How to Use a Crypto IRA for Your Retirement Savings
Thanks to technology, the way we manage our IRA has changed significantly. No longer is it required to attend an investment firm in person. All of this can be done ourselves. The IRA was first introduced in 1974 and it has remained pretty much the same since then. Specifically, people were able to invest in a variety of traditional funds, such as bonds, stocks, physical assets, and certificates of deposits. However, the investing world is also changing, with everything becoming more digital. The result is that it is now even possible to open a crypto IRA, which is one in which at least some of the assets are cryptocurrencies.
Before looking at the crypto IRA, you have to get an understanding of what bitcoin, and other cryptocurrencies, r. Essentially, it is a type of currency that exists on an online public ledger known as the blockchain. Cryptography is used on this ledger to secure transactions. Bitcoin is not regulated by a bank, government, or other central authority. Instead, management is done through the consensus of a peer-to-peer network. Bitcoin was the first cryptocurrency, developed in 2009 by Satoshi Nakamoto. A finite amount of Bitcoin exists, which is 21 million. While other cryptocurrencies now also exist, bitcoin continues to be the most popular and it is accepted by some 150,000 merchants around the world.
The Crypto IRA
The value of bitcoin has shut up. If someone had purchased $400 of Bitcoin in 2011, it would now be worth $1 million. Needless to say, this has made people even more interested in it, hoping that it will be worth even more. Because of the fact that bitcoin is finished and that the final bitcoin should be mined in 2140, there is something known as scarcity. What this means is that it is likely to only further increase in value.
Another great advantage of cryptocurrency is that it can be held independently. This means that you are in control and don’t have to worry about third party fraud for mismanagement. Indeed, the crypto IRA is a completely self directed IRA, which means you get to make the decision. Even if you sign up for custodial services, you are still completely in control. That is because you will need to have private keys in order to make any transaction, and even if you give one of those keys to a custodian, you will still have one as well.
Finally, bitcoin is a completely independent asset. It is not linked to bonds, savings, or stocks. If and when the next economic crisis strikes, there will not be an instant fall in value of bitcoin. Instead, historically speaking at least, they will increase in value, taking an inverse relationship to the regular financial market. Clearly, therefore, they are a fantastic asset to hold within an investment portfolio and certainly worth your consideration if you feel confident enough to be able to manage a self directed IRA.