Bitmain · How To Store Your Bitcoins

invest bitcoins

Can Investors Buy Bitcoin In An IRA?

Can Investors Buy Bitcoin In An IRA?

Technology has changed the way that we do almost everything in our lives including the way we prepare for and manage our IRAs (Individual Retirement Accounts). As a result, retirees no longer have to schedule an appointment with their financial advisor, drive to their office and go over their retirement accounts. They are now able to do this while they are at home.

The one thing that has remained mainly unchanged are the different types of IRAs and the investments that can be used to fund them. Since the introduction of IRAs in 1974, the primary types of funding have been:

  • Bonds
  • Stocks
  • Valuable physical assets
  • CDs (certificates of deposit)

However, as with other aspects of our world, the way and type of investment funding is also slowly beginning to change. As each passes, the world is becoming more connected and more digital. It only makes sense that retirement investments and digital currency must also merge to meet the needs of the changing landscape.

Bitcoin

This is a form of digital currency that has an existence on a public ledger, also known as a blockchain. This ledger utilizes cryptography to create transactions that are secure, and this results in cryptocurrency.

This currency is not overseen by a central authority such as a government agency or a bank. This means that the ledger is only updated through the use of computers that use specialized core software in a network of peers. The public ledger is also ‘regulated’ through the consensus.

The process of consensus is often referred to as mining. The computers that are in the peer to peer network compete with each other to find solutions for the math problems that are provided by the Bitcoin protocol. This occurs every 10 minutes.

The computer that finds the answer to the problem then ‘holds on’ to the public ledger for 10 minutes. During this time, the ledger is updated. The computer also maintains possession of any new Bitcoins that are released during that timeframe.

The Bitcoin protocol is considered open-source. This means that it is not owned by a company, a government agency, a bank or an individual. In fact, there are software developers all around the world who work together to improve this protocol.

So, now that you have a better understanding of what Bitcoin is, let’s discuss Bitcoin and IRAs.

Benefits Of Using Bitcoin For Investment

The supply on this cryptocurrency is capped. This means that at any given time, there will never be any more than 21 million Bitcoin in circulation. In fact, the number of Bitcoin that comes into circulation decreases every four years. This is typically the time when the supply declines by half.

This also means that the last Bitcoin will be mined in 2140. These are just some of the reasons why many investors have coined this time in history as a digital gold rush.

The diminishing of the number of Bitcoin in circulation combined with the worldwide adoption of the cryptocurrency has led to a global environment where the value for the digital currency will continue to increase.

Bitcoin is also an investment that does not require you to have a custodian. Investors are able to maintain control of their holdings, and they are also protected from fraud or mismanagement by a third party.

Bitcoins exist outside of regular assets such as bonds, savings, and stock. When an economic crisis begins, the cryptocurrency will not decrease in value like other assets. It has been known to increase in value during the time of economic downturn and adversity.

Does The IRS Consider Bitcoin To Be A Retirement Asset?

Bitcoin is relatively new, and as a result, many regulators have not made a final decision on how they plan to deal with the cryptocurrency. However, the United States is one of the few countries that has made a decision on how it can be used for investing and retirement plans.

The Internal Revenue Service (IRS) decided that Bitcoin would be treated as a commodity. This means that the agency would classify it in the same manner as it does stocks and bonds. It will be treated as property, and investors will need a custodian so they are in compliance with the regulations.

A Self-Directed Bitcoin IRA

Custodians for traditional IRAs only accept assets that are considered mainstream such as mutual funds, CDs, stocks, etc. However, if you want to include Bitcoin as part of your retirement investment, you will need an SDIRA. A self-directed IRA will give you the opportunity to invest in cryptocurrency if you choose to do so.

When you are using this type of IRA retirement account, you have the option of either hold and buying Bitcoins, or you can choose to purchase funds that will allow you to hold them.

With the first choice, you will be able to purchase Bitcoins and sell them based on the movement of the prices and the projected earnings that are based on any volatility. However, you would need to be knowledgeable in forex trading or asset trading in order to be successful.

If you decide to invest in funds where Bitcoins are held, you will be able to leave the decision of buying and selling to trusted financial experts.

Investing In Bitcoin IRA

One of the best ways to invest is to use a combination of options that are available to you. This allows you to have a more diverse investment portfolio, and it will not be dependent on one type of asset class. In other words, the more asset classes that you are invested in, the more you will be able to spread your potential risks.

It is important that if you are setting up the Bitcoin IRA on your own, it must be compliant with IRS regulations. This means that one of the things that you will need to do is create an LLC for the Bitcoins. A trusted financial advisor can also help you with this process.

There is a lot of potential in a Bitcoin IRA and it also allows you to change up your portfolio.

Bitcoin is a stable digital currency that can be included in a self-directed IRA. It is an affordable and quick cryptocurrency that can be efficiently used to add a new asset class to your portfolio.

Follow "Bitcoin Money News" on Twitter & Facebook to be kept up-to-date with our latest posts! Use our contact form to get in touch with Bitcoin Money News team.
More like this: bitcoincryptocurrencyinvestment

Add Your Comment