Bitfinex Review

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How to: Collect Passive Income with Bitfinex

The team here at Crypto Crooks have begun to use another Bitcoin exchange as part of our overall strategy. We’re using a few exchanges to trade with, one of them being Bitfinex. Built into the Bitfinex exchange is the ability to trade Bitcoins on margin and lend out Bitcoins and money in exchange for daily interest payments. You’re able to do this in either bitcoins or dollars. The interest rates on Bitcoins are less than the rates you receive with dollars. Our Bitfinex review will show you how to collect passive income.


Bifinex isn’t just an Exchange

Although Bitfinex has many features other bitcoin exchanges don’t, it can work just like any other. One may place an offer to buy or sell bitcoins. When an order is matched against another in the order book, it is executed. Bitfinex even allows you to bet against the price (go short), as well as collect interest for lending your bitcoins out. It is one of the only exchanges that allows you to short Bitcoin.

Bitfinex Margin trading

Their margin trading feature is unique in the Bitcoin world. Basically, it allows you to borrow funds from lenders to trade bitcoins. If you make a profit, you get the profit and pay the depositor interests. If you make a loss, you reimburse the depositors the whole borrowed amount plus interest.

You must be wondering, first of all, what exactly is Margin Trading? In a nutshell, margin trading is basically borrowing money from the broker (trading site) for trading. Bitfinex currently offers a leverage of 1:1 up to 2.5:1, meaning that you can borrow 1 up to 2.5 Bitcoin for every 1 Bitcoin deposited. For beginner traders, I suggest changing your leverage right after you set up you account to 1:1. Keep in mind that by borrowing funds, you’ll be subjected to interest charges (10-13%) which is automatically factored in when you close your position. If you’re inexperienced, please listen to my advice, or you could get burnt badly (although 2.5 leverage is pretty decent). For example, if you use 2.5:1 leverage, and short sell your whole account from $800, but price goes up by $800/2.5=$320 to $1120, you’re going to lose ALL your Bitcoin in your account (even lower than that actually, because of a platform’s stop-out level and margin call). Of course, this can be easily managed with a good trade size & risk management strategy.  If you head to their ‘how it works’ page, you’ll be able to find a good explanation of each of the 3 different functions available.

Margin Funding: Provide Liquidity for Margin Traders

Their margin funding allows one to lend bitcoin to traders in exchange for a return. It’s simple to do, just specify the amount and term, then . Bitfinex allows you, using your deposit wallets, to lend bitcoins and/or dollars to traders. You can put offers with your chosen terms which rates, for how long, and how much.

Margin funding gathered our attention for allowing us to profit from little work. This allowed us to collect bitcoin with little risk as Bitfinex guaranteed the terms of the offer.


The main risk in keeping your coins an exchange,  any exchange is with the actual platform itself. It may go bust overnight ala Mt. Gox and your entire holdings contained on it will evaporate overnight. The major exchanges seemingly offer the liquidity to facilitate Bitcoin transactions. There is always the chance the trading activity underlying it is smoke and mirrors. These sites claim to be audited and while they very well may be, these audits can miss things. The cryptocurrency space is still in its infancy, with that so is a long-established order that ensures stability. Understand the risk you run when holding money on new emerging platforms. They may evaporate just as quickly as they emerged. Not to say that Bitfinex is or is not on the level but keep this in mind if and when you leave your money with these sites. Proceed with caution in the new emerging unregulated space that is crypto currency.

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