28 Oct 2020

5 Essential Things You Need to Know About Bitcoin IRA

Some say Bitcoin IRAs are the way of the future. Others are skeptical about its legitimacy. Since it is a relatively new investment opportunity, many people have questions that need to be answered before they can consider putting their money into one. Here five essentials things you need to know about Bitcoin IRA.


1. You must use the right kind of IRA

When you put money into an IRA, there are two options. When you talk to your investment facilitator, you may find that they cannot purchase a Bitcoin IRA for you. This is confusing because Bitcoin is legal in the US, despite what some people believe. To purchase a Bitcoin IRA, you must not use a captive account. Captive accounts have limitations which include a law that states you can only purchase investment options that your IRA company offers directly. Since these investment firms do not offer Bitcoin, unfortunately, you cannot purchase through them.

Instead, you must purchase them through a self-directed IRA. With this, you can invest in any legal asset available; therefore, you can purchase Bitcoin. 


2. Bitcoin IRAs are still in their infancy

Many professionals agree that Bitcoin values have room to grow exponentially. In recent years, stock values have grown faster than most other stocks. As investors get more comfortable with the idea of virtual currency, their popularity is going to increase. This means the value is going to follow suit. When you look to the future, Bitcoin IRA may be an excellent investment now because of its potential future value. 


3. Bitcoin IRA in retirement portfolios creates diversification

Most investors know the basic rules of diversification - don't put all of your money into one investment. When you add Bitcoin to your portfolio, you are adding an entirely different type of investment. This diversification may help protect your money from unanticipated market drops and unfavorable fluctuations. 


4. You cannot commingle your Bitcoin wallet with other IRA funds

Unlike other investments, if you have a Bitcoin wallet for your IRA, you can only fund it with your IRA. You cannot use capital from any other source to invest in your Bitcoin wallet. The money here is an exclusive benefit for your Bitcoin IRA and your Bitcoin IRA alone. Commingling any other capital sources with your IRA is strictly forbidden by the IRS. Doing so leads you to a flurry of serious problems that do not go away quickly. You can invest in bitcoins using Crypto Genius.


5. Bitcoin is not legal in all countries

Some countries like Iceland have never been open to the idea of legalizing any cryptocurrency, including Bitcoin. Places like China allow accounts that hold Bitcoin, but China bans the trading of the cryptocurrency. Countries like Canada treat it like a regular investment. As earlier mentioned, in the US, Bitcoins are allowed for IRAs so long as they are held in self-directed IRAs. All of this is essential because it affects the value and volatility of Bitcoin. It is also essential for anyone who owns accounts in other countries as part of their investment portfolios. Since you must follow the country's laws, your account is held in, ensure they consider Bitcoins to be legal. 


It seems that Bitcoin is here to stay. Unlike other assets, such as gold, there is no physical commodity to back up the value. Years ago, this was unheard of and would have been considered a problem. With the advancement of the virtual world, it looks as though this no longer matters. While investing always comes with an inherent risk, Bitcoin is worth it for those willing to bet on the future value of cryptocurrencies.


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