BTCJam is an interesting idea on how to crowd source loans and peer to peer lending. While it is not without its problems it does have some promise of disrupting the traditional banking and borrowing system.
I have been a member of BTCJam since May 2015 and my initial impressions of the service were really quite positive. I was looking for a way to see if I could increase my amount of Bitcoin without having to get into the expensive area of Bitcoin mining. Signing up and getting started using the service is really quite easy and if you are just interested in being a lender the need to confirm your accounts if pretty low. I did not invest a great deal of Bitcoin, in the event the loans I invested in were defaulted on.
As a lender it is really easy to look for loans to invest in. Just click the invest button and a listing of available loans are available to browse. BTCJam has a BTCJma Score of the borrowers from A to D depending on how risky the borrower and the loan is. While this seems like it might help you stay away from risky investments, in my experience it really means nothing. I had some C level borrowers pay promptly and occasionally early while some A level borrowers would default and you would never hear from them again. While the BTCJam Score might give you some peace of mind it means little in my humble opinion.
The biggest lesson on BTCJam is to diversify your investments. You will have people default on the loans and the more Bitcoin you have spread out in all types of investments the better your return will be. When I started BTCJam did not have the autoinvest feature that they have now. That feature should help investors make the most of their investments by spreading it out in small amounts across a number of loans. The only downside is the initial investment amount you need to start an autoinvest plan. You need to start with 1 BTC on auto invest, and that was more than I have ever planned on investing on BTCJam. If you have no problem putting up to 1 BTC into BTCJam autoinvest might be perfect for you.
The biggest downside of BTCJam is the default rate on loans. Yes you can diversify your investments into small amounts and spread it out but you will have many borrowers, even ones that seemed stable and paid off previous loans, simply disappear. You might get arbitration awards but enforcing those awards costs more and for lots of small amounts is simply not worth the trouble.
Overall in the year I have been an investor on BTCJam I have a 6.58% net annualized return and if I had perhaps deposited enough to take advantage of the autoinvest feature it might be higher. I have only participated as an investor on BTCJam so if you have experience as a borrower feel free to leave a review and let us know what it is like from the other side.