I wish it were easier to separate the wheat from the chaff. I’m quite frustrated by my inability to get adequate working capital.

  11. I had the same experience loaning $USD with Prosper years ago and never did that again. Too risky. If these people were credit worthy they could get a personal loan or a small business loan at a bank with a much better interest rate. So what you have with these crowd funded loans is a bunch of people with bad credit trying to get your money.

  12. Ofir,

    1.- I don’t know why the e-mail addresses are being shared with 3rd party services since I’ve gotten e-mails from other parties using the e-mail I use in this site. That’s why I stopped visiting and commenting in this site.

    2.- I couldn’t stop from commenting on this since I’ve experience on BTCJam and I can comment regarding the “bug” BTCJam has. In order for us to leave a bad rating or negative review we should (in theory) invest at least 0.02 BTC. In theory (as fas as I understand you invested 0.3 on each project) and it should let you bad rate the user. I can prove this 0.02 btc since I wanted to bad rate a user and it won’t let me because of that.

    3.- I agree with MURL regarding the auto-invest. Is a good option but maybe not the best one. Its a tricky one since it invests in things that you don’t want sometimes. But I believe is the best way to go. I’ve been spending some months so far and its growing slow, but growing. I think I definitely build a rig and start mining instead of investing haha.

    Thanks for this article, it helps us a lot.

    • Ofir Beigel on

      Hey Luis,thanks for your feedback. Regarding the email issue you’ve mentioned. I can personally guarantee you that I have not shared any of the email addresses from my mailing list with anyone. If you can provide me with the names of the parties you’ve gotten emails from I’d be more than willing to look into this, as I hate spam as much as you do.

      • Hi Ofir,

        Sure, I can take note and actually re-send them to your e-mail address so you can analyze them. I will do it as soon as I receive more. Actually I’ve deleted one just a few minutes ago but they will come more.

        Best regards,

  13. I know all about them i don’t trust it either they don;t take US invert er any more i have a few investments there now of which i think three are default a few late on payments and every time i try to sell off the investment it gives me some ass excuse why i can’t even after i summit what it asked me to .

  14. Do not invest through BTCJam. If you are a U.S. resident, you cannot apply for a loan now. You shouldn’t invest in something if you can’t take out a loan from it as well. Now BTCJam is able to have people from around the world “invest” in other people, who have no interest in paying anythimg back. There is no contract enforcement in highly corrupt countries like Brazil.

    Full disclosure: I invested in quite a few “people” through BTCJam for quite a few years. I stopped doing investments in Brazil due to very high defaults. I then did the auto-invest, minus Brazil (and its currency). Some of them are paying out, but once those are done, I am out.

    BTCJam can only really go after U.S. citizens for defaults, but other than that, it is a slow payout gambling site.

  15. The thing with BTCJam is you have to make many very small investments to minimize your risk. That’s the best way to use it. Your strategy of investing 0.3 bitcoin into one investment is extremely risky. Take that 0.9 BTC and put it into 10-20, or even 50-100 investments. My average investment is 0.067 BTC. Use their autoinvest feature to take care of the leg work.

    You also have to be willing to lose some money. That’s why I invest tiny amounts, I’m not going to cry if one person runs off with $2. Of course if you make 100 investments 20-30 people might be running off with money so it does add up. But in the end using that strategy over a year and a half my initial investment has grown, despite the scammers that just take the money and run. For me the losses are part of it and I’m fine with that if my money is net growing.

    • Ofir Beigel on

      I agree, I just didn’t have the time to find 20 worthy investments. That’s why the auto-invest feature may be a good solution.

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