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Tom
March 6, 2018

By now just about everyone has heard of Bitcoin and cryptocurrency (digital currency), but not everyone really understands what it’s all about. And when you start adding in things like Bitcoin and Ethereum IRAs to the mix, things can get even more confusing.

However, you don't to be an expert to know that you can now fund your IRA and 401(k) with cryptocurrencies in addition to traditional assets such as stocks and mutual funds. It is easier than you might think to get started...

What is Ethereum?

Ethereum is a cryptocurrency platform that allows you to utilize something called ‘Ether,’ a crypto token that can be used for trading, securing, decentralizing and even codifying a number of things (the company says almost anything).

This system is very similar to Bitcoin in structure and Ethereum is ranked as the second most popular cryptocurrency in terms of overall market cap. It has additional features from Bitcoin such as smart contracts as well as its own token standard (ERC-20) which other cryptocurrencies utilize.

Ethereum has seen astronomical growth in both value and usage since the beginning of 2017 which has made it a target for investors. 

Using Ethereum for Retirement

Once you’ve taken a look at the historical growth returns you’ll want to take a look at how you can use Ethereum as part of your retirement portfolio. 

That way, you can invest in this emerging asset class completely digitally, in a way that’s less susceptible to the fluctuations that you’ll find in most other retirement markets.

But there’s more to it than that.

Even if you’re not just looking at investment opportunities you can still get involved with Ethereum. You can start buying and selling with no problem and you’ll start seeing the benefits of a digital form of currency.

There’s a lot involved with more traditional investing, but you’ll have no problem getting the hang of these types of currency. Anyone who hasn’t invested before will see that getting started here is going to make some differences in the way you feel about digital currencies in general.

Opening An Ethereum IRA

When you buy Ethereum with an IRA you still have the option of all other types of IRA, such as traditional, Roth, SEP, or 401(k), as well as some additional similar choices.

Ethereum IRA

What’s really nice is that adding this method is just like adding Bitcoin to an IRA, so if you’ve already done one you won’t have any problem doing the other. 

You just go through the process of opening your self-directed IRA with a top custodian, rolling over funds, and then finishing up with an allocation order.

The way that a typical IRA works is also great for this type of Ethereum IRA because you get tax-based incentives but at the same time you’re not going to be able to get into the funds. At least, you’re not going to get into them until you hit 59 ½ unless you are willing to pay some penalties.

In general, it’s going to be very similar to what you would normally expect with an IRA.

Why You Want an Ethereum IRA vs. a Regular IRA

There are several benefits to cryptocurrencies and Ethereum versus the standard options for investment and if you’re even thinking about this process you’re going to want to know those benefits. After all, no one wants to jump in without having all the facts, right?

You’ll notice benefits with convenience, fees, and the ability to transfer a lot of your funds a lot easier. After all, these digital currencies are easy to move around whenever you want and there’s a lower risk of any kind of fraud, even when you’re transferring them between different countries. This makes it great even for investment purposes.

When it comes to an IRA specifically, you’ll notice that the best crypto IRA companies allow you to invest in multiple cryptocurrencies. So in addition to Bitcoin and other crypto tokens like Ripple, you can put a portion of your IRA in Ethereum. 

You’ll also notice that it has tax deductions on some contributions and that gains are even non-taxable until after the distributions have been completed.

Making Your Choice

The key is making sure that you look at different options when it comes to investing. After all, there are plenty of different IRA accounts out there and there are a whole lot of ways to invest in them as well.

If you’re just getting started with Bitcoin and Ethereum it may be difficult to even imagine what they could mean for you, but if you take a closer look you’re definitely going to find options that work for you and your investment process.

About the author 

Tom

Tom is a former accountant turned entrepreneur. He is not a financial adviser but does tend to give a lot of financial advice to his friends and colleagues. He currently runs a small online venture and blogs about his research and experiences.

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