Bitcoin IRA: An Exciting Retirement Investment Opportunity
One of the best ways to reap the benefits that bitcoin investments can offer is to hold them in an individual retirement account (IRA). When managed within a self-directed IRA, bitcoin IRAs enable you to invest in a special assets that most conventional retirement funds cannot include.
Why You Should Consider Bitcoin IRA Investments
If you are interested in long-term bitcoin investments, you might want to consider purchasing bitcoin with a self-directed IRA. In self-directed IRAs, you choose, invest in and manage each asset in your account. No brokers, no financial advisors—just you. The assets in these individual retirement accounts are based on Bitcoin blockchain technology and a vigorous open source software community that is committed to keeping the Bitcoin network efficient and bitcoin value strong.
Although you are in charge, when you work with BitIRA to purchase bitcoin for your IRA, you create a new IRA account with the Equity Trust Company or Preferred Trust Company, two certified self-directed IRA custodians. One of these companies will provide all the administrative duties for your account, including making any required financial disclosures to the government.
Several financial principles can help you decide whether an individual retirement account based on bitcoin has a place in your retirement portfolio.
Owning a bitcoin-based IRA provides some significant financial benefits, which include:·
- Tax-deferred returns. If you set up a self-directed IRA and follow IRS guidelines, you can maximize your retirement investments by taking advantage of tax-deferred returns. This means that you can buy and sell bitcoin or hold it as a long-term investment. Taxes on profits will wait until you take money out of your retirement fund, provided you’ve followed all the rules and regulations.
- Protection against losses in stock value. By investing in bitcoin, you’re diversifying beyond conventional IRA assets, which mostly follow trends in the value of the stock market. Cryptocurrency investing is different. It’s a brand-new asset class, so be sure that you understand the pros and cons of using bitcoin for this purpose.
View this video to learn why some investors are attracted to Bitcoin IRAs:
Long-Term Investment Value
The potential for short-term financial benefits is just part of a bitcoin IRA’s value. A ruling by the IRS in 2014 also opened the door to make bitcoin IRAs an attractive long-term investment. The U.S. tax code permits a wide variety of assets within IRA accounts, including bitcoin investments. Under current code, you can choose from a range of:
- IRA classifications. A bitcoin-based IRA can be set up with any of the classifications that you are used to, such as Traditional, Roth, SEP and SIMPLE IRA accounts.
- Cryptocurrencies. These include BTC (Bitcoin), ETH (Ethereum), LTC (Litecoin), XRP (Ripple) and others. Learn about BitIRA offerings.
- Conventional IRA assets such as individual stocks and mutual funds.
- Alternative assets such as precious metals, real estate (commercial, residential, or raw land) and more.
What Investors Like About Bitcoin
There are many differences between bitcoin and other non-currency investments. These are what make bitcoin attractive to investors.
Bitcoin Is Decentralized
This means that there is no need for a middleman to verify or vouch for transactions. This approach completely bypasses most laws regarding fund transfers, ensures that you won’t have to worry about chargebacks, and makes it impossible for someone to charge you without your permission.
Value Isn’t Controlled by Third-Party Organizations
The only parties who control bitcoin value are bitcoin buyers and sellers. It can’t be controlled by any government; it also means that its value is not tied to the rise and fall of any government’s legal tender. This makes bitcoin an attractive alternative to gold in countries experiencing social and financial unrest.
Investing in cryptocurrencies to achieve short-term objectives is not for the faint-hearted. Rapid changes in Bitcoin value and technology are common. But, changing trends continue to make bitcoin the most popular digital currency, especially with US millennials.
Longer-term market and government behavior can affect bitcoin’s role as a currency and an asset. Check out these recent financial and market trends before you invest.
Growing Popularity as an Investment
First developed as a currency, bitcoin now captures investor interest as an asset to be kept long term and added to investment portfolios, such as an IRA.
Investors continue to learn about the potential of blockchain technology and are paying more attention to old-fashioned financial fundamentals. The result: growing interest in bitcoin as an investment.
How might these trends affect investor decision making? Investors usually choose the asset with the best chance to build and keep long-term value. These days, more people are choosing bitcoin as a sort of gold, not as a way to pay for an extremely expensive cup of coffee.
Bitcoin Technology Is Getting an Upgrade
In June 2018, a beta of the Lightning Network went public. This upgrade of Bitcoin technology is designed to make the Bitcoin payment network much more efficient. So far, standards have been adopted, and there is a report of an actual purchase of physical goods using Lightning.
These tests prove that developers are improving Bitcoin technology. Much of bitcoin value depends on its network performance, which should keep transfers fast and transfer fees low. That makes speed and efficiency of Bitcoin transactions an important part bitcoin attractiveness as a retirement account asset.
Members of the Bitcoin open source community are making these changes to keep bitcoin competitive with newer cryptocurrencies such as Ripple and Ethereum. The success of these upgrade projects will affect Bitcoin network capabilities and the attractiveness of bitcoin as an investment.
Update. Recent Bitcoin milestones include:
- Jan 2019: Bitcoin celebrates the 10th anniversary of the mining of the first Bitcoin block on its blockchain. Since 2009, BTC has dramatically risen in value despite periods of dips and plateaus.
- Feb 2019: Samsung announced that its new Galaxy S10 cell phone will have a build-in cryptocurrency wallet, another small step in the direction of mainstream adoption.
- Apr 2019: An educational campaign for the Lightning Network, called the Lightning Torch, successfully completed a relay of transactions that included such influencers as Reid Hoffman of LinkedIn and Jack Dorsey of Twitter.
- May 2020: Bitcoin’s most recent halving occurred on May 11, 2020.
- Oct 2020: PayPal announced its big move into crypto. U.S. account holders will be able to buy and sell Bitcoin, Bitcoin Cash, Ethereum and Litecoin, as well as store them in an e-wallet.
- Oct 2020: Square buys $50 million in bitcoin and says cryptocurrency aligns with their company’s purpose.
Add the Granddaddy of Digital Currencies to Your IRA
Our bitcoin-based, Self-Directed IRA is just one of our full-service solutions and a great way to participate in the exciting cryptocurrency market. You can find information about setting up a cold storage, cryptocurrency-based retirement account here.
If you have questions about cryptocurrencies or qualifying for IRA-based tax deferrals, contact us today at (800) 299-1567 to get started.