Six Bitcoin Investing Myths You Should Probably Forget About No Matter Your Experience or Expertise
If you listen to six different crypto investment gurus online, you might hear six different investment strategies. Crypto investing is a brand new concept, and there’s a lot of confusing information out there.
Andy Klein, Director of Strategic Planning at BitIRA, recently took to Forbes to highlight some of the most persistent cryptocurrency investment myths.
Klein wrote the article with the goal of tackling misconceptions about the crypto market. He also wanted to clear up confusion regarding putting bitcoin in your retirement account – something you can absolutely do.
With that in mind, let’s take a look at the top six cryptocurrency investing myths highlighted by Klein:
1. It’s Too Late to Invest in Cryptocurrencies
You should have invested in cryptocurrency in 2011 when bitcoin was priced at a few dollars. You should have invested in bitcoin in 2013 when it was under $100 for the last time. You should have invested in bitcoin when it was 2014 and $250, or in March 2017 when it was at around $1,000.
Here’s the thing: we all wish we would have invested sooner. You’ve probably heard the adage: “The best time to invest was yesterday. The second best time is today.”
It’s not too late to invest in cryptocurrencies at all. In fact, with bitcoin sitting at around $6,000 as we go to press, and other altcoin markets slumping, you could argue that this is one of the best times to invest in cryptocurrencies. Awareness of bitcoin is at an all-time high.
Yes, it would have been nice to buy a million bitcoin for $20 back in 2009. But let’s be honest: you probably would have sold your bitcoin as soon as it climbed past $1.
Don’t trick yourself into thinking it’s too late to invest in cryptocurrencies. It’s not. Some analysts believe bitcoin is going to $50,000. Other analysts believe bitcoin is done, and that a new cryptocurrency will emerge. Do your own research and invest in crypto today by taking a position on a coin.
2. I’m Not Tech-Savvy Enough to Invest in Bitcoin
Bitcoin and its underlying blockchain technology sound complicated. Even storing private keys in wallets can be complicated.
However, don’t fool yourself into thinking you need to be tech-savvy to invest in cryptocurrencies. If you can use your internet browser and navigate a trading window – just like any trading platform for stocks – then you’ll be able to purchase cryptocurrencies.
3. The Cryptocurrency Market is a House of Cards
Some people believe crypto is a house of cards. It’s all built on top of one another, and when one falls, the rest are going to fall with it.
The likelihood of this being true gets lower every day. With every passing year, bitcoin has become better known and better accepted. Wall Street giants are exploring the launch of bitcoin trading desks. Bitcoin futures markets are open and booming. There are bitcoin ATMs worldwide. Mainstream venture capital investors have invested billions into blockchain startups.
For all of these reasons and more, it seems increasingly unlikely that crypto is a house of cards. Sure, altcoin prices often track bitcoin prices – but it seems unlikely the entire crypto economy is doomed to collapse.
4. Crypto is Full of Security Threats and Hackers
From the outside looking in, the crypto market looks like a mess.
That’s because the news stories that make it to major media outlets are different from the news stories that reach crypto users.
These hacks do occur – and that’s why you don’t keep money on an exchange. However, with a little due diligence, it’s easy to avoid these attacks and limit your liability.
5. Digital Currency IRA Providers Are Approved by the IRS Because They’re “IRS Compliant”
Klein takes particular issue with the fact that bitcoin IRA providers are using terms like “IRS compliant.”
“”IRS compliant” is a term I believe was invented by a marketing person; in reality, it often just means a company works within the rules set up by the IRS. Most companies do this, so if safety is important to you, you need to dig deeper.”
A bitcoin IRA provider might advertise themselves as being IRS compliant. This is pretty much a meaningless term. It doesn’t mean they’ve been certified by the IRS or any other regulatory agency. It’s just a way for them to sound better.
Digital Currency IRAs Have Different Rules than Traditional IRAs
This one may surprise you: it’s a myth that digital currency IRAs have different rules than traditional IRAs. Klein, who runs a bitcoin IRA service, explains digital currency IRAs actually have more freedom:
“Digital currency IRAs actually have more freedom than their conventional counterparts, as they fall under the broad umbrella of a self-directed IRA account, which places more investment decisions in the hands of the account owner. This control allows owners to invest in a wider variety of asset classes, and cryptocurrencies are just one of them. Others include real estate, private businesses and precious metals.”
There are plenty of similarities between digital currency IRAs and other IRAs. IRA growth, for example, is tax-free until you take a distribution, and the same maximum contribution limits apply. You can also setup a digital currency IRA in all of the same classifications as a conventional IRA, including Traditional, Roth, SEP, and SIMPLE IRAs.
There are lot of misconceptions about investing in cryptocurrency. It’s easy to see why: crypto is a burgeoning, new industry. There are a lot of unknowns – and a lot of “gurus” online trying to convince you they know everything.
Nobody knows everything about cryptocurrency. However, by following Klein’s six myths about crypto investing above, you can be a better informed cryptocurrency investor.