Ethereum IRA – Self-Directed IRAs

Ethereum IRAs: Add cryptocurrency to your retirement plan

For decades of investing, Individual Retirement Accounts (IRAs) have become one of the trusted anchors for retirement planning. Stocks, bonds, and their various funds are the familiar elements of traditional IRAs. But times and investor preferences are changing.

The benefit of diversification, increasing risk tolerance, the desire for higher returns and the availability of innovative products have made alternative IRA investments increasingly popular in recent years. Precious metals, real estate and even digital currencies have found their way into more and more retirement accounts.

Before you pull out the checkbook, however, it pays to learn the benefits of investing in Ethereum-based IRAs and trends that are making Ethereum an exciting long-term investment opportunity.

Why Ethereum IRAs can be a sound investment

If you are interested in the long-term value prospects of Ethereum-based cryptocurrencies, you should consider buying Ethereum as part of a self-directed IRA. Setting up a self-directed IRA allows you to invest in special funds that are not allowed in traditional retirement accounts. In fact, you can invest in and manage traditional and alternative assets in the same account.

Managing your own IRA

When setting up a self-directed IRA, the biggest difference is who does what. With traditional IRAs, professional money managers choose and manage investments that they purchase with your contributions. In a self-directed IRA, you have complete control over the assets stored in your account.

As a self-directed investor, you take responsibility for the assets you choose. For example, when you buy tokens on the cryptocurrency market, you need to decide which currencies you want to buy. Then you also have to decide when you want to sell them.

Although you have to choose and manage your assets, you will get help with the formalities. When opening an Ethereum IRA with BitIRA, open an account with either Equity Trust Company or Preferred Trust Company. One of these certified, self-directed IRA custodians will take care of all the tax-related administration details, e.g. B. to make any necessary financial disclosures

Ethereum IRA Short Term Benefits

When deciding whether to invest in a cryptocurrency-based IRA, it helps to keep short-term benefits and long-term business value in mind.

Ethereum-based IRAs offer these short-term financial benefits:

• Deferred taxes on returns. Leveraging tax-deferred returns on your wealth with a traditional IRA is one of the top reasons to set up an Ethereum-based IRA. You can trade Ethereum short-term or hold it as a long-term investment. If you have complied with all regulations, you do not have to pay tax on your profits until you receive a distribution from your pension fund.
• Protection against stock value losses. By investing in Ethereum, you diversify with alternative IRA investments that don’t always follow stock market value trends. Cryptocurrencies like Ethereum are a brand new asset class. So, learn the pros and cons of using Ethereum for this purpose.

Watch this video to see even more why some investors are choosing to roll over to an Ethereum IRA:

Long-term investment value

A 2014 ruling by the IRS on how virtual currencies would be treated for tax purposes allowed investors to set up and add assets to Ethereum-based IRAs as a long-term retirement investment. Under the current IRS code, you can combine investments from these asset classes in a single IRA account:

• IRAs. Choose from a Traditional, Roth, SEP or SIMPLE IRA account.
• cryptocurrencies. Choose cryptocurrencies like ETH (Ethereum), ETC (Ethereum Classic) and BTC (Bitcoin). Learn more about BitIRA offers.
• Other alternative assets such as precious metals, stakes in startups or Real Estate Investment Trusts (REITs).
• Traditional IRA assets such as individual stocks, bonds, or their mutual funds.

What investors like about Ethereum

Launched in 2015, Ethereum is a virtual currency somewhat similar to Bitcoin. Both are currencies that owners can buy, sell or hold for investment purposes. Both work with anonymous transactions in decentralized environments. There are no third parties controlling or validating transactions.

Ethereum and Ethereum Classic emphasize building and running distributed applications. Their blockchain technology and consensus rules are designed to build an extremely wide variety of smart contract-based applications without downtime, fraud or third-party intervention.

The prospect of building secure distributed apps for many use cases has caught the attention of IT, manufacturing, fintech and other companies interested in Ethereum development.

Ethereum facts you should know

Using cryptocurrencies as a short-term investment requires nerves of steel. Even small changes in markets, governments or technologies can have a large impact on current prices and long-term value. Find out these market and technology facts before you invest.

“Ethereum” are two cryptocurrencies

Whenever you hear or read “Ethereum,” you’re bound to ask, “Which one?” Ethereum Classic, which keeps the original Ethereum blockchain and consensus rules? Or Ethereum, which changed the original blockchain rules after a flaw in a smart contract resulted in $60 million in stolen funds?

Both currencies are functionally the same. Each is based on blockchain technology that uses smart contracts to create a variety of distributed applications. But from an investor’s perspective, they are very different. First of all, their market cap and prices reflect Ethereum’s greater popularity.

	Ethereum (ETH)	Ethereum Classic (ETC)
market capitalization	$67 billion	$725 million
price min./max (02/12/19 – 02/12/2020)	$95.18 up $635.16	$3.59 to $12.34

After the separation of Ethereum Classic and Ethereum, which created the separate blockchains, many world-class developers and companies showed greater confidence in the new blockchain approach by using Ethereum. A detailed account of the early days of Ethereum can be found here.

Technical improvements drive long-term value

The two cryptocurrencies also differ in how they use technology. Why should investors care? Technological improvements that increase performance and a wider range of real-world applications tend to support the long-term value of cryptocurrencies.

This has to be good news for cryptocurrency-based IRA investors. Greater confidence in cryptocurrency through improved technology is an important part of Ethereum’s story. Recent and upcoming technology improvements include:

• Backwards Compatibility: Ethereum is backwards compatible, Ethereum Classic is not. This means there is a constant opportunity to improve Ethereum’s performance by adding new software technologies as they emerge.
• Proof of Work versus Proof of Stake. These different sets of consensus rules play a big role in transaction speed. Ethereum is moving from the older, slower Proof-of-Work methods to faster Proof-of-Stake consensus methods.
• Faster transfer speeds. Cryptocurrency analysts look forward to testing faster transaction speeds in 2021 thanks to a multi-phased upgrade called Shard Chains. Shard chains will spread the load of the network across 64 new blockchains and have the potential to drastically improve transaction speeds — up to 100,000 per second. The importance of faster speeds is important because they make Ethereum more scalable, an essential part of becoming a competitive cryptocurrency.
• December 2018. Despite a bear market for most of 2018, Ethereum (ETH) price has skyrocketed by 66% in a week. This shows the resilience of the digital currency despite increasing competition from new coins.
• March 2019. According to the CCID Global Public Chain Technology Evaluation Index, Ethereum is one of the top three public blockchains, even edging out the top cryptocurrency by market cap, Bitcoin.
• April 2019. The popular browser Opera has released a browser update with an integrated Ethereum wallet. Developments like these are making crypto transactions easier, which may lead to greater adoption of digital currencies.
• December 2020 Ethereum 2.0 went live. Their beacon chain brings staking to Ethereum and lays the foundation for Ethereum’s more scalable, secure and sustainable system. If you are interested in learning more about what this upgrade means for investors, please follow this link here for more information.

Add solid investment value to your IRA

Our Ethereum and Ethereum Classic based self-directed IRAs are just two of our full-service solutions. Do you have questions about cryptocurrencies or how to qualify for IRA-based tax deferrals? Contact us today for answers and a quick start into the exciting cryptocurrency market. We are ready to help you invest in an Ethereum IRA.

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