U.S. citizens are immersing themselves in the many advantages of holding cryptocurrency accounts. The less-than-strict regulation and early stages of counsel on exactly how these accounts should be run make them that much more appealing to investors and those willing to take a risk on hitting it big financially. But how available and acceptable is cryptocurrency when it comes to saving for retirement?
In the wake of the global COVID-19 pandemic, people are rapidly looking for creative ways to make money, invest money, and save for their retirement. The rapid growth of the cryptocurrency landscape prompted an interest in including cryptocurrency in retirement strategies. Ample knowledge about cryptocurrency, its future trends, and how you can include it in your long-term saving strategies ensures you’re doing everything possible to make an informed decision about including it in your retirement strategies.
Let’s better understand cryptocurrency and discuss a couple of ways to get started with including it in your approach to saving for retirement.
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What is Cryptocurrency?
Cryptocurrency is rising in popularity because of its economic promise and its potential to offer financial security for all of us. Taking the time to understand cryptocurrency is probably the most prominent action preventing many of us from investing in and taking cryptocurrency seriously.
Cryptocurrency can be technologically intricate, but we can break down some important information that will ultimately aid in an informed decision about how to move forward with it in your life and retirement.
What is cryptocurrency?
Cryptocurrency is defined as a form of digital currency designed to work as a medium of exchange. Its transactions are secured through cryptographic technology, also influencing how and when a new cryptocurrency is created.
Its security efforts are furthered through the use of decentralization, meaning it cannot be traced back to one centralized entity or government as its head. Cryptocurrency transactions are recorded and distributed across millions of computers.
Who invented it?
A mysterious developer or group of developers known as Satoshi Nakamoto published a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”
It detailed the creation of a peer-to-peer digital cash system that employed blockchain technology to record and track each cryptocurrency transaction. Three months after this paper was published, Nakamoto released the first Bitcoin software.
What is blockchain?
A blockchain is a continuously expanding list of records called blocks. Each block in this distributed ledger system is linked to the ones before and after it and secured using strong cryptography. Every system in the blockchain is updated each time a new block is added by someone.
Once the transactions are recorded in the blockchain, they are nearly impossible to change or delete. You need the permission of the network majority to do either of these, and that’s a complex process in itself.
One of the biggest concerns of cryptocurrency users was double-spending, or the ability to spend the same money twice. A blockchain helps ensure there’s no double-spending because each transaction is recorded and as stated above, nearly impossible to change or delete.
How many cryptocurrencies are out there?
According to CoinMarketCap, there are over 8,000 cryptocurrencies out there, Bitcoin leading the pack. Ethereum and Tether round out the top 3 cryptocurrencies to date.
What is an altcoin?
An altcoin is a term used for any other cryptocurrency aside from Bitcoin. It stands for “Bitcoin alternative” or “alternative to Bitcoin.” Most altcoins are focused on improving the privacy, transaction speed, and other framework used by Bitcoin.
One principal pro
Accessibility is a huge pro for those exploring cryptocurrency. You can manage your entire cryptocurrency operation on your mobile device, spend and buy from anywhere, and make decisions based on access to real-time data.
One principal con
There is no security available should you lose your cryptocurrency. Scams surrounding digital currency are increasing and people are taking advantage of the lack of security around your cryptocurrency accounts.
What is the Future of Cryptocurrency?
It’s important to stay current on all trends regarding longevity, consumer and business use, as well as creative solutions to the unique challenges presented by cryptocurrency. It’s equally important to be familiar with the basics of business, finance, and technology as cryptocurrency meshes the efficient use of each for long-term stability. The future of cryptocurrency changes daily due to the roll-out of new cryptocurrencies and constant updates but shows promise in long term availability.
Cryptocurrency is steadily transforming the entire currency landscape by reducing fraud risks with its blockchain technology, maintaining anonymity and privacy for its users, streamlining payment strategies, and creating an entirely digital environment for transactions. It’s also placing the financial system back in the hands of the people. The absence of a central governing agency remains an important factor in garnering continuous support for the cryptocurrency industry’s growth.
The future of cryptocurrency looks lIke:
- Businesses accepting cryptocurrency as a form of payment.
- Universities offering cryptocurrency courses.
- Evolving technology to identify potential money laundering.
- Blockchain interoperability.
How to Include Cryptocurrency in Your Retirement Strategies
Saving for retirement is all about stability, so, understandably, people may side-eye using cryptocurrency as a means for saving for retirement. Cryptocurrency is hardly secure and its volatile market relationship is documented for all to see. This rollercoaster of how helpful or harmful cryptocurrency is to its holders makes it less than appealing compared to traditional retirement savings strategies.
But even with its noticeable disadvantages, cryptocurrency as a retirement savings strategy potentially offers high returns, increased liquidity, and a high level of transparency that aids in choosing the best strategy for cryptocurrency growth.
Most of us are familiar with company-provided IRAs and 401ks as the most used vehicles for retirement savings. But as entrepreneurship rises, and more and more people pursue opportunities that don’t provide traditional retirement benefits, it’s perfectly acceptable to look for alternative options like self-directed IRAs to save for the future.
A Cryptocurrency IRA
A Bitcoin IRA can be one accessible alternative option for saving for retirement. A Bitcoin IRA helps with diversification, provides an opportunity for tax-free growth, and limits inflation. It requires a minimum investment of $3000, a $240 annual account holder fee, and a 0.05% wallet holding fee. There are promotional opportunities available to waive certain fees depending on which promotions, if any, are running at the time you open your account.
A Bitcoin IRA only uses cryptocurrencies and is the first of its kind to offer Bitcoin, Ethereum, and other cryptocurrencies in an IRA. You’ll have access to experts who specialize in cryptocurrency and who can guide and educate you through the entire lifecycle of your Bitcoin IRA. It may also be of interest to research other companies aside from Bitcoin now offering cryptocurrency IRAs to choose the best option for your long term saving needs.
Self-taught trading and maintaining a cryptocurrency account
If you’re not convinced about cryptocurrency being a plausible option for retirement savings yet, it may be a good idea to do some self-education in trading cryptocurrency and/or maintaining a cryptocurrency account. Thoroughly educating yourself in all things cryptocurrency and actively applying what you learn can ease the fears associated with taking cryptocurrency to the next level in your finances.
As you embark on your self-taught cryptocurrency journey ensure you’re:
Track your cryptocurrency transactions correctly and accurately. Disclose everything on your tax return with your cryptocurrency accounts and accurately fill out any specific forms. Make sure you do the right thing now so you don’t have to face the hefty consequences of illegitimate cryptocurrency practices later.
Implementing a system
Have a solid system in place for tracking and reporting your cryptocurrency transactions. Keep an extensive log and record of your transactions. Especially in peer-to-peer cryptocurrency transactions, it’s important to keep everything from screenshots, emails, and handwritten notes.
The connection between cryptocurrency and retirement remains in the early stages of research and implementation. It shows promise as a viable option for saving for retirement despite its market volatility, price fluctuations, and questionable security. By taking time to understand cryptocurrency, you can make an informed decision about how to utilize it in your long-term investment and retirement-saving strategies.