Eight years ago, the anonymous author Satoshi Nakamoto disrupted the idea of a central authority, like banks and regulators, around currency and investing – and changed the world forever.
Nakamoto’s creation, Bitcoin, and the underlying technology – the blockchain – have gone on to dominate headlines in the last year, with individual coins now worth more than $17,000 and a forecast for continued growth. Now that it’s gone mainstream, regulatory authorities such as the IRS are paying attention – and have written rules regarding digital currency.
In March of 2014, the IRS announced that digital currencies are “property” – and the tax principles are the same as for real estate or gold.
As a result, it became possible to make Bitcoin and other digital currencies part of one’s retirement portfolio. If you’re still wondering whether this may be a good choice for you, here’s what you need to know and what steps you can take to get involved:
A Digital currency IRA is a retirement account that buys digital currencies, then holds them until you reach retirement age. They accrue in value and are not subject to capital gains tax until you begin to withdraw them, and it’s a great way to benefit from the digital currency revolution while avoiding annual taxes.
You can invest in a Digital Currency IRA using existing rollover funds from your current retirement accounts. An IRA, Roth IRA, or 401(k) can be used to roll funds over into a Digital Currency IRA. However, you cannot place digital currency you already own into an IRA, as the IRS requires that Digital Currency IRAs be funded using US dollars.
Digital currency was created as a reaction to the Great Recession and the US subprime mortgage crisis, during which many investors lost their savings – and never recovered.
Unlike fiat currency, there is a limited supply of digital currency – for example, there will never be more than 21 million Bitcoins in the world. This protects the currency from rampant inflation, and no government can arbitrarily change its value or make more.
We advise that you build a portfolio containing a diverse assortment of assets, including stocks and digital currency, to ensure a robust, smart retirement fund.
Leading media outlets have written pieces in favor of including digital currency in your retirement portfolio.
By early 2017, a single Bitcoin was worth more than an ounce of gold. Digital currencies are now growing faster than ever before. Etherereum, Ripple, and Litecoin have all made major gains and are projected to move to to new record levels moving forward.
Experts are now forecasting Bitcoin to reach $100,000 within a few years time – and as much as half a million dollars each by the end of the next decade or sooner.