The term “Bitcoin IRA” can be just as confusing as the term “self directed IRA”. Depending on who you talk to, one definition may be entirely different than another. Cryptocurrencies in and of themselves are immensely technical and complex, so the added noise doesn’t help. Here are some tips to clarify.
The Options
Publicly Traded Securities – Yes, you can speculate cryptocurrencies through publicly traded securities. Bitcoin, alt coins, blockchain tech, etc… related funds are offered by several mainstream brokerage houses.
Depending on your perspective and which way the wind is blowing at any given time, the relationship between these “funds” and their underlying assets may look very good or very bad. For example, the Bitcoin Investment Trust is inflated more than 40% over BTC itself. Again, depending on the current climate and perspective, investing in these securities can prove to be more lucrative than buying bitcoin (that’s a bold statement) or investors may just be taking a ride on another hot air balloon sponsored by Wall Street.
Why would anyone invest in a crypto-related security instead of just exchanging fiat currency for digital currency? Why invest in a fund that buys precious metals, cryptocurrency, loans, etc…? Well… that’s just how publicly traded securities work! I’m sure those brokers know what they’re doing.
Trusted Third Parties – It’s really easy to find a “trusted” third party to buy/sell/hold/exchange cryptocurrency. This sounds safe enough right? It’s not! Here are some of the dangers:
1 – Consolidation is not a good thing. Bitcoin, and other cryptocurrencies were designed to be decentralized, non trust based systems that simply rely on mathematics instead of government regulation. What reasoning can we find in centralizing bitcoin IRAs under one roof?
2 – Hacks can AND WILL happen in this market (were looking at you Russia). If the trusted third party is hacked then your coins were hacked. Once they are gone you can’t get them back. Go ahead and trust the trusted third party but when they open the vault it could very well be empty.
3 – Where’s the big red target? Companies that are holding millions, no, billions of dollars in digital currency are on the radar of hackers, corrupt insiders, even governments are watching your money very carefully.
4 – Death by fees! The “top experts” in the Bitcoin IRA industry charge fees that are considered flat out ludicrous in any other investment market. I have seen fees ranging from 15% to 25% and some charge to buy AND sell, ouch!
5 – Inside jobs – All it takes to destroy your holdings is one disgruntled employee or dishonest partner who hides the facts. Hey… it happens.
The New Standard IRA. I won’t even deny that this is a biased opinion so consider this a challenge to prove us wrong.
Checkbook Control – With IRA checkbook control you can buy and sell any investment that is not specifically considered disallowed or prohibited.
You Wallet, Your Way – Hardware wallets, digital wallets, even paper wallets are acceptable. You don’t need a trusted third party and your custodian doesn’t even know that you are holding cryptocurrencies.
Low to No Fee Options – You have the option to pick your own exchange, if you use one at all! This can significantly cut down on cumbersome fees.
But wait, theres’s more! Admittedly, the liberal inside me thinks Bitcoin is a revolutionary change in our current banking infrastructure. It has shown us, not only how quickly the wealth can be redistributed, but also how wide the gap really is. I’m a believer, and my hunch says millennials are too. However, the analytical, conservative, diligent side found something far greater than buying/selling/holding this coin or that. A way to throw speculation out the window, mitigate risk and capitalize on the hottest market since the world wide web. Here’s a hint: Google, Goldman Sachs, Billionaire Mark Cuban and plenty other savvy investors found it too.
When you join our IRA LLC investor network you can connect with others just like yourself and will likely find opportunities that you have never even heard of. Call our office for more information.