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What is a Bitcoin IRA & How to Invest?

Donny Gamble
January 19, 2022
what is a bitcoin ira
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Investing for your retirement is something you have to start on as soon as possible. It allows your investments to grow, gives you the opportunity to diversify your investments, and confidence in your future that can lead to a less stressful life.

But should Bitcoin be part of your retirement?

A Bitcoin IRA is an individual retirement account that focuses on Bitcoin as the primary investment. An IRA can have multiple assets, but a Bitcoin IRA specializes in cryptocurrency.

According to the IRS, Bitcoin (and other crypto) is now considered personal property. Including it in an IRA can be tricky, and it comes with fees, but it has its benefits.

We’re going to dig deep into the topic of Bitcoin, how long it’s going to be around, whether or not it should be included in your IRA, and how to mitigate risk while riding a once-in-a-lifetime financial phenomenon without it passing you by.

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How Do You Open a Bitcoin IRA Account?

You can open a crypto IRA on sites like Coinbase, who have paired with Bitcoin IRA to help you with cryptocurrency IRA accounts. Alternatively, you can go through a firm so that they can store the assets for you, through a cold storage depository, and call it a day.

Opening a Bitcoin IRA isn’t too difficult, you just have to make sure you manage it properly. For that, check out our list of reviews on crypto IRA companies and programs right here.

How Does a Bitcoin IRA Really Work?

Having Bitcoin in IRA accounts is different to mutual funds or gold, but there are some similarities that you may be familiar with.

  • Cryptocurrency Marketplace: This is where the magic happens. Buy orders, sell orders, and invest in your IRA all begin with the correct marketplace. Just make sure that when you buy your crypto, it has the right destination.
  • Secure With a Custodian: Custodians are the depositories that store your cryptocurrency, so to speak. They watch after it in cold storage, and communicate directly with your marketplace. You need a custodian to store Bitcoin in an IRA.
  • Cold Storage: This is where it differs from the traditional online route of buying stocks, because your cryptocurrency is actually held in offline storage, know as “cold storage.” This means that it can’t be accessed or stolen in any facet; it’s insured by the custodian, and it’s secure as can be.

Can I Buy Bitcoin With My 401(k)?

You might be able to, but it’s going to be rough. We wrote an entire piece on Bitcoin 401(k)’s, but to summarize it quickly, Bitcoin is part of some 401(k) plans, but it is often not supported by employers and the way that they match contributions.

Most of the time, you’ll end up rolling your 401(k) over to a Bitcoin IRA if that’s where you want to put your investments. While a 401(k) can hold many assets, it ends up being used to hold onto liquid cash that your employer matches more often than not.

This way, your employer can contribute cash, and receive their tax benefit for it without having to purchase and allocate assets. In most employers' eyes, they’re already contributing dollar for dollar (as many do), so why should they have to bother purchasing assets to match them?

While there’s some truth to that mindset, you also have to think about the fact that these asset costs change by the minute. Some, like stocks and gold, have high enough prices already, so they may not even be able to contribute in the way that you want.

Crypto has fractions, or for Bitcoin there are Satoshi, but it just further complicates the process.

Should You Bother With a Bitcoin IRA?

Bitcoin IRAs have their benefits, but they should not be one person’s entire plan. Your IRA should allow you to purchase and store cryptocurrency like Bitcoin, but it should also be open to gold, stocks, bonds, and other assets apart from just cash.

You should include Bitcoin in your financial plan, but not base its entire success off of Bitcoin or cryptocurrency.

Final Thoughts

Bitcoin is a solid investment, it has historical prowess, but many financial experts still believe it will fall since it has no specific financial center to balance on. 

In the meantime, it’s turned people into millionaires, helped the global economy, and proves to be a solid financial strategy for the time being.

Since Bitcoin isn’t going to stop producing new coins until around 2140, having it as an investment option right now should be relatively safe, so long as the crypto giant doesn’t get completely dumped.

It’s like investing in a stock in a sense, where there’s always going to be risk.

Investing some of your portfolio in Bitcoin or other cryptocurrency, but not more than 10%. You can, of course, play with Bitcoin and other cryptocurrency on apps like Webull and Robinhood if you want to try and ride the price waves, similarly to a stock.

Bitcoin IRA

Bitcoin IRA is the world's first, largest and most secure cryptocurrency IRA platform used by thousands of clients.

About the author 

Donny Gamble

I’m Donny. I’m a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.

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