Tag: Cryptocurrencies

Guide to Cryptocurrencies in a Roth IRA | Bitcoin IRA

Guide to Cryptocurrencies in a Roth IRA | Bitcoin IRA

Posted on | by [email protected]

New investors are often curious about the benefits of a Roth IRA vs. a traditional IRA. The most significant difference between the two is how each is taxed.

Investors may make pre-tax contributions to a traditional IRA, and then the money is taxed when it is withdrawn. With a Roth IRA, the money contributed may not be tax-deductible in the contribution year, but it might also not be taxed when it is withdrawn at retirement age. For investors considering long-term cryptocurrency investments, the potential tax benefits make the Roth IRA an attractive option.

So why might investors consider a self-directed Roth IRA?

Overall, Roth IRAs potentially remove or mitigate the risk of a future increase in retirement income taxes. Additionally, assuming that the account grows over time, a Roth IRA holds the possibility of paying fewer taxes on the resulting amount when an investor enters retirement.

Cryptocurrencies in a Roth IRA

To achieve portfolio diversity, you may invest in alternative assets, such as cryptocurrencies within both a Roth or traditional IRA. An option for investors seeking to add digital currency to an IRA would be to consider seeking out an IRA custodian offering alternative investments.

Having a separate account for alternative asset investing may help to diversify a retirement portfolio as a whole. Diversifyingaway from traditional assets, like stocks and bonds, can be important for investors who are looking to prepare for future market adjustments. Investors can use self-directed Roth IRA accounts for many alternative assets, including cryptocurrencies, real estate, and much more.

Investors may choose to roll over portions of existing or entire accounts to an IRA custodian in order to fund a self-directed Roth IRA for cryptocurrency investing. Meanwhile, those without an existing Roth IRA account may also open a self-directed IRA for cryptocurrency with the same custodian and make contributions.

Investing a Roth IRA in Cryptocurrencies

Like any other type of investing, it’s typical for investors to begin by educating themselves about the assortment of cryptocurrency options available. One thing to note would be finding a platform with offerings that cater to the interests of the investor. Bitcoin IRA offers investors more than 60 types of cryptocurrencies to choose from. The more choices available, the easier it is for investors to diversify their portfolio with crypto holdings.

Another route for eager investors to consider could be to divide funds between three of the more popular cryptocurrencies to diversify their entire retirement portfolio. That said, some investors may prefer to deeply research (crypto) projects based on their fundamentals by reading whitepapers, online articles and using social media to learn how other investors rank their prospects.

There is no right or wrong way to go about investing, but it is best to have a strategy that works for you.

Opening a Cryptocurrency Roth IRA

Bitcoin IRA1 offers investors a tax-advantaged2 way to invest in various cryptocurrency assets directly in their self-directed IRAs. Investors can take advantage of the simple process of opening an account. The 24/7 platform can be accessed from mobile devices, allowing for easy trading and management of your Roth IRA.

2Some taxes may apply. We recommend you consult your tax, legal, and investment advisor.

 

Questions on getting started with cryptocurrency investing in your Bitcoin IRA account? Our specialists are here to help! Call us at 877-936-7175 or email us today.

Recommended article: Why Investors are Banking on Bitcoin Instead of Social Security

Bitcoin IRA | Bitcoin vs Social Security

Why Investors Bank on Bitcoin Instead of Social Security | Bitcoin IRA

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Whether you are 30 years away from retirement or three, planning for your senior years was something that the U.S. government thought it could help with.

The Social Security (insurance program) was brought forth by the Social Security Act of 1935 as a general welfare effort to help provide economic security to retired workers and their families. It was in 1940 when Americans began to receive these benefits and the social security system provided retirees with the fixed monthly income that we know of today.

Since then, multiple administrations have engaged in talks about altering or removing the system altogether. Because the future of the social security system is not written in stone, many American workers have taken matters about their retirement income into their own hands by investing in self-directed IRA accounts, managing their own stocks, as well as by contributing to 401(k) and alternative retirement plans.

Investors who were managing their portfolio of stocks and bonds between 2009 and 2019 found that, for the most part, most assets increased in value. Once the economy hit a period of higher inflation, some investors of all ages began considering other asset classes as alternative investments, like cryptocurrency.

Who is Investing in Cryptocurrency

Younger investors (within the Gen Z category) have started seeing long-term benefits when investing in cryptocurrency, expecting to hold it in their portfolio for five or more years. For millennials, 46% surveyed by 2021 Engine Insights report that they believe they can become millionaires by investing in crypto.

And, while Gen Z’ers and millennials are out-buying other generations in crypto investments, Gen X is out-spending by almost $1,000 per year.

While the risks of investing in cryptocurrency include competition, cyberattacks and changing regulations, the potential long-term benefits have, so far, shown promising potential growth for investors.

Using Cryptocurrency in a Retirement Program

By taking advantage of self-directed accounts, some investors may opt into a program that allows them to buy, sell or trade cryptocurrency.

Utilizing a self-directed IRA for your cryptocurrency investment strategy may offer some tax advantages, such as helping you to avoid capital gains taxes by deferring taxes on your crypto investments held in your IRA. For instance, when the price of a cryptocurrency increases by large percentages in a short period, you may be less likely to pay a tax rate of more than 20% on the gains you’ve earned.

Among other benefits of holding and trading cryptocurrency in an IRA account is that it has the predisposition to hedge against inflation, like gold. This is due to the finite or limited supply of Bitcoin and other cryptocurrencies in addition to the fact that crypto isn’t tied to one country’s economy.

When you’re ready to give cryptocurrency investing within your IRA a shot, the key is finding a custodian that offers you alternative investments in addition to that of traditional asset classes that are accessible directly within your IRA.

Adding Bitcoin Investments to your IRA Portfolio

Innovative investment platforms, like Bitcoin IRA, offer users alternative investments as a solution to augment their potential, future social security income.

Bitcoin IRA makes the process simple for one to open a new IRA account and roll over funds from an existing one. Bitcoin IRA helps you to open a tax-advantaged* IRA account that allows you to invest in alternative assets, like cryptocurrencies. The platform can also be accessed on mobile devices, allowing for 24/7 trading and easy access to your IRA dashboard.

*Some taxes may apply. We recommend you consult your tax, legal, and investment advisor.

 

Questions on getting started with cryptocurrency investing in your Bitcoin IRA account? Our specialists are here to help! Call us at 877-936-7175 or email us today.

Recommended article: Crypto: To Invest or Not to Invest

Using Crypto to Diversify for Retirement | Bitcoin IRA

Using Crypto to Diversify for Retirement | Bitcoin IRA

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Diversifying a retirement portfolio is essential for investors at any age and stage of their investment journey. It’s typical for younger investors tend to take on more risk, while those closer to retirement age are more likely to pare back risks to ensure capital preservation.

Managing that risk includes evaluating retirement account investment structures. One traditional option is to hold 60% in stocks and 40% in bonds, but when bond rates are at historic lows, some investment managers may suggest that the ratio be closer to 70/30. This allocation leaves openings for alternative investments as one of the best ways to diversify for retirement.

New Ways to Diversify for Retirement

So, where should you start looking for that extra bang that will help you reach your goals by the time you are ready to retire?

Consider alternative investments beyond stocks and bonds that often include real estate, precious metals, and private equity. In addition to these alternative options are cryptocurrencies, which are also quickly gaining ground as investors seek more asset classes to diversify investments for retirement.

As an asset class, cryptocurrencies offer investors new transaction options. They also provide levels of transaction transparency that might be unachievable with cash and other current digital methods. These qualities make cryptocurrencies viable for mass adoption by governments, central banks, and institutions, as well as private investors.

In all, cryptocurrencies are a great way to diversify an IRA portfolio because the IRS views them as assets. To add these to your portfolio, it’s best to find an investing platform that supports crypto investments in your IRA.

How to Diversify for Retirement with Crypto

When beginning to diversify your investments with crypto, an option one can take is to start with the due diligence and fundamental analysis that you would do with any other investment product.

One of the easiest ways to perform basic research on cryptocurrencies is by reading through the whitepaper distributed at each coin’s initial offering. You should be able to find this information—and more—about each individual cryptocurrency on its project website. Read through each paper to see whether it has a viable use case and which problem(s) are solved by that specific cryptocurrency.

Also, consider how the trading volume has changed over time. You may want to look for cryptos that have historically increased interest and trading volume. To really dig into the details, you can search online forums to view conversations about what current investors think about the coin.

Another way to analyze crypto charts is by technical analysis. To do this, start by opening a chart in your trading platform and applying your favorite indicators to help you decide your best opportunity to start trading.

Where to Diversify Your Retirement with Crypto

Not all self-directed IRA platforms are designed to help you diversify your retirement portfolio with cryptocurrencies. If you’d like to add crypto to your IRA portfolio, be sure to find an investing platform, like Bitcoin IRA that can serve you and your needs as you diversify with alternative investments.

Bitcoin IRA* is an industry-leading Crypto IRA platform  that offers a variety of cryptocurrency investment choices (60+ coins) to account holders. With a substantial base of over 100,000 users, our easy-to-use platform can be accessed both online and via our mobile app (available for iOS and Android). Bitcoin IRA is a solution designed for investors who are ready to take control of their retirement and build the best diversified portfolio to suit their needs Visit Bitcoin IRA to get started so you can diversify your investment portfolio with cryptocurrency today.

 

*Alternative IRA Services, LLC dba Bitcoin IRA is a platform that connects consumers to qualified custodians, digital wallets and cryptocurrency exchanges. The company is not a custodian, is not a digital wallet and is not an exchange. Self-directed purchases processed through Bitcoin IRA have not been endorsed by the IRS or any government or regulatory agency. Bitcoin IRA is not an adviser. Information contained on this website is for educational purposes only. We encourage you to consult an adviser or professional to determine whether Bitcoin IRA makes sense for you. Cryptocurrencies are very speculative and involve a high degree of risk. By using the website, you understand the information being presented is provided for informational purposes only and agree to comply with our Terms of Use and Privacy Policy.

 

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Bitcoin IRA | Growing Your Nest Egg with Cryptocurrency Investing

Growing Your Nest Egg with Crypto | Bitcoin IRA

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With the stock market in a stage that many refer to as a bubble, it can be tough to identify the best ways to diversify your portfolio so that you can grow your nest egg (also known as your retirement account or retirement savings).

When considering to diversify a portfolio with cryptocurrencies, investors may wonder about these types of assets and how they can impact or possibly even benefit an IRA. The good news is that because the IRS views cryptocurrencies as property, crypto investments are available as assets for an IRA, which means that you can easily use crypto to grow your nest egg. The important thing is to find a reliable self-directed IRA custodian that offers cryptocurrency investing. If you’re looking to diversify your IRA portfolio with alternative assets, like cryptocurrencies, this article is for you. Learn more on how to do this below.

How to Invest in Cryptocurrencies

When growing your nest egg, your investment choices may often revolve around the amount of risk you are willing to take. Investors may mitigate risk to maintain a financial plan in several ways, including portfolio diversification. For example, in your current IRA platform, you may be able to purchase Bitcoin or Ether futures. Still, with the wide variety of offerings on the market, you may want to maximize your opportunity to diversify your cryptocurrency holdings between different types of assets.

In some cases, certain cryptocurrencies were developed to solve specific problems. For example, Bitcoin can help people who don’t have access to banks while Litecoin was created to make crypto transactions faster than they were with Bitcoin.

Bitcoin (BTC) is the first established and most well-known cryptocurrency. It engineered the use of blockchain technology that has been adopted as the backbone of new industries. Many other offerings, including Bitcoin Cash, Litecoin, and Dogecoin, use similar but lighter-weight technology, to accomplish similar things as Bitcoin.

Digital coins vary from one another, as they aim to accomplish different objectives. For instance, Internet Computer was designed to improve the internet architecture, and Filecoin seeks to provide a secure web-based data storage solution. So, when investing in cryptocurrencies, it’s wise to research the coins you’re looking to invest in and learn each coin’s objective toward improving specific systems currently in place or current gaps in their space.

You can conduct your technical analysis by reviewing this coin research alongside historical price charts to view how different cryptocurrencies have performed in the past. Then, once you have decided which projects you want to support, investing in cryptocurrency seems likely to be your next step. If you’re ready to get started, find a digital IRA platform that is right for you, open a wallet for your digital currencies and choose the cryptocurrencies you’d like to buy.

It’s important to note that cryptocurrency does not have to be an all-in investment product. Know that you can also purchase portions of coins versus a whole coin. For example, one Bitcoin is trading at around $40,000, but you can buy any amount of your desired crypto that works best for you and your portfolio.

Find an Investment Platform

There are numerous ways to invest in cryptocurrencies. In addition to a regular exchange, many investors are seeking out the potential tax advantages associated with crypto investing in an IRA or even a 401(k). While there are various custodians available, not all of them are structured for users to open IRA accounts to buy or sell crypto. So, if crypto is something you’d be interested in exploring, be sure to look for a custodian that offers this option when preparing to invest your IRA in cryptocurrencies.

For example, Bitcoin IRA offers investors options to open a new retirement account or transfer funds from an existing retirement account, like an IRA, to invest in cryptocurrencies. In addition, our platform can be conveniently accessed via a mobile app as well as through a web experience. In fact, our platform allows you to buy, sell or swap crypto directly in your IRA anytime, wherever it suits you, 24/7. Plus, Bitcoin IRA offers users access to over 60 different types of cryptocurrencies.

Growing Your Nest Egg with Cryptocurrencies

To grow your nest egg by investing your IRA in cryptocurrencies, first, choose and research a credible and secure platform with features that best serve you. Then, educate yourself about the different types of cryptocurrencies available to you and determine which fit best into your risk assessment mix. Next, it’s time to begin investing and once you do, it’s suggested that you assess the performance of your investments as you would any other account.

Bitcoin IRA is an industry-leading Crypto IRA Platform that allows you to invest in tax-sheltered IRA* accounts in assets like cryptocurrencies; check them out today.

 

*Some taxes may apply. We recommend you consult your tax, legal, and investment advisor.

 

Questions on getting started with cryptocurrency investing in your Bitcoin IRA account? Our specialists are here to help! Call us at 877-947-4125 or email us today.

Recommended article: Crypto: To Invest or Not to Invest

Bitcoin IRA | Crypto: To Invest or Not to Invest

Crypto: To Invest or Not to Invest | Bitcoin IRA

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Cryptocurrency investing has become a hot topic over the last five years, and because of how its popularity has risen, long-term investors could worry that cryptocurrency investing may seem like the wild west of finance. One thing we can say is that it’s starting to appear that crypto  is here to stay.

 

What Makes Cryptocurrencies a Good Investment?

First and foremost, cryptocurrencies are starting to gain recognition and acceptance from more people, businesses, and institutions. In addition, central banks (worldwide) are also working on digital coins of their own. So, the digitization of everything money-related is on the horizon.

Consider this: investing in cryptocurrencies is a great way to diversify your currentfiat-based portfolio—especially your retirement portfolio—as you become an early adopter ofcrypto trading, relative to the rest of the world.

The recent attention drawn to cryptocurrencies has piqued the interest of regulators, and there are legal off-the-blockchain products available in which to invest. For example, there are CME hosts bitcoin futures products, and there are also many cryptocurrency ETFs for investment as well. In addition to these investment platforms, people are also looking into their retirement accounts, including their IRA and 401(k) accounts, for cryptocurrency investing due to potential associated tax advantages.

Pros of cryptocurrency investing:

  • It can help you diversify your retirement portfolio
  • Crypto is becoming more widely accepted
  • Potential for high scale with long-term investments

Are Cryptocurrencies Risky?

The most widely talked about risk associated with well-known cryptocurrency names is its volatility. While the broader market is experiencing  a good amount of unpredictability at the moment, cryptocurrencies tend to have wider price swings (on a daily basis) than some of the more popular stocks and ETFs.

Additional concerns of cryptocurrency investing tend to vary upon each individual investor. It’s important to note that not every coin will yield 1000% returns, as many are coming to realize. Like the threat of any stock, cryptocurrencies may experience hype before becoming vaporized when a significant player sells at the top, regardless of the project’s validity behind the coin.

So, simply opening a wallet and buying coins at random may not be a viable strategy. That said, smart investors wouldn’t necessarily do that with stocks, real estate or other types of investments either.

Risks of investing in cryptocurrencies:

  • Cryptocurrencies, on average, tend to be driven by speculation
  • Going into cryptocurrency investing with outlandish expectations may not always result in outlandish gains
  • Many invest in projects without doing their due diligence nor the proper research

Is Cryptocurrency a Good Investment?

Yes, it can be if the right strategy and due diligence are employed. It’s highly recommended for cryptocurrency investors to take the time and make the effort to educate themselves and do their research. This way, they can be better equipped to make thoroughly thought-out investment decisions to diversify their portfolio. Doing this gives them the potential to fare well with cryptocurrency investing.

As always, the use of risk parameters that are appropriate for your portfolio while taking advantage of these technologically innovative high-growth assets is highly recommended. BitcoinIRA offers a range of self-directed IRA options along with easy solutions for converting your fiat into crypto, all with just a few clicks via their mobile app or on their website.

Questions on getting started with cryptocurrency investing in your Bitcoin IRA account? Our specialists are here to help! Call us at 877-947-4125 or email us today.

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Bitcoin IRA | Using Crypto to Diversify for Retirement

Crypto Investing Myths Debunked | Bitcoin IRA

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Bitcoin, Ethereum, Cryptocurrency, Investing Myths Debunked

What started as an underground asset class for the computer savvy has turned into a household name. Interest in cryptocurrencies has exploded, and with it, some myths and misconceptions about the space.

If you have ventured beyond Yahoo News or the Wall Street Journal to learn how to invest in cryptocurrency, information within the universe can appear off-the-wall and disingenuous—making it look like a poor investment choice. But, with gains in the 1000% percentile, it’s hard to ignore completely. So here are some of the top cryptocurrency myths debunked.

Cryptocurrencies are a Scam – FALSE

Financial fraud dates back to the creation of money. Here is a fun fact, in 193 A.D., the Praetorian Guard auctioned off the Roman Empire (which they didn’t own), to Julianus for 250 gold pieces for each member of the army (equivalent to approximately more than $1 billion today). Julianus was never recognized as emperor and the new sitting emperor executed the guards.

First of all, crypto (when invested using a credible platform) is generally not a scam—despite the many naysayers across various social media channels. While cryptocurrency investing doesn’t have the heavy regulations of other investment types, it is believed that federal regulations for crypto are in the works. Like any other investment, it is always recommended for investors to do their due diligence and research to protect themselves from bad players and other dishonest entities.

Obtaining meaningful research from the cryptocurrency universe can be challenging at first, but it is not impossible. It’s recommended to keep things simple by starting with credible sources, such as relevant online publications from notable names within the segment, including Bitcoin Magazine, Crypto Briefing, and Blockchain Magazine. Another way to prevent a bad or fraudulent situation is to invest through a trusted platform, such as BitcoinIRA, which offers over 60 types of cryptos via both a web experience and convenient mobile app.

Too Much Anonymity – Mostly FALSE

Over the years, cryptocurrencies have been touted as a way for people to launder money because of their anonymity. However, this is false for most cryptocurrencies, including $BTC and $ETH. Simply put, cryptocurrencies are built on a linked public ledger. For example, the information in block B contains some information from block A, and information from block B is inserted into block C as it is formed—creating the digital blockchain.

If any information in any block is disturbed, the chain is no longer in agreement with the information present, and the chain becomes invalid. Of course, there is much more to this, but the linked ledger makes it impossible to alter the sequence of transaction information to hide one’s activities. The means that authorities can more easily track and identify fraud through blockchain.

Meanwhile, IT programmers are working on stealth addresses and new ledger protocols to achieve better anonymity for many reasons. Some credible reasons include trade secrets and personal information protection. So, it is possible to achieve some level of anonymity with cryptocurrencies, but most available coins do not operate this way.

Cryptocurrency Investing and Trading is Easy – FALSE

Cryptocurrency investing is like any other market; people buy when they think prices will increase. When any asset class is in a bull market, buying low and selling high is no longer an art. The problem with bull markets is that they come to an end.

For example, the stock and housing markets have been in a long-term uptrend since the Great Financial crisis bottom in 2009. Since then, people have generally taken the BTD (buy the dip) approach and been successful. But when the winds change, this strategy will no longer work for any market.

Since the US Federal Reserve announced in late 2021 that they would bepulling back financial accommodations interest-rate sensitive products have moved in sympathy to the news—with the technology sector being hit the hardest.

While the Fed has very little to do with cryptocurrencies, the idea is the same. For instance$ETH prices are showing an optimistic pattern now that large corporations are interested in selling NFTs (non-fungible tokens) and their metaverse applications.

So, cryptocurrency prices are also susceptible to political news and moves in international equity markets. Suppose you are the type to invest in new ICOs. In that case, it’s recommended to gain a better understanding of the protocol used, what significant news events could potentially affect pricing, the underlying project, how well it is being marketed, and which problems it may solve for probable future success.

Understanding Crypto

Overall, like many asset classes, cryptocurrency investing has its strengths and weaknesses, which is why it’s wise to do your due diligence and research before making any investment decisions. That way, regardless of what is being said on various public forums, your viable investment opportunities may not be swayed by opinions of sources that may lack credibility or expertise. Additionally, it’s generally a good idea to understand the mechanics behind how your money is being put to work. So, take the time to learn how to invest in cryptocurrencies and invest through trusted platforms, like Bitcoin IRA.

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Bitcoin Lightning Startup Goes Beta

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On March 15, the highly anticipated Lightning Network launched a beta version of its software (LND) that is now available to the developer community. As discussed previously on this blog, the Lightning Network is a decentralized network that uses smart contract functionality in order to enable payments and process transactions off the blockchain. With this launch, the developer community can leverage LND to send Bitcoin and Litecoin to other users, marking significant progress towards improving transaction times, processing fees, and potential for scalability.

Industry Buzz

The developer community is working tirelessly to develop solutions that make cryptocurrency transactions cheaper, faster, and ultimately more scalable. While the LND is just one software of several trying to accomplish this, many believe it’s the most mature software of this type to date.

Establishing itself as a distinguished innovator in the crypto space, Lightning Labs has raised $2.5 million from some of the biggest names in Silicon Valley, including Twitter CEO Jack Dorsey, Litecoin creator Charlie Lee, and former PayPal COO David Sacks.

In addition, BitGo, the blockchain security company that we are proud to have an exclusive partnership with, also offered their support for the launch of LND. “It’s something the entire community has been focused on and working towards for the better part of two years now. It’s really the culmination of a lot of work by many people, not just Lightning Labs…We see it as a very important piece of the scaling solution for Bitcoin, and perhaps other digital currencies as well,” said BitGo CTO Ben Davenport.

LND Software Highlights

Lightning Labs released a comprehensive blog post detailing all of the highlights from this launch. Some of the benefits include, but are not limited to:

  • A new and improved key creation and recovery system that makes recovery from data loss or corruption simpler and more reliable
  • Automating the process of sweeping funds back into a user’s wallet. This is now handled by a concert of subsystems in a process known as automated contract resolution that is fault-tolerant and intelligent, which is critical to the safety of funds.
  • SegWit only. An implemented soft-fork change in the transaction format of Bitcoin, Segwit ensures all transactions, even on-chain transactions, will benefit from lower fees and faster transaction times.

LND Software and Bitcoin IRAs: Why it Matters

While cryptocurrency prices have experienced volatility in recent months, technological advancements like the release of LND software are testaments to the long-term staying power and value of digital currencies in the world today. And this is only the beginning. Jack Mallers, a developer for a user-friendly Lightning wallet that is being built on top of LND, said: “This release is a step forward for the network itself. Before all of the apps, we need to build a healthy network that has liquidity, reliability, high-uptime nodes, healthy channels, etc. We need to onboard an entire industry onto a new layer and build a healthy topology. This release kinda marks the ‘start’ so to speak.”

As the cryptocurrency community continuously works towards implementing new solutions, this industry will likely continue to see even greater mainstream acceptance and adoption at the enterprise level as well.

With BitcoinIRA.com, you can capitalize on all of the exciting innovations happening in the digital currency community by investing in Bitcoin as well as five other currencies in your IRA or 401(k). Call us today to speak to a IRA specialist and learn more: 877-936-7175.

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Microsoft to Embrace Decentralized Identity Systems Built on the Blockchain

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Bitcoin, Litecoin, and Ethereum are getting a boost from an unlikely partner, Microsoft, who plans to work with blockchain technology in creating decentralized identity systems. Through the process of decentralization users will have full control over their identity, making this the perfect solution to a growing systemic problem. The tech giant has agreed to join the ID2020 initiative, an alliance of public and private companies, as well as governments, working towards improving the lives if 1.1 billion people around the world lacking any form of legal identity. With this agreement, Microsoft is making a donation of $1 million as well as allocating additional resources and human-power to the cause.

The Problem

Over 1 billion people across the globe lack a proper form of identification that is recognized by the world’s governing bodies, leaving them without many basic rights such as healthcare, public education, access to banking, and more. This also makes those without a legal form of identification more susceptible to displacement and human trafficking. On a macro level, this problem prevents aid organizations from accounting for accurate population data, making it difficult for them to allocate resources appropriately where they are needed most.

The Solution

The use of blockchain technology is paramount in the attempt to provide digital identities to those in need. Blockchain technology is a brilliant solution for providing digital identities to those in need, as it allows for the distribution of trust across a decentralized network. This ensures that no one entity control over information and ultimately keeping data and identity information secure.

Blockchain identity solutions work on a system of trust known as “attestations,” inherent in many public blockchains such as Bitcoin and Ethereum. In this process, an individual asserts pieces of their identity which are then verified by trusted parties. This differs from the current identification process which entails accessing and authenticating data through the use of password protection.

Through the process of decentralized IDs (DIDs), identity is verified through a variety of methods such as fingerprint scanning, facial recognition, date of birth information, social media accounts, and more. With no physical form of identity required, individuals run no risk of losing their identity, as it is securely stored on the blockchain. Each individual determines when their information is distributed and to whom, giving the individual full control over their identity.

How does Microsoft fit in?

The company plans to use its Microsoft Authenticator app to support DIDs, along with public blockchains such as Bitcoin, Ethereum, and Litecoin to foster the growth of this project. Currently the Authenticator app is used as a secondary proof of identity verification on mobile devices and already has millions of users worldwide. The plan is for this application to be used in conjunction with DIDs to directly manage cryptographic and identity information. Users will be able to allow Microsoft to act as their user agent on their behalf to manage user information and cryptographic keys. However, this won’t give Microsoft access to the ID itself, which is encrypted and rooted on the blockchain and unable to be viewed.

This is another step in the direction of further blockchain development for Microsoft, which has already been working with the Decentralized Identity Foundation and Tierion on DID projects, as well as the Enterprise Ethereum Alliance to incorporate aspects of blockchain into their business. “We believe it is essential for individuals to own and control all elements of their digital identity. Rather than grant broad consent to countless apps and services, and have their identity data spread across numerous providers, individuals need a secure encrypted digital hub where they can store their identity data and easily control access to this,” said Director of the Microsoft Identity Division Alex Simons.  

Through the process of implementing these decentralized identity systems, Microsoft is demonstrating even further adoption/incorporation of blockchain technology at the enterprise level.

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Bitcoin Technology is Improving

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While cryptocurrency prices have seen their fair share of volatility, the underlying technologies supporting the industry continues to grow immensely, demonstrate innovation, and solve problems. Specifically, technological advancements in the areas of privacy, off-chain solutions, and exchanges are signs of a cryptocurrency industry with a bright future ahead.  

Privacy

The initial iteration of blockchain privacy has left many people scratching their heads as to why anyone would ever want their financial transactions published for the world to see.  But the advent of zero-knowledge proofs are beginning to change this narrative, as they allow transactions to be validated without any information of the transaction itself being made public. This method of privacy, which is currently being used by ZCash and is being developed by Ethereum, has been thoroughly researched in order to prove its validity as a method for increased privacy.

There are other technological advancements arriving on the scene that are dedicated to making user privacy a priority. Coinjoin technology gives the option to join multiple transactions together making it impossible to tell the transaction origination and destination wallets. Homomorphic encryption, or a method of performing calculations on encrypted information without decrypting it first, has been proposed as a way to prevent privacy problems that occur when dealing with sensitive, unencrypted data. Although still in the theoretical phase, this technology is projected to be utilized for practical, mainstream usage in the not-too-distant future.

Off-chain Solutions

Two large challenges for blockchain technology are speed and scalability, and developers are actively working on addressing both. Payment processors such as Visa can conduct thousands of transactions per second at high speeds, while the legacy Bitcoin blockchain can only conduct 4-7 transactions per second. Because of this, Bitcoin has had trouble scaling at the enterprise level, but an array of off-chain solutions are being implemented to help create blockchains that can transact without capacity or speed limitations.

The Bitcoin Lightning Network has been widely regarded as a game-changing innovation that could take the cryptocurrency to the next level. Powered by smart contracts, the Lightning Network allows payments to be settled off-chain by way of payment channels where users transact. The blockchain isn’t used in every transaction and is instead only called upon to settle disputes and when payment channels are closed.

Ethereum is working with a similar off-chain solution, the Raiden Network, which promises instant, low-fee transactions to work in conjunction with the Ethereum blockchain. Compatible with the ERC20 token, the Raiden Network takes away the need for global consensus and allows Ethereum smart contracts to be processed off-chain and settled on the blockchain when needed.

Bright Horizons Ahead

Although the cryptocurrency industry has dealt with its fair share of volatility in recent months, the technology powering the space has grown immensely and will only continue to grow steadily with the help of dedicated teams working to accommodate the over 20 million digital wallets being used by consumers and businesses around the world. This puts blockchain technology and cryptocurrencies on track to do great things in 2018 and beyond.

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It’s Official: India to Legalize Bitcoin Soon

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Like others around the world, the Indian government has had its initial reservations about bitcoin and other cryptocurrencies. The country’s reserve bank on several occasions has issued warnings to the public on cryptocurrency use risk.

Even with these warnings, bitcoin adoption in the country only grew. Things came to a head on November 8, 2016. Prime Minister Narendra Modi decreed that Rs 500 and Rs 1,000, the largest denomination currency notes, were no longer legal tender.

The following day long queues formed outside banks and government owned gas pumps as people tried to convert the now useless notes to smaller denominations. That pushed even more Indians to hold and buy bitcoin.

The Bitcoin Taskforce

In March 2017, Kirit Somaiya, a Member of Parliament of the ruling BJP party, wrote to the reserve bank of India, the ministry of finance and the Securities and Exchange Board of India (SEBI). He wanted an urgent study done about bitcoin and its use in the country. Kirit:

“The use of Bitcoin, a hypothetical currency, is increasing at a rapid speed in India as well as in the world….there is urgent need to have a study on the development of Bitcoin in India.”

In early April 2017, the government formed a taskforce to look into bitcoin and other digital currencies. The taskforce’s mandate included formulating a framework that would guide industry regulation.

Members of public and other stakeholders were invited to give opinion.  On MyGov, the official government portal, close to 4000 submissions were made and the majority were in support of legalizing bitcoin in India.

The Digital Asset and Blockchain Foundation of India, a non-profit organization that represents local bitcoin businesses, is one of the entities that sought audience with the taskforce.

Change of Heart

As the regulators got more enlightened about cryptocurrencies, in particular, through the work of the taskforce, their stand softened. In fact, the Asian country is now on the path to joining countries like Japan, Australia and South Korea that have in the recent past recognised bitcoin as a digital asset or a private currency.

On July 13, CoinDesk reported that India is considering imposing goods-and-services tax on bitcoin purchases. This is a far position from the push that some elements in the government made to have the cryptocurrency banned. An official:

“The discussion on whether crypto-currencies should be banned or regulated has been on for some time. The pros and cons for both aspects were put forth in the meeting chaired by Finance Minister Arun Jaitley last month.”

The tax on bitcoin purchases will be the first step to industry regulation. Most bitcoin companies operating in India such as exchanges and remittance services have long self-regulated.

They have observed the Know Your Customer (KYC) and anti-money laundering (AML) requirements. Therefore there will be little impact on how they operate when the regulator starts having a closer look at their operations.

Bitcoin’s legalization in India is critical and will have a significant network effect. India has the second largest population after China. It also has one of the largest unbanked populations. Bitcoin could be the technology that brings millions of Indians to financial inclusivity.

 

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