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Why Bitcoin as an Investment?
Not just Bitcoin but specifically a bitcoin IRA. Let the numbers do all the talking here, if you bought bitcoin 6 years ago you would have seen an increase in excess of 457400%. Probably the greatest increase ever? but it still has potential. If society was to progress then a digital currency would absolutely be the logical way forward. Therefore if bitcoin was used more widely in retail shops etc… then its value could be almost limitless.
Why a tax efficient IRA when bitcoin is un-taxable?
Many wonder why put Bitcoin in any investment portfolio where it then becomes an asset that can be taxed rather than holding it in their own bitcoin wallet. The reason is simple. Currently Bitcoin can only be used in a limited number of places. If you wanted to turn your bitcoin into the more widely accepted dollar then by law you would have to declare whatever you sell. It is now in your interest to get it converted into real cash the most efficient way possible, which is likely to be an IRA account.
What is Crypto-Currency and Bitcoin
Bitcoin was the first ever crpyto-currency also known as digital currency. Bitcoin first arose in late 2008. The mechanics behind Bitcoin and any other digital currency give them a number of advantages over traditional currency. These advantages include a set limited supply meaning they are essentially inflation proof, as well as being de-centralized from all governments, meaning no corruption of the currency itself. Further to this there are many technical advantages to these currencies, from transaction speed of payment to offering a certain level of autonomy. Its basic design is to bring how we pay for goods into the 21st century by solving all the issues with traditional currencies. Bitcoin was created by an unknown figure who goes by the pseudonym Satoshi Nakamoto. Since then thousands of digital-currencies have been created, some by random computer software developers, and others by more official organisations.
Crypto-Currency works by a series of highly encrypted blocks known as the block chain. Each block-chain is essentially sealed with an algorithm which requires computing power to unlock. Every-time a blocks encryption is cracked a reward of the currency is unlocked to the person or persons who used their computing power to unlock it. The reward is a set amount, for Bitcoin it is 12.5 bitcoin per block. This is known as mining and before exchanges came about this was the only way to get bitcoin.
It is essential to understand that this blockchain is absolutely secure and no one has access to it other than hashing out the encryption with computing power. The blockchain is an online entity shared by anyone with a digital wallet and is open to anyone to try and mine. However as each block is cracked it gets harder each time. In the beginning (2008/2009) these could be solved with a standard laptop, but now in 2017/2018 it requires computers the size of whole rooms or a collection of thousands of home miners with high end graphic cards to unlock a single block.
With the exception of developers who work on things such as transaction logistics and upgrades along with security and other operational needs, crypto currencies are not controlled by anyone. No one can manipulate or govern them in any way, no one has any power over them, they are what they are.
Why Are Smart Investors Including Bitcoin in Their portfolios in 2017
Bitcoin in an investment portfolio may seem like a bold step to take but their are now solid financial, technological and logistical reasons as to why serious investors are including bitcoin in their investment portfolios. To make it easier for you to decide see our 6 main reasons why we think it has become so popular. Ultimately the longevity of any asset is its use in real world application, and this is of-course one of our points. If it is not adopted by companies, people, institutions then it could never work. The last straw to snap will most likely be governments accepting it as legal tender, but when that happens the value will soar as banks begin to trade and hoard bigger than anyone else can at the moment. In addition to this the fact that no one government will ever control the currency means no manipulation or policy can ever effect the way in which the currency works.
Completely decentralized and free from central bank manipulation and government policies.
The supply is limited. Only 21 million bitcoin can ever be mined.
More and more people and businesses are using Bitcoin.
Just like gold, Bitcoin’s value does not correlate with the dollar and tends to move opposite to stocks & bonds.
Approved by IRS as a form of currency
In comparison to gold, bitcoin could be significantly undervalued at the moment.
Bitcoins Future Potential
The potential growth of bitcoin is still at a stage where it could leap 10 fold if not more. Despite the price being over $6000 in October 2017, having jumped back from a low point below $400. Some estimate its potential value reaching 1 million US dollars. This may sound far-fetched however it is based on solid theories and calculations. Currently it is still only used by technological innovators, the relatively small crypto-currency enthusiast market, and dare I say it, some criminal underground organisations.
If we now consider that Bitcoin is recognised as a taxable asset by the IRS, this allows for investment through legal channels. This has just blown open a whole new market “the investor market” and more specifically retirement funds such as an IRA account.
Whereas previously only the tech savvy would have the means of purchasing these little nuggets of digital gold now anyone can access them through an IRA custodian broker. It is now as easy as saying to your account manager you want bitcoin in your portfolio.
With the investor market on board it is a matter of time before we see more retailers accepting the currency, not that many online shops already accept bitcon, just check out this list. As you can see big retailers such as Newegg and Expedia are among the ranks to join this revolution.
Now consider that Bitcoin has reached $6000 and and has yet to really grasp the retail or investor markets, but has done so within online crypto-currency communities and tech savvy start-up businesses. What if bitcoin became a recognisable global currency? It would not take long for every shop, bank, broker, corporation and government to accept bitcoin as legal tender. This would put bitcoins value way beyond a million per coin.
How to setup Bitcoin IRA
To keep it simple you can just use the basic steps provided by our friends at regal assets. Fill out any form on this website (top of the page). A representative will contact you and help you set-up your account. Then fund your account and then your virtual wallet will be loaded and put into cold storage. These are obviously the basic steps, how you go about funding your account can vary depending on your options. Like any other IRA account you have options such as rolling over your 401K or any other retirement account you already hold. Alternatively you can just fund the account yourself.
From your perspective it should be no different from investing in anything else as your custodian will handle everything. You could always invest in bitcoin directly and then deal with all the wallet downloads and blockchains yourself. Then purchase bitcoin through exchanges (some of which can be shady) which then require you to deal with different sellers world-wide on a trust basis. Or go the legit route and stick with an IRS regulated custodian.
Bitcoin IRA vs Personal Bitcoin Investment
Sure it is an option to invest in bitcoin yourself, downloading the wallet and updating your wallet, then creating back-ups with .dat files and storing in several locations. This is the process needed if you want to hold your own bitcoin, which does has benefits. The main benefit of having your own private investment with bitcoin is bitcoin is non-taxable currency, however if you wanted to sell it for your own currency then you will be taxed maximum tax rates for the value of your asset.
By putting bitcoin into an IRA when it is time to sell, your tax rate will be far lower. The exact rate tax will depend on both the amount you have and the type of IRA account you hold be it Roth IRA or Traditional IRA.
There is also the possibility that if you hold your own private bitcoin wallet you can still purchase goods through a growing number of retailers. You can even buy holidays and some websites even sell property through bitcoin, meaning you can purchase a house with tax free bitcoin. However this is still early years for bitcoin, although it is sure to rise in value, and knowing you can always turn back to the US dollar is always the wiser choice.
Bitcoin IRA Q&A
Is Bitcoin an official currency?
No, Bitcoin is not currently recognised as legal tender for the USA or any other country. It is however recognised by the IRS as of 2014 an “asset” or “property” for the purposes of taxation. This means you can include this in an IRA account. Selling your assets upon retrieval of your retirement fund will be down to you and/or a broker that can assist you.
What IRA custodian should I use?
The two main custodians currently seem to be Bitcoin IRA and Regal Wallet. Regal Wallet is just Regal Assets who are already one of, if not the biggest supplier of Gold IRA so have a safer history knowing they are already well established. Bitcoin IRA are arguably more bespoke, therefore may have greater knowledge. The best thing to do is contact us or for further information. We currently work with Regal for the security and reliability of the business. There are of-course more custodians and will continue to be many more popping up, however until we hear any further details or news we would not recommend any outside of these two.
Is it possible to buy Bitcoins with a Roth IRA account?
Yes you can, as long as you have a self-directed IRA you can buy any IRS approved assets. This is also true with a traditional IRA as long as it is self-directed. There are loads of companies that offer self-directed IRAs. To contact one just feel in any contact form on this site. It is also possible to purchase and add them yourself, however that does take a bit of extra work. Your other options are to rollover any other kind of retirement account such as a 401K or you can just start a new IRA.
Where will my Bitcoin be stored?
Typically Bitcoin is stored on a virtual wallet. This wallet can be saved on any hardware device or any cloud service, however due to historic issues with wallets being hacked and stolen from it is much safer to keep in cold storage. What this means is a form of external hard-drive which is then physically stored in a highly secure location (bank vault etc…). Your IRA custodian will store your Bitcoin in cold storage protected from fire and disaster along with being fully insured in event of disaster and theft. In addition to this the storage will be offshore in a private and safer jurisdiction.
Why should I invest in Bitcoin?
We are not saying you should invest all your funds into Bitcoin. As any good investor should do you need to diversify your portfolio. Just as Gold is not linked to any other finance, stock or bond, neither is Bitcoin or any other crypto-currency. This means drastic movement in other assets should have no effect on your Bitcoin or vice-versa. By doing this you protect different sections of your IRA account, as having all your eggs in one basket is almost a ridiculous idea. You are also not limited to how many IRAs you can have, so with one custodian you could have Gold, Silver and Bitcoin and then with another you can have stocks /bonds. This will mean all 3 assets are completely separate, providing plenty of opportunity to leverage assets if needed.
Can I put my current bitcoin into an IRA
Technically no not directly, however we are struggling to find any rules or regulations that prevent you doing it in-directly. Bitcoin is sold on exchanges direct with buyers and sellers, kind of like Ebay where you buy directly from someone else through a service. We are unsure of the legality of this but it may be possible to arrange your custodian or another 3rd party to purchase your own bitcoin and place in the account. However it must be bought and tracked with the US dollar. Maybe this is too new and these regulations haven’t been written yet.