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Should You Invest in a Cryptocurrency Retirement Plan?

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invest in Cryptocurrency Retirment Plan

This is a guest post submitted on CryptoTapas.

As our industry evolves and changes the job market changes along with it. While consistent technological advancements usually come with a ton of good, it has also brought as to a point of living in the age of increased uncertainty. Entire professions are dying out and certain technical skills are becoming obsolete.

As the years go by, the concept of job security is fading away slowly which has led to some drastic changes in the way we think about our careers. Modern professionals have more freedom but that freedom comes with a side of fresh responsibilities and difficult choices to make.

In a world of changes and uncertainty, developing a sense of financial security has become an increasingly difficult task. So if we’re losing all of these assurances about our work life, what does that mean for the ways we save for a time after our careers have ended?

How to Retire In This Day and Age?

The increase in average life expectancy has made the task of setting aside sufficient income for retirement more challenging and people are not getting ready. A recent survey has shown that only 10% of the people in the US have a formal retirement plan set up and the idea of working after your statutory retirement age is becoming a real strategy for many.



how to invest in cryptocurrencyThose seeking security have shifted the discussion from retirement to financial independence which is changing the focus from age to finances. Even though it’s not easily obtained, the key benefit is that with it comes a belief that you are the one who is in charge of your finances throughout your whole life. Thinking about financial independence is an inherently active approach.

Those who are trying to achieve financial independence usually have a better understanding of their finances. They are probably more likely to stay up with the current trends in the business world and one of the biggest current trends is, of course, cryptocurrency.

In recent years, cryptocurrency has become a dominant topic all over the world, consistently raising more and more attention from potential investors. No one knows what the future will bring for sure yet many believe that we’re still in the early stages of the cryptocurrency era. But could it be a strong asset to your retirement plan?

3 Ways of Developing a Retirement Plan That Includes Cryptocurrency

ways to invest in cryptocurrencyThere are several ways to incorporate cryptocurrencies into your overall retirement plan and strategy. One of the easiest and most common ways is to create a self-directed IRA.

An SDIRA is a specific type of individual retirement account provided by trustees or custodians. It allows you to hold various investments within your account. Things like stocks, gold, real estate and more importantly, digital currency.

Self-directed IRAs that can hold cryptocurrency are also known as Cryptocurrency or Digital IRAs. A key distinction between a self-directed and a traditional IRA is that an SDIRA is managed by the account holder. This will help you gain greater control over your finances and future, but it does come with some extra responsibilities.

If all of this sounds like a whole lot of work to you, there are simpler ways of approaching the matter. There is an increasing number of companies that specialize in combining cryptocurrencies with your individual retirement accounts. Even though this would make the process a lot easier, it does come with additional fees.

Lastly, there’s always an option of investing in crypto as a way of saving money but without merging it with your official retirement plan. It might be less of a hassle but you will miss out on the tax benefits. Even though we consider it digital currency, the IRS still treats crypto as property which is why you should learn about crypto taxes if you plan on taking this route.

The Upsides 

  • It’s a Way of Diversifying Your Portfolio

crypto portfolioDiversifying your investments is one of the key principles of low-risk financial management and the same goes for your retirement plans. Along with things such as real estate investment and creating multiple streams of passive income, investing in cryptocurrency can be a great angle for your diversification strategy.

There have been some success stories in recent history where people went with the cryptocurrency retirement plan and came up on top. In 2017, a physicist who educated himself on the topic of virtual currencies via YouTube invested 15% of his retirement fund and ended up increasing his value nine times. Success stories like this one can make people get very excited but financial advisors still recommend that you should be careful with your investments and make sure to keep them between 5 and 20%.

  • It Allows Tax-Free Growth of Your Cryptocurrency Investments

If you’ve decided to take the route of opening up a Digital IRA then your investments in Bitcoin or any other cryptocurrency will grow completely tax-free. As long as you keep these funds within your account, you are not required to pay any tax fees on them. The only way these funds will become a subject of taxation is when you decide to make a distribution.



  • It Operates Under a Decentralized Infrastructure 

One of the main advantages of cryptocurrency retirement savings is that you’re investing in a decentralized infrastructure. Being a part of a system that is independent of centralized institutions comes with the advantages of being unaffected by the actions of central banks and governments.

This is a great benefit because it keeps your investment safe in cases such as bank failures. One of the main reasons for creating a blockchain-based, decentralized cryptocurrency is so that people could avoid being impacted by events similar to the 2008 financial crisis.

Another thing cryptocurrency can save you from is the effects of inflation, in case you’re investing in those that have a hard cap. Bitcoin’s is set at 21 million dollars, meaning no entity will be able to simply invent or print out more and decrease its value.

  • It Has Great Long-Term Growth Potential

Long Term investments in cryptocurrencyPutting aside the significant growth in value Bitcoin has experienced this year, there are still other valid indicators that suggest crypto is here to stay. The rise in crypto-specific patent applications along with the rising interest coming from tech giants are just some of the signals that very big players believe in the future of cryptocurrency.

Discussing the potential of a relatively new system is a controversial topic but there are certainly reasons why many experts and big company executives believe cryptocurrency has huge long-term potential for growth. A recent comment made by Apple Pay vice president Jennifer Bailey has stirred this discussion even further.


The Downsides

  • It Carries a Lot of Uncertainties 

Investing in CryptoThe fact of the matter is that with both crypto and blockchain we’re all very deep in uncharted territory. Economic experts are divided in their opinions at best and their predictions range broadly from incredibly optimistic to disappointingly pessimistic.

One of the reasons for these discrepancies lies in the fact that certain characteristics of the system are open to interpretation. For example, the volatility of cryptocurrency can be considered to be both a strength and a weakness of the system.

Bitcoin is only just about a decade in existence which is too short of a time-frame to really understand and predict how a financial system will look like in the future.

  • It Has Significant Added Fees 

Trading in cryptocurrency through your IRA comes with different types of fees which vary depending on the custodians or trustees providing you with the account. These trading fees usually vary depending on the type of crypto so if you’re considering making an investment, make sure to take these variations into consideration.

  • It Comes with Additional SDIRA-Related Risks

Every self-direct IRA carries specific risks which is something you won’t be able to avoid if you’re looking to maximize the benefits of tax-free growth. The risks come from the fact that SDIRAs have a set of strict rules you must adhere to in order to avoid paying penalties or getting charged with fraud. SDIRAs also come with a set of fees like a one-time establishment fee, a first-year annual fee, annual renewal fee, and fees for investment bill paying.

All of this burden is that much heavier because you have to carry it all by yourself since custodians can’t legally offer financial advice. Finding a good financial advisor is an option but it’s also not very cheap.


Should You Do It? 

With everything considered and taken into account, we can certainly say that it’s not the simplest, easiest way nor is it the safest way of setting up a retirement plan. If you’re not even the least bit familiar with cryptocurrency you should probably either figure out another way or look to educate yourself on the subject.

Another thing we can conclude with confidence is that cryptocurrency shouldn’t be considered an all-in strategy, at least for the foreseeable future. The huge potential gains are very exciting but you need to remember what’s on the line.

Those who are uncomfortable with sizable fluctuations in their finances should look to other places to invest their money. Or if you’re close to retirement and don’t have a lot of funds to spare, it’s probably best to sit this one out. Losing your health over the stress of rapid changes in the crypto market is just not worth it.

On the other hand, if you’re still a fairly long way away from getting out of the game and have a few bucks to set aside, cryptocurrency just might be a great thing to try. If you’re smart about it and approach it gradually you can surely set up a scenario where the potential gains drastically outway the potential losses.

Thank you for reading the article.

AuthorBio: Mark is a biz-dev hero at Invoicebus – a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.

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IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

This is a guest post. We do not endorse or guarantee the accuracy of the information and claims made.



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This is What Non-Bitcoiners Think About Bitcoin

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Bitcoin believers

There are two types of people in this world: Bitcoiners and non-bitcoiners.

Many non-bitcoiners stay that way because they have come to associate Bitcoin with certain elements of the society. 

Here is a short list of things non-bitcoiners associate Bitcoin with and whether these allegations have any validity.

Money laundering

moneyBitcoin is criticised to be used for many illegal activities including money laundering. 

Can Bitcoin be used for money laundering?  Sure.

So can gold or cash or you name it.  

Anything of value can be used for money laundering, however, only one of them can be actually tracked forever.

To many people’s surprise, Bitcoin is the only asset among many that is the worst medium to use for money laundering.

Terrorist funding

Haters say that bitcoin is used by terrorist groups to avoid being tracked. 

Fools be those who think Bitcoin is completely anonymous.  

In fact, physical cash is much more anonymous than any medium of exchange out there.

Drugs

Bitcoin was (is) used to buy and sell drugs. 

Bitcoin did not create a single drug and it did not create commerce for drugs either. The drugs commerce has been in existence before bitcoin.  What bitcoin did was create this false illusion that it is anonymous money.

To the dismay of many those who thought they were being smart have etched their dealings on the blockchain for anyone with the right tools to find out.

Dark web

darkwebYes, the dark web has made Bitcoin popular.

Silk Road, illegal weapons, transferring money without going through banks or other legal entities, all of these have colored Bitcoin as Dark Web money.

However, once people understood the myriad of applications that bitcoin and blockchain can help with, the dark web allegations have faded.

We would scorn anyone suggesting that the internet should be banned because there is illegal stuff going on (dark web lives on the internet too).

However, these very people would call for a ban on Bitcoin without understanding that Bitcoin is the next phase of the internet’s evolution.

Gambling

Gambling cryptocurrencyGamblers love to squander their wealth. And those who dabble with Bitcoin with their life savings are no better than gamblers.

This has some truth because there are no guarantees that Bitcoin will succeed (although one could argue that it has already succeeded in bringing blockchain to the consciousness of mainstream).

As such, those putting money in bitcoin understand that they could lose their investment.

While many invest in bitcoin in the hopes of getting rich, there are few who invest in it to own a piece of technology and be part of the history in the making. 

In that sense, Bitcoin is way different than gambling.

Is Bitcoin the panacea?

While Bitcoin is far better than the existing fiat system, we do not think Bitcoin as the panacea.

We believe that Bitcoin will build bridges and connect the world which was deprived of access to financial inclusion and in doing so it will become part of the world financial ecosystem.

It will not replace the fiat system, rather, it will make it more accessible.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Factors adding gasoline to the Bitcoin shortage fire

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Bitcoin shortage

Bitcoin’s creation and its subsequent proliferation may have all been planned for a long time, this is the outcry of many conspiracy theorists.  

These conspiracy theorists also believe that whistle blowers are mere plants to help prepare the world for what’s coming.

One of their theories is that the end of physical fiat was planned a long time ago, however, the transition of physical fiat to digital fiat needed a catalyst to drive the conversation.

Either by meticulous design or by sheer coincidence – Bitcoin came to life in 2009.

We personally think that Bitcoin was designed by liberals who believed a ‘fair world’ was possible.

The invincibility of this groundbreaking technology meant that the forces that were working on doing away with physical fiat had a runway built for them.

So, the rhetoric has now changed from ‘Bitcoin is for anti-social elements’ to ‘Bitcoin is the currency for the visionaries’.

Why is that backdrop of conspiracies and layout necessary?

Because, irrespective of the underlying reasons the rhetoric has changed and it has changed for good.  This means, as the physical fiat follows the path of extinction, Bitcoin – the king of digital currency, will see a lot of demand.

We were warned a long time back that there will not be enough bitcoin in the world for everyone to buy.

Some studies say that owning .28 Bitcoin will guarantee you a seat in the top 1% bitcoin holders in the world while others say you need 5 bitcoins to claim the top 1% in the Bitcoin rich list.

Point is, even if you have all the fiat in the world, there is a limit on how much bitcoin you can buy.

When people who want to buy bitcoin are ready to pay any price while those who own the fractions of it are unwilling to sell it – the prices have only one way to go: UP.

 

The strategic moves into Bitcoin from MicroStrategy, Square, GrayScale, Fidelity and a host of billionaires who actually know something about money and finance is a tell-tell sign for the rest of the world.

Whether you want to get into Bitcoin to own a piece of technology itself, or to hedge against the inflation, or simply to use it as ‘digital gold’ that you can take with you, any and all of these reasons are good enough to look into Bitcoin.

If you had told us last year that a public limited company will convert its cash reserves into Bitcoin we would have laughed at you, but that is precisely what has happened.

As a result of converting fiat reserves to Bitcoin, the stock price of MicroStrategy saw an immediate boost which was as big as the reserve itself.

Do you think other public companies will stay on the sidelines for long?

When a legend like Paul Tudor Jones says ‘Bitcoin is the fast horse’ to bet on against inflation and he himself invests 2% of his portfolio, how long will it take for other fund managers to take note?

Add to this the demand from retail investors in the form of millennials, who are also set to inherit some $60 Trillion dollars from the baby boomer generation in the coming decade.

Conclusion

We personally think the goldilocks moment for Bitcoin has arrived.  It has the perfect combination of ‘scarce supply’ and ‘growing demand’.  It also has the added elements of adoption and ‘nascentness’ working in its favor.

These factors alone make Bitcoin one of the best investment assets of the century, in our opinion. 

We have been investing in Bitcoin using dollar cost averaging.  We don’t go selling our home or taking on insane loans to invest in bitcoin, rather, we invest $100 here and $100 there.

Before you invest your money into bitcoin or cryptocurrencies, spend some time understanding what Bitcoin is and why it is important in taking the world from the centuries old fiat system to a brand new global currency system.

In our personal view, Bitcoin will become one of the best assets to hold by the next halving.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Why this bull run has no precedence? ONE key metric to rule them all

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bull run 2020

Everyone is singing the praises for the bulls’ arrival in the crypto space.

Some say that 2020 will mark the biggest bull run in cryptos’, albeit short, history.  

We are already in October so we doubt any fireworks will take place now since there is a lot of uncertainty about the US elections.

Add the uncertainty around the stimulus bills, unemployment trends, soon to be lifted forbearances and the list goes on.

2020 still has another 2.5 months to go but most of these uncertainties will take a while to show their true impact.

For instance, what will a Biden presidency mean for the economy and cryptos?  

How many people will be forced to sell their homes once the forbearance’s are lifted?

What happens if the next stimulus bill does not pass through?

When will the vaccine become available?

These are some of the unique situations that we have no precedence for. Do not let anyone convince you that we know what’s going to unfold, because no one does.

Yes, everyone has theories, like the ones we are presenting here, but that is all they are: theories.

The BIGGEST metric that crypto community is not considering

We are no economists nor can we run any fancy charts to impress a point on you.  

We are just good observers and have common sense to deduce a few things based on data.  

For instance, between 2007 and 2010 consumer spending dropped by an overall .2% and we know what that meant for the economy.

Personal consumption expenditure

In 2020, people have literally cut down on their spending.  Some of it is forced due to the restrictions imposed by external forces and most of it is self imposed.

I am sure the spending on marijuana, liquor and food have gone up but what about other spending?

2020 also saw a spike in the savings balances.  

Economy is not stimulated by people hoarding their money. People need to exchange value for the economy to thrive.

What happens to the spending behaviors when the true stats around evictions, lost jobs (that are not coming back) and small businesses that are shutting down permanently are out?

Our guess is that people are going to be weary of spending money in the short to medium term. If we were forced to pick a timeline – we would say about 12-16 months (assuming we get a vaccine in Q1 2021).

When is the next bull run? 

Based on what we have seen in 2007 through 2010 and observing the consumer spending habits in recent times, we think that Bitcoin (and cryptos) will not find their true peak until next halving.

We know this is not what you came to hear.  

If the bull run in your mind is hitting the 2017 highs then we do not think you have to wait until the next bull run.

If the bull run means a $100,000 bitcoin then we stand by our opinion on when that is going to be.

A case for bull run

In spite of what is going on in the street, following factors are acting as strong bull market signals for the crypto space. 

Hype: Crypto space (specifically Bitcoin) has been gathering a lot of steam in terms of brand awareness and mass penetration.  This is great for the long game.

Adoption: More than ever, private and public enterprises are becoming serious about bitcoin and underlying blockchain technology.  What is good for bitcoin is good for blockchain and vice-versa.  MicroStrategy investment, Paul Tudor Jones getting involved with bitcoin are some examples.

Tech explosion: Crypto space is home to some of the brilliant minds in the tech space. Add Big Techs interest in the crypto space and you have a perfect recipe for monumental shifts in crypto perception. Tech giants like Microsoft, Google, Twitter, Facebook are all getting involved with blockchain and cryptocurrencies in some shape or form.

Retail demand: More and more retail investors are looking for alternative investments and they are waiting on the sidelines to get involved with Bitcoin.  As soon as companies like Fidelity or other brands offer crypto investment through retirement plans – there would be a massive influx into this space.

DeFi: DeFi in its current state might be infested with shittty projects but as a concept and technological shift to turn the current banking system upside down – it holds great potential. Any demand to DeFi brings more demand to bitcoin, ethereum and blockchain in general.

Conclusion

The debate around when is the next bull run will hinge on how the market recovers from this pandemic. How soon will we get the vaccine and how many of the lost small businesses and jobs are we going to resurrect?

From a macro perspective, Bitcoin and few select cryptocurrencies will continue their upward trajectory so if you looked back to 2020 five years from now, you might think bitcoin was on sale.  

Question is: how many people have that kind of patience?

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

 

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