What’s the big idea with cryptocurrency?
The visionary behind Bitcoin, “Satoshi Nakamoto”, remains a mystery to this day. He, or she (or they?) must have anticipated this revolutionary idea was going to create powerful enemies. Think about it…
- Decentralized Currency – A peer-to-peer network verified by its own participants, not a centralized authority.
- A non-trust based system – Currency that relies on mathematical algorithms, not banks and regulators.
- Global – Cryptocurrency can travel fast and far without being impeded by borders or policed by governments.
- You don’t need permission – I’ll give you 100 chickens and 5 goats for your cow… or we can use cryptocurrency.
- Secure – “Funds” are kept on a public key cryptography system. You have a better chance of being struck by lightning and subsequently eaten by a shark than breaking this schematic.
- Cutting out the middle man – What if I told you that you can use the very same system as your bank, but without your bank? Is that something you would be interested in?
If you don’t think these features are cool then we’ll assume you’re either a banker or a politician. That said, we never really know what the future holds. I doubt that pioneers of the world wide web had “cat video’s” in mind.
Investing in Cryptocurrency
Cryptocurrency is not a tangible asset and its value simply relies on what the market will bear.
Would you rather invest in gold or a gold mining operation? Make a secured loan or explore opportunities in the international debt market? Real Estate or a REIT?
There are plenty of “blockchain funds” to speculate but some investor view cryptocurrency for what it is, the currency of the future. If you simply want to put some money aside in a crypto-IRA savings account the best thing to do is establish an IRA LLC.
With IRA checkbook control, putting cryptocurrency in your IRA is as simple as downloading Coinbase on your smartphone and clicking that “buy” button.
What's the big idea with cryptocurrency
IRAs have a tax advantage, so there are rules associated with them:
- Don’t commingle your personal account/digital wallet with your IRA LLC account/digital wallet.
- Don’t buy, sell or exchange anything with disqualified parties.
- Don’t use IRA cryptocurrency personally or for your own benefit.
- Keep it separate! Keep accurate records!
In short, make sure it is an investment for your IRA, not a personal savings account.
