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Should You Invest in Cryptocurrencies in Your IRA?

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As an investor, you may be contemplating whether or not to include cryptocurrencies in your retirement account. Cryptocurrencies are digital assets secured by cryptography, used as a security measure for cyber currencies, also known as alt-coins. They are different than fiat currencies because the current provided by the United States Mint is backed by gold and silver standards. The United States government guarantees the acceptance of 1 fiat US dollar.

On the other hand, it is not issued by any central authority and their value depends upon demand and supply in the market. They do not represent hard assets or standard currencies. However, since they are gaining popularity daily, many investors are interested in investing their retirement funds in cryptocurrencies.

The first thing to understand about investing in cryptocurrencies is that they are not securities, but rather currencies, despite being used as investment vehicles. This means that investments made into cryptocurrency are subject to capital gains tax instead of being taxed as securities.

One of the major concerns for any investor is to keep their funds safe and secure. Storing your money in bank accounts or making an investment in mutual funds seems to be safer options as they are highly regulated by local government authorities. But, when it comes to cryptocurrencies they don’t have any authority hence the chances of losing all your investments is quite high.

Is it very safe to invest on this digital currency? This is one of the major concerns among investors whether their funds would remain safe while investing in cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) etc. If you are also looking for the answer then check out this article as we have jotted down some of those critical points that will guide you to understand whether your money is safe or not!

In order to invest in Bitcoin or other cryptocurrencies for your IRA, you must entrust the third party with the transaction, which may cause some investors to feel nervous about how their investments are handled. However, these services exist for a reason: because of cryptocurrency’s relative newness and unique nature, it is often easier to use a third-party intermediary than it is to manage the currency yourself.

Speaking of which, you can invest in any cryptocurrency that has been designed as such. This means that both cryptocurrencies like Bitcoin and Litecoin and ICOs (initial coin offerings) are on the table for pension fund investment purposes. It also has some other benefits, like the fact that it is an efficient way to diversify your investments, which can protect you in some cases. Cryptocurrency also has some unique properties like anonymity and low transfer fees (in most cases), making it preferable for some investors. If you are interested in Bitcoin IRA, this article will provide additional information about the company and some pros and cons of cryptocurrency-based investment vehicles.

Pros of Investing in a Cryptocurrency IRA

#1 – Diversification of your Retirement Savings

While many people still think of Bitcoin as a “bubble” or a fad, there is no denying that it has reached a high level of adoption. Several countries now accept Bitcoin as legal tender for public sale and trade. While this move towards mainstream acceptance is not as prevalent in the United States, it still represents a significant step forward for the currency.

As such, some investors may feel more comfortable diversifying some of their retirement savings into cryptocurrency. After all, why put all of your eggs in one basket when you can spread them around? Even if you believe that cryptocurrency is currently overvalued, it’s at least a good idea to hedge your bets by putting some money into this new type of investment vehicle.

#2 – Low Fees and Scalability

Another benefit of investing in cryptocurrency is that the fees are lower than other retirement savings vehicles like mutual funds, stocks, bonds, etc. As far as accountability goes, it’s also easier to track the movement of cryptocurrency than it is with securities like stocks.

#3 – No Minimums, No Fees

With other types of retirement savings vehicles or accounts that brokers manage, you may be required to put in an initial investment before you can begin making contributions. This can be a big deal for many people, as they may not have thousands or even hundreds of dollars to invest at the beginning. This is less of an issue with cryptocurrencies, as you can begin making small investments with just a few bucks.

In addition to being relatively accessible as far as initial investment goes, cryptocurrency IRA services do not charge commissions or fees for managing your account. This means that they do not make money unless you make money, which is an essential consideration for anyone looking to invest their savings in this type of vehicle.

Cons of Investing in a Cryptocurrency IRA

#1 – Volatility and Lack of Regulation

At the time of writing, cryptocurrency values are currently pretty volatile. Meaning, they tend to go up and down a lot due to market fluctuations. That’s not necessarily a bad thing (it can be an effective way to make money), but it can also lead you to make rash decisions based on emotional responses like fear and greed.

Another issue that many people have with investing their retirement savings in cryptocurrency is that there is currently no regulation at the national or global level. This can be a big red flag for some people, as they worry about being scammed by a fraudulent company or being prevented from withdrawing their money due to technical reasons.

#2 – Lack of Transparency and Security

Because cryptocurrencies are not regulated the way traditional investment vehicles are, it can be hard to find out who manages your money and how they’re spending it. While this may not sound like a big deal, it can be very problematic for people who want to know where their savings are going.

Another aspect of cryptocurrency IRA management that some people take issue with is the lack of transparency and security, especially for those storing their cryptocurrency in online multi-signature wallets. This is due to the fact that if one of the managers of your account loses access to their login information (if they get hacked or lose their password for example), you may not be able to withdraw your money for an extended period of time.

#3 – No Fiat Currency Support

One other issue that potential investors consider when thinking about getting into cryptocurrency IRA investing is that there are currently no companies that accept fiat currency (traditional “real” money like U.S. dollars) in exchange for cryptocurrency. This means that if you want to diversify your retirement savings by investing, you have to transfer savings that are already in cryptocurrency into the IRA account.


With all of this taken into consideration, it’s clear that there are pros and cons to investing your retirement funds in cryptocurrency IRA accounts. That being said, if you’re looking for a way to diversify your investment portfolio while also getting some exposure to the profitable and ever-rising market of cryptocurrency, this may be one of the best options you have. Be wise enough to make sound judgement.

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