Litecoin vs. Bitcoin: Is Litecoin the “Silver” to Bitcoin’s “Gold”?James Page
The Histories of Bitcoin and LitecoinThe idea of decentralized finance was actualized in the late 1990s, but it wasn’t until 2009 when the pseudonymous author (or team) of Satoshi Nakamoto introduced this new concept to the public by sharing the link to the whitepaper Bitcoin: A Peer-to-Peer Electronic Cash System. Bitcoin was the first cryptocurrency traded without an intermediary to control asset flow and transactions. According to the creator(s), the invention of Bitcoin resulted from the need for “an electronic payment system based on cryptographic proof instead of trust”. Despite the hardships Bitcoin has faced - including sharp price fluctuations, cyberattacks, and public hesitation - it turned into a significant global, financial phenomenon of the 21st century. Litecoin, on the other hand, was launched in 2011, by a former Google employee named Charlie Lee, who saw great potential in the blockchain industry. The new cryptocurrency was created with the clear vision of complementing the new promising concept of an anonymous and trustless financial system. It openly supported Bitcoin’s key objective by improving the blockchain network’s integrity. That being said, Litecoin offered a faster and technically improved version of Bitcoin, which was making its way towards mainstream recognition. However, it wasn’t an easy road for Litecoin either. The system experienced serious network issues and it seems that trust from the community wasn’t fully secured until 2013, following the release of the 0.8.5.1 Litecoin. Litecoin has kept its position among the top ten ranked cryptocurrencies in terms of trading volume and market cap in the past several years.
Similarities Between Litecoin and BitcoinIn addition to a shared vision, quite a few similarities between Bitcoin and Litecoin are observable at first sight. The way they complement each other is compared to gold and silver.
Proof of Work System (PoW)Both Litecoin and Bitcoin operate on a proof-of-work model as a secure method to prevent double-spends. In a nutshell, this system stands for a method by which altcoins are acquired through mining. It includes generating, authenticating, and adding the cryptocurrency to the blockchain ledger. Litecoin and Bitcoin’s PoWs systems aren’t identical, but they do share the fundamental features.
Transactions and StorageAccording to users, the Litecoin transaction execution reminds them of what they’ve already experienced on the Bitcoin blockchain. Both cryptocurrencies can be purchased on a crypto exchange platform or rig-mined. Furthermore, both require a digital or hardware wallet to ensure the safe storage of users’ funds before and after the transaction process. We can also note that both Litecoin and Bitcoin have gone through critical price volatility caused by the general public demand. This has also created the need for applying local finance and anti-money laundering regulations.
Differences Between Litecoin and BitcoinSimilarities between Litecoin and Bitcoin are mainly what we consider to be core operating principles. The list of differences between these cryptocurrencies is slightly longer.
Market CapitalizationThe most distinctive dissimilarity between Litecoin and Bitcoin lies in their market cap, which indicates the asset’s value on the market based on the number of outstanding coins multiplied by the current coin price. As of the early months of 2021, Bitcoin’s value has been $1 trillion, which is incomparably higher than the Litecoin value of $13.7 billion. There are several factors contributing to this huge price gap. The time factor is perhaps the most obvious one, but it’s not the main reason why Bitcoin has been superior concerning market cap figures even to the second-largest cryptocurrency Ethereum, whose market cap has been estimated at $475 billion. It’s the role of Bitcoin as a cryptocurrency leader that has generated such a far-fetched cap record score.
Total SupplyAnother distinguishing point of utmost importance is the total number of assets that each coin can produce. The Bitcoin system is designed not to exceed the number of 21 million “pieces” of Bitcoin, whereas the total supply of Litecoin can go up to 84 million. This may appear as a point for Litecoin due to the psychological perception of buying whole units for a lower price. However, it doesn’t really mean much in real-life trading since both Bitcoin and Litecoin can be divided into smaller units. Bitcoin’s “cents” are known as satoshis, the lowest fraction to which Bitcoin can be “broken into”. One Satoshi equals one-hundredth millionth of a Bitcoin. Litecoin applies the same math, but its smallest units are called Litoshi.
SpeedEven though both networks deliver real-time transactions, transaction speed was one of the imperatives in the creation of Litecoin, so it outperforms Bitcoin in the time required for transaction confirmation by the counterpart participant. In numbers, the average confirmation time of Bitcoin is nine minutes per transaction. This includes all courses of action during which the code is verified and recorded on the blockchain, for which Litecoin requires only 2.5 minutes. The transaction speed factor is undeniably advantageous for the overall image of Litecoin, but it’s not the deciding one when choosing your potential asset for investment.
AlgorithmsWhat was described above as a general similarity between Bitcoin and Litecoin regarding the PoW system does in fact contain certain differences on a more technical level. To begin with, Bitcoin and Litecoin use different cryptographic algorithms. The former employs the traditional SHA-256, while the latter employs a relatively new Skrypt algorithm. This affects the mining process since, in both Bitcoin and Litecoin, the process of acquiring coins by mining requires a great amount of computing power. As of 2021, the mining reward on Bitcoin’s blockchain is 6.25 BTC. They appear every ten minutes and secure the predictive character of Bitcoin’s supply by automatically adjusting the difficulty of the SHA-256 equations. Litecoin applies Skrypt, a memory-intensive hashing algorithm that was created with the purpose of deterring ASICs and GPUs, making the Litecoin network accessible to personal users, which is the target audience of Litecoin. In the beginning, all users were allowed to mine LTC with their CPUs, but now there are Skrypt-compatible ASICs as well.
A Few Words Before You Go...We hope that we conveyed the main points you should consider when comparing the features of LTC against BTC. Litecoin is a complement to Bitcoin rather than a direct competitor on the market. Therefore, it’s impossible to pick a winner or imply in any respect as to which one is better investment material. Litecoin tends to be a more practical medium of exchange while Bitcoin has turned out to be a well-established store of value. The choice depends on your personal trading preferences and your purpose as a potential crypto investor. If this article managed to spike your interest in the prospects of crypto investments, contact our experienced Coin IRA team. They’ll help you decide on the best crypto path for your individual preferences and needs.
Making Sense of Cryptocurrency TermsStaff Writer
Basic Crypto Terminology, DecodedWhat is a node? What is a hard fork? Here are some of the most common crypto terms associated with the blockchain and the currency itself. Altcoin: A cryptocurrency other than Bitcoin. Bitcoin, which first appeared in 2009, is the oldest and best-known form of virtual currency. Other, newer cryptocurrencies, like Litecoin and Ethereum, are known as altcoins. There are thousands of altcoins currently on the market. Blockchain: An immutable digital ledger containing a full record of all of the transactions that have been carried out using a given cryptocurrency. The data on the blockchain is stored in a series of blocks of a fixed size. A blockchain functions like a huge, encrypted database. Because it is decentralized, there is no one master copy of the blockchain for hackers to target. Faucet: an app or website that hands out cryptocurrencies to users in return for carrying out simple tasks, like watching advertisements or completing quizzes. The goal of the faucet is to increase public interest in cryptocurrencies by distributing digital currency. Fiat: Currency issued by a government. The US dollar is an example of fiat currency; so is the Euro, the British pound, and the Japanese Yen. Fork: a fork occurs when a blockchain changes the protocol that it uses to verify transactions. This can happen in the (unusual) event of a blockchain being hacked. It can also happen when users have a major disagreement about verification protocols. There are two distinct types of fork.
- A hard fork (or hardfork) will impact the entire blockchain, making previously invalid transactions valid, and making previously valid transactions invalid. A hard fork necessitates a complete, top-to-tail upgrade of the whole blockchain so that the system can stay up and running.
- A soft fork is backward-compatible. The existing nodes will still be able to recognize new transactions as valid and will not need to be upgraded. However, the current miners will need to shift to the new protocol in order for the soft fork to work.
- A software wallet is housed on a computer’s software files.
- A hardware wallet is a physical device, comparable to a USB drive.
Crypto Investment TermsIf you’re not sure what a whale is — or if you’ve ever wondered what HODL really means — just keep on reading to find out. Note that some of the terms used by crypto investors overlap with the terms that stock traders use. This article focuses on the terms that are unique to crypto. FOMO: Fear of Missing Out. The term is used in everyday life but has a special place in digital currency circles. In crypto terms, FOMO refers to the fear of missing out on an investment opportunity or on a chance to reap profits from a sale. Investors should be cautious not to make risky decisions because of FOMO. FUD: Fear, uncertainty, and doubt. A vague and pointless sense of uncertainty deliberately spread by investors who want to see the price of a cryptocurrency drop. HODL: This term, exotic as it sounds, simply means to hold cryptocurrency instead of selling when the price drops. The term was born when a certain Bitcoin investor posted a drunken rant on a message board. Some people also define the term with the useful acronym Hold On for Dear Life. ICO: Initial Coin Offering. A fundraising opportunity, similar to IPOs, at which a startup sells new cryptocurrency tokens to investors. Pump and Dump: The practice of “pumping” one particular cryptocurrency by buying it in large quantities and motivating others to invest in it, with the goal of increasing its value, only to “dump” the currency to make a quick profit. “Pumping” is sometimes also referred to as shilling. Whale: An investor who owns a very large amount of cryptocurrency. A whale’s sizeable holdings give him a degree of influence over the market.
Cryptocurrency Terms: Is That Everything?Let’s be clear — this list is not an exhaustive source on all the crypto terms out there, nor will it provide you with everything you need to know in order to begin trading in the new asset. Most of the time, crypto investors do best when they are working with an experienced partner. Don’t let FUD hold you back from taking advantage of the tremendous opportunities that cryptocurrency represents. Contact Coin IRA today to learn more about the potential of cryptocurrency in your investment future.
Investing in Cryptocurrency IRAs: The Ups and DownsStaff Writer
Cryptocurrency IRAs: The Pros and ConsThe most obvious benefit of a Cryptocurrency IRA is that it would enable you, the investor, to participate in any gains that might occur in digital assets. In one survey, 40% of responders expected that the Bitcoin price will be at least $50,000 at the end of 2021. While there are no guarantees that any cryptocurrency's price will increase, at least you'll get good exposure to the movements in the asset prices through a Cryptocurrency IRA. The next advantage to consider is the diversification that a Cryptocurrency IRA could provide to the investor. As the old saying goes, you don't want to put all of your eggs into one basket — meaning, it's not recommended to pour your entire account into just one asset class. Maybe you've got stocks or cash already in your IRA account. That's fine, but is that enough diversification? Cryptocurrency prices tend to move separately from stocks — and having uncorrelated assets is a key component of proper diversification. In the aforementioned survey, 28% of the respondents stated that their primary reason for buying crypto was due to inflation concerns. As long as more dollars are being printed up, the cash in your IRA is susceptible to inflation, which means the gradual deterioration of the value of that cash. One way to possibly shelter your IRA's holdings against the negative impact of inflation is to own a cryptocurrency like Bitcoin. Since there will only ever be 21 million Bitcoins mined, inflation is less of a concern — and that's why plenty of investors use it as a hedge against inflation. In addition, a Cryptocurrency IRA may offer tax advantages. Without delving into specific tax codes, it may be possible to have your distributions taxed at a more favorable income tax rate once you're retired and earning less (please refer to a licensed and registered tax professional for more information on this topic).
Is Investing in Cryptocurrency IRAs Risky?Any investment strategy involves risks — as they say, no risks often correlate with no rewards. Still, it's important to be aware of the risk-versus-reward balance when it comes to Cryptocurrency IRAs. There is the possibility of capital loss if the asset in question — in this case, cryptocurrency — goes down in price. But then, you could say the same thing about an investment in any asset class, including stocks. We already touched upon the topic of taxes, and if your gains from a Cryptocurrency IRA are substantial, it at least provides you the opportunity to spread out the income tax liability by taking distributions over a longer term. Some might say that this isn't such a bad problem to have, though. Finally, there's the risk of over-investment if someone were to allocate too much capital into cryptocurrencies. This hazard can be avoided by always maintaining a reasonable position size relative to your account overall.
Special ConsiderationsAlong with the considerations mentioned above, there are a couple of important matters to keep in mind. As the U.S. Securities and Exchange Commission (SEC) explains, you'll want to be wary of anyone offering "guaranteed" returns for your IRA. There's always some degree of risk involved in the world of investing — it's just a matter of knowing those risks, and minimizing them when appropriate. Moreover, the SEC stresses the importance of staying informed — and rightly so. Even if you're using a "set-it-and-forget-it" type of investment strategy, you'll still want to be aware of what's inside of your Cryptocurrency IRA. The key phrase here is "know what you own" — a credo for all informed investors to abide by.
Take Advantage of a Cryptocurrency IRA — The Right WayMost importantly, you'll want to avail yourself of trusted information sources when you're ready to set up your Cryptocurrency IRA. Ready to get started? It's easy and hassle-free —simply visit Coin IRA, a fully compliant and licensed institution that will guide you through safe buying, selling, trading, and storing of Bitcoin and other cryptocurrencies.
Cryptocurrency News You Can Trust: Top 4 Sources of Credible InfoStaff Writer
CoinDesk (coindesk.com)CoinDesk truly is a one-stop shop for reliable information centered around crypto and the blockchain. Sure, you've got the latest cryptocurrency news on the home page, but there's much more to CoinDesk than that. For example, you can visit CoinDesk TV to view video programs featuring daily and weekly updates from respected cryptocurrency and blockchain authorities. Or, maybe you're a crypto newbie and you just want to learn the basics of digital currency investing. In that case, you can check out CoinDesk's Learn section, which features a veritable Crypto 101 with tutorials on everything from Bitcoin basics to blockchain for beginners. And if you don't mind some commentary mixed in with your news, feel free to peruse CoinDesk's Podcasts page. There, you could literally spend all day listening to news and views on the latest happenings in the crypto-verse. As you can see, CoinDesk offers multiple ways to digest your crypto-centered news. But most importantly, CoinDesk is an established media portal that's been around since May 2013 and is continues to provide relevant, timely data for crypto connoisseurs worldwide.
CoinTelegraph (cointelegraph.com)Among CoinDesk's chief rivals is CoinTelegraph, which covers fintech, the blockchain, and Bitcoin, while bringing its visitors "the latest news and analyses on the future of money." Like CoinDesk, CoinTelegraph was founded back in 2013. The portal's team members are spread across the globe, and they seem to practically live and breathe crypto and the blockchain. The news reporting you'll find at CoinTelegraph is rife with passion for the blockchain, yet also appears to be free of bias. Along with the latest news, you can also find in-depth analytics and comprehensive cryptocurrency price charts at CoinTelegraph. One of the more unique features of CoinTelegraph is the way the site divides up the news items among separate pages for Bitcoin, Ethereum, Ripple, Litecoin, and altcoins. CoinTelegraph is also noteworthy for its graphic design. Accompanying the articles on the home page are highly stylized works of art that can immediately identify the pieces as belonging to CoinTelegraph. You may find yourself checking both CoinDesk and CoinTelegraph on a daily basis for the latest cryptocurrency info as they're both quite informative, and perhaps a bit addictive as well.
NewsBTC (newsbtc.com)Admittedly, while CoinDesk and CoinTelegraph are both generally considered to be credible informational sources, they're also visually flashy and might be overwhelming for some viewers. NewsBTC provides a somewhat stripped-down platform for crypto and blockchain enthusiasts. But don't get the wrong idea—NewsBTC is still a polished and informative source for news related to cryptocurrency price moves, exchanges, mining, and other items of interest. While the name of the platform includes the Bitcoin symbol "BTC", it covers other digital assets as well. Thus, the NewsBTC describes itself as a "cryptocurrency news service that covers Bitcoin news today, technical analysis and forecasts for Bitcoin price and other altcoins." There must have been something magical about 2013, as NewsBTC was also founded during that year. NewsBTC emphasizes its firm ethical stance, declaring, "we don’t write for the sake of getting page views. We write about Bitcoin news because we love Bitcoin. Simple as that." And indeed, NewsBTC's reporting is markedly devoid of flash and fanfare—no bells and whistles, just clean, clear, and transparent reporting. If you're on board with that, feel free to give NewsBTC a try.
CryptoSlate (cryptoslate.com)"Cutting edge"— that might be the best way to describe news and info portal CryptoSlate. The news features on the home page are updated quite frequently, so if you're on the lookout for fast and furious crypto-sphere updates, CryptoSlate's got you covered. Established in 2017, CryptoSlate is a relative newcomer to the scene. But don't assume that the CryptoSlate team isn't doing their due diligence. In actuality, this site might be the most data-driven one on this list. As CryptoSlate asserts, the platform "delivers real-time prices and comprehensive data for 2345 cryptocurrencies across 50 industry sectors" and "maintains a directory of 239 fintech companies, 171 crypto products, and 285 people." Now, that's some serious data, and, to be honest, CryptoSlate might not be ideal for crypto and blockchain newbies. Indeed, it seems to be geared toward more intermediate or advanced cryptocurrency fans. But if you believe you're ready to dive into the sea of crypto-centered data, feel free to jump to the home page and browse through CryptoSlate's broad selection of trending and timely news reports.
Cryptocurrency News: Trust, but VerifyAt the end of the day, you can gather information from various sources and cross-check them for accuracy, but ultimately you have to decide what's believable and what's not. And with that, don't hesitate to take a look at the four cryptocurrency news sources listed here. Peruse them, use them, and enjoy your journey into the wide world of crypto. And when you're ready to dive into the exciting world of cryptocurrency investing, you'll definitely want to check out Coin IRA, one of the pioneers in the Cryptocurrency IRA space. Their experts can guide you through the safe buying, selling, and storing of Bitcoin and other cryptocurrencies.
Crypto Investors: Who Are They?Staff Writer
The Typical Crypto InvestorMost people have a certain cliché in mind when they think about cryptocurrency investors. According to that cliché, the average crypto investor is young and male. He lives in a big city and works at a prestigious job, probably in finance or technology. He’s unmarried and childless, and he pulls in a hefty salary. He may or may not be wearing a designer watch and a designer suit. Is there any truth to that image? Sure – in the same way as there’s a little bit of truth in many stereotypes. There are plenty of wealthy, single young professional men who invest in cryptocurrency and who do very well for themselves. But today, as more and more people are learning about how the digital asset works, crypto investors are a more diverse group than most people realize. This article will take a closer look at crypto demographics and at what kinds of trends are on the horizon in this huge market.
Crypto OwnershipGemini’s 2021 State of US Crypto Report gives an interesting snapshot of today’s crypto investors. Most owners of digital currency are male, relatively young, and affluent. The average owner is a 38-year-old man who earns upward of $110,000 a year. 74% of crypto holders in the United States are men, and 77% of them are under the age of 45. Additionally, Gemini found that 71% of crypto investors are white. Just 13% are Latino, and 9% are African American. Another 10% are Asian Americans or Pacific Islanders. Those demographics mirror the demographics of taxable investment holders, which also skew white and affluent.
Shifting Crypto DemographicsAs the crypto market grows, more Americans say they plan to invest in the virtual currency soon, perhaps within the next 12 months. The new cohort of prospective investors identified by Gemini's survey is far more diverse than the current set of crypto holders. 53% of the prospective investors who spoke to Gemini are women, and 35% live in a small town or in a rural area. The prospective investors' average income is a bit lower than that of current crypto investors, although still high at $107,000. Nearly half of them are over the age of 45. There are other indicators that older Americans are interested in crypto and may eventually lead to a major demographic shift. Even the AARP has cautiously endorsed investment in virtual currency in several of its online publications.
An Inflection Point for Crypto InvestingRightly or wrongly, many investment firms formerly classified cryptocurrency trading as a form of speculation. Today, thanks in part to a more robust regulatory framework and greater availability of products, financial analysts like Morgan Stanley are redefining crypto as an investable asset class. Analysts point to 2020 as an inflection point, as there was a widespread devaluation of fiat currencies and also a greater public interest in digital wallets and no-touch spending. 2020 was also the year that PayPal began allowing its users to buy Bitcoin using its apps. In the same year, Mastercard announced that it would allow its customers to pay merchants using Bitcoin, and a Visa-backed credit card began offering Bitcoin rewards. The result has been a far greater level of public awareness when it comes to virtual currency.
Institutional InvestorsIn a 2020 survey carried out by Fidelity, the overwhelming majority (80%) of institutional investors said they were interested in digital assets. 36% said that they were already invested in crypto, and 60% said that the assets should have a place in their investment portfolio. Most of those surveyed said they liked the fact that the asset is uncorrelated to other asset classes and that it is based on innovative technology. Respondents also said that digital currency has a high potential for upside. Blackrock, the world’s largest asset manager, has filed documents signaling its plans to invest in crypto futures. Wall Street investment firms like Paul Tudor Jones and Stanley Druckenmiller have invested in Bitcoin. Mass Mutual, MicroStrategy, and Square have also bought cryptocurrency and are driving public confidence in the asset forward.
Digital GoldPortfolio managers have often compared Bitcoin to “digital gold” because the asset is decentralized and comes in a limited supply. The creator of Bitcoin, Satoshi Nakomoto, designed Bitcoin with a built-in scarcity; the upper limit for the coin’s supply is 21 million. That scarcity, coupled with the increased demand for the asset, is a big part of why Bitcoin’s price keeps marching upward. Crypto also wins plaudits for being a deflationary asset. Unlike other alternative asset classes, crypto is safe and easy to store, and it can be moved easily as well. Qualities like these are winning over converts to crypto investing and are likely to push the asset class further into the mainstream, leading to increased diversity in the demographics of crypto investors. Worldwide, the jump in crypto investors since 2020 has been staggering. Statista reports that there were 101 million cryptocurrency asset holders in 2020, up from 35 million in 2018 and 18 million in 2017. That number looks poised to keep on rising as an ever-broader swath of investors learns more about the digital asset.
Crypto and Pension FundsNot surprisingly, several major pension funds have already added crypto startups to their portfolios, and say they intend to invest directly into virtual currencies in the future. In 2019, two pension funds in Fairfax, Virginia decided to invest in the Morgan Creek Blockchain Opportunities Fund. The pension funds in question manage retirement assets for Virginia’s state police force and for other state employees. Also in 2019, the Hong Kong-based asset manager Legacy Trust created a pension plan backed by cryptocurrencies as well as traditional assets. Legacy’s staff said they had noticed an increased appetite for investment in crypto, and they were confident that the new pension fund would be popular with people around the world.
Education and Crypto InvestingPeople tend to be anxious about the unknown, and cryptocurrency is no exception to that rule. Inevitably, as investors learn more about how the digital asset works, that early uncertainty turns into anticipation. Today, more investors are recognizing crypto’s enormous potential as a way to diversify their IRA and hedge against inflation. If you’d like to learn more about crypto investing, visit our website or call Coin IRA today to speak to one of our digital asset specialists.
Demystifying Crypto Storage – What Does It All Mean?Staff Writer
Paper WalletsPaper wallets are one of the most straightforward ways to store your crypto. With a paper wallet, you use a piece of paper that has your crypto key printed on it. Is Bitcoin a good investment for those who like to use paper wallets? Some say yes because you get both the benefits of Bitcoin and the simplicity of keeping your private key on a piece of paper. However, there are significant drawbacks as well. If you keep your piece of paper in your wallet, it may suffer water damage and be illegible or impossible to scan. Further, many printers store info about what they print out, which could expose your private key to anyone who knows how to hack the printer.
Online WalletsAn online wallet also referred to as a web wallet, is used to keep your cryptocurrency and its access information on the internet. An online wallet runs in your web browser and is, therefore, secured by your browser’s security tools. One of the primary benefits of online wallets is their convenience. As long as you’re connected to the internet, you can access your crypto because it’s stored in the cloud. There’s no need to have anything on you, physically, when you manage your crypto or keep track of extra hardware or devices that allow you to see and work with your funds. On the other hand, online storage also exposes you to a few different risks. If someone were to steal your device and you didn’t have multi-factor authentication enabled, they may be able to access your crypto without much effort, particularly if they have your login information. Also, cyber thieves tend to target online storage providers, such as crypto exchanges, knowing that if they are successful, they can gain access to hundreds or thousands of users’ wallet address information.
Omnibus WalletsWith an omnibus wallet, your crypto is stored by an exchange alongside that of others who also subscribe to the same exchange. For instance, if you were to buy $20,000 of BTC, your BTC would be stored along with that of the exchange’s other customers. To access your funds, you provide login information and can then manage your crypto. With an omnibus wallet, you get very strong security, supplied by the company. You also can easily access your crypto by providing login credentials. There’s no need to carry an additional device or travel to a physical location. However, omnibus wallets also come with some risks. If a hacker is able to penetrate the security of the omnibus wallet provider, they could steal your crypto, along with that of other users.
Mobile AppsYou can use a mobile app to store your crypto, and all you need is a smartphone or other compatible mobile device. With a mobile app, you get a combination of ease of use and security. Mobile apps work by encrypting your private crypto key and then storing it on the company’s servers. Because your key is encrypted, even if a hacker were to access the company’s server, they wouldn’t be able to easily access your key without having the decryption algorithm. In some cases, your security is shared between your device and the company’s servers, so a hacker would have to penetrate both to try to access your crypto. Mobile apps also often use biometric measures, such as your fingerprint or a facial scan, adding another level of security. However, with a mobile app, you have to be very careful not to lose your device, otherwise, you may have to use another one to access your funds. This could make it difficult to move or manage your crypto in a crunch. In addition, some mobile apps, such as ZenGo, have limits on the amount of crypto you can buy per month, requiring different levels of verification for each buying limit. Going through different verification processes depending on how much you’re buying could be a drawback for some users.
Segregated StorageWith segregated storage, you store your crypto key, physically, in a vault that is kept separate from those of other people. You would have to physically go to the vault, present access credentials, which could be a physical key or combination and use that to open the vault and get your security key. You would then enter your security key to initiate an online transaction. Segregated storage is very secure in that your key is kept safe by hardware, staff, and a security system designed to protect valuable assets. However, segregated storage is inconvenient for many because you have to physically travel to the storage location before being able to make a transaction.
Mobile Devices—Cold StorageMobile storage devices typically work by interacting with another device you use to manage your crypto, such as a laptop or phone. This happens with a USB connection or an air-gapped connection based on a QR code. Without the mobile device, you cannot access your crypto, making it very difficult for hackers to get to your crypto—even if they manage to steal your device and log on to it. Using this kind of solution is also referred to as cold storage, which differs from hot storage, which involves cloud-based storage, such as with an online wallet. You can also choose a mobile device that stores information about each transaction, allowing you to go through your history and glean info about what you’ve spent, transferred, received, and earned. Some devices also give you the option of seeing what’s happening during a transaction, including security measures being applied, while you’re managing your crypto. The biggest downside to mobile devices is if you lose the device, you won’t be able to access your crypto. In addition, if someone were to steal your device and be able to log in to your computer, they may be able to easily access your funds.
Advantages of Owning Cryptocurrency in an IRAOne of the many advantages of purchasing cryptocurrencies through an IRA is the institutional-grade, segregated, multi-asset cold storage for full custody of your digital currencies. With Coin IRA, your IRA assets are also protected by crime insurance that covers internal and external theft on assets held in the care, custody, and control of the custodian's chosen storage provider. You can gain peace of mind knowing your digital currencies are protected with a combination of advanced security practices and a suite of customized insurance solutions. To learn more about the benefits of a Cryptocurrency IRA, reach out to a Coin IRA cryptocurrency sales specialist today.
How to Invest in Cryptocurrency: 401(k) Rollover to IRA and More TechniquesStaff Writer
401(k) Rollover (or other Employer Plan to IRA)One of the easiest and most popular ways to fund a new Cryptocurrency IRA is a rollover from an existing 401(k) or similar qualified accounts, such as a 403(b) or Thrift Savings Plan. When changing jobs, many people choose to roll their existing employer-sponsored plan to an IRA because it offers significant tax savings and better investment opportunities. A rollover typically involves transferring the money from your old employer plan, such as a 401(k), into a new IRA, after which you can diversify it into a wide variety of investments of your choice, including cryptocurrency. Once your new IRA account is set up, the rollover request can often be accomplished online or with a phone call to your employer plan administrator. Should you only wish to move some of the funds out of your employer plan, you can also do a partial rollover if the plan rules allow for that. The IRS has something called the "IRA One-Rollover-Per-Year Rule", which can be restrictive depending upon the way the transaction is completed. Coin IRA's IRA Specialists are experienced in working within these kinds of IRS rules and will structure your rollover accordingly. In most instances, your previous plan administrator will transfer the funds directly to your new IRA account.
IRA TransferAn IRA transfer involves sending funds from an existing IRA to a new IRA. This can be a full or partial transfer of funds. The funds are sent directly from your existing custodian to the new IRA custodian after your new Self-Directed Cryptocurrency IRA account is established. In the case of a Cryptocurrency IRA, you would need to convert any existing stocks or bonds to cash before initiating the transfer. Once the transfer is complete and your new account is credited, these funds can then be used to invest in cryptocurrency assets in your new IRA. With a trusted cryptocurrency custodian taking care of your assets, you won't have to worry about the complex technical aspects of storing cryptocurrency.
Annual ContributionAs long as you are earning income, you can also fund your cryptocurrency IRA through eligible contributions determined by the IRS according to your age. You simply make your annual allowable contribution or any portion of it using your earnings or any savings you have. You can do this directly from your personal checking or savings account. Payments needn't be yearly but can be done to your own preferred schedule, whether weekly, monthly or spontaneously, as long as you don't exceed the limit for your age. These are known as annual contributions because the amount you can put in is given a yearly limit by the IRS. For 2021, the combined value of all your IRAs is limited to a maximum contribution of $6,000, or $7,000 if you're over 50. However, if you choose a Roth IRA your annual contributions may be further limited based on your filing status and income and if you're married, whether you file separately or jointly. Even if you already participate in a retirement plan through your employer, you are also free to contribute to an IRA of your choice. In some situations, this could limit the amount of taxable deduction you're allowed but still gives you exposure to the excellent returns that a Cryptocurrency IRA can offer. Your CPA or tax preparer is the best person to advise you on contribution limits based on your income level, marital status, and filing status.
Discover the Benefits of a Cryptocurrency IRA TodayWith a Cryptocurrency IRA, you can diversify your retirement fund beyond just cash or equities and take advantage of the full potential of this exciting new asset class. Coin IRA provides an easy method of investing in real, non-derivative cryptocurrencies through the safety of a Cryptocurrency IRA. To learn more about the benefits of starting a Cryptocurrency IRA, contact Coin IRA today.
NFTs: What Are They and What’s the Fuss?Staff Writer
What's all the fuss about these non-fungible tokens (NFTs)? The Mona Lisa, for example, is an NFT, obviously somewhat pre-Bitcoin, but known worldwide as a unique and valuable work of art.
NFTs are the latest mash-up of “art” with the underlying technology of cryptocurrencies — the blockchain. It’s a kind of art and commerce collision that has produced an explosion of money for a few lucky creators.
This is defining “art” in its broadest sense—so a cartoon, an image of a kitten, a tweet by the founder of Twitter, etc.—these sorts of things have been put up for sale as NFTs.
Recent NFT Sales Create Riches
Here are some recent NFTs:
- Artist Beeple sold 5000 digital artworks for $69 million through Christie's auction house;
- The first tweet announcing Twitter; and
- A collectible baseball card.
These “artworks” are owned on the blockchain by the people who purchased them — it is a simple transfer of ownership using the protocols set up by Ether. These sales have been very lucrative for some people — raking in millions of dollars.
The beginning of the phenomenon was the problem of digital copying — images, music, and movies — have long had the issue that they can be copied digitally and distributed without any way of getting the originators some money back. Now that you can put digital art onto the blockchain using the applications built into Ether and some other tokens, you can create a kind of digital artist's signature, ensuring it is unique. It's a bit like buying 'Print 5 of 100 (signed) Andy Warhol'. In the art world, you would need the “provenance” — an expert or gallery would certify that this print was a genuine Warhol. By using the blockchain, NFTs have provenance too.
What the Heck Does 'Fungible' Mean?
'Fungible' simply means tradable, identical. One dollar bill is the same as any other. This is really important for currencies — a shopkeeper will accept any dollar bill, they are all the same — even if one is older than another, or even has been used for criminal purposes: it doesn't matter. Bitcoin is fungible too — any BTC is identical to any other one.
However, every address on the blockchain is unique, and using Ether or other tokens other metadata can be added. That's the cryptographic way of adding “provenance”. So non-fungible items are unique — they can even breed! Cryptokitties are each a unique cat on the Ether blockchain and two digital kitties can produce offspring which each have their own characteristics, like real cats. Strange, isn't it?
NFTs and Online Gaming
Another use is in the world of computer gaming. You may know that people purchase in-game items, say a magic sword, with real dollars. Of course, a cheat might sell the same sword many times and there wouldn't be much you could do about it if the game's moderators didn't take action. Using NFTs would solve this problem, and mean that those in-game items could be sold for in-game digital gold pieces, or real-world dollars. Various gaming companies like Decentraland are already using crypto tokens for large multi-player online games.
Tickets for sports or music events would seem another area where NFTs could have an impact, and also reduce the problems of lost tickets, counterfeiting, and ticket scalping. Collectible tickets could be traded just like any other piece of merchandise.
Are There Any Serious Uses of NFTs?
Yes, there are. Non-fungible tokens are another step forward in the development of the cryptocurrency ecosystem. They introduce sophisticated trading and loan systems for various asset types, ranging from physical things like real estate and land to contracts and artwork. By enabling digital representations of physical assets, NFTs are a new form of asset management, in theory streamlining the financial operation of particular assets.
For example, a tract of land owned by a corporation contains a condominium, a shopping mall with offices, and an industrial site with small factories and workshops. These three assets have different values, rents, occupants, maintenance requirements, and many other elements to consider as part of their overall worth.
Let's say the company wants to sell the shopping mall, but keep the other two properties—all the necessary documentation and information could be loaded on the blockchain as an NFT (as the blockchain is just a decentralized ledger) and then marketed, sold and contracts exchanged using dAPPs (decentralized applications) and smart contracts in a much more streamlined and quicker way than the complex, time-consuming existing methods of using realtors, lawyers and other middlemen.
NFTs have been likened to “digital passports” in the sense that they are a representation of all the important components of a physical item, digitized and stored in a tamper-free format on the blockchain — where they can be used for a transaction.
How to Trade NFTs
One particular difference between NFTs and more conventional cryptocurrencies is that you don't trade NFTs on an exchange. A particular piece of art is desired by a buyer and sold to him or her. There are marketplaces for these sorts of NFT price deals, like OpenSea or Nifty Gateway, which has been acquired by major US crypto exchange Gemini.
Once you have acquired an artwork, you can see if its token price goes up. Then you could sell it on the marketplace, just like you would a real painting — although without the hassle of packing it up, insuring it, and mailing it to the recipient. On an NFT marketplace, this happens digitally with a few clicks and the ownership is transferred.
Despite the Hype, NFTs Will Find a Place in the Fintech Ecosystem
Is this a craze or not? Like many things to do with cryptocurrencies, there is a lot of hype, but also a significant step forward for the utilization of cryptocurrencies in advanced financial applications. Although the uses have been mostly frivolous up to now, that should not obscure the reality that a reliable “digital passport” will have a lot of uses in a wide variety of sectors, reducing costs and cutting out expensive middlemen.
Will NFTs become eligible investments for qualified retirement accounts? We don't know just yet, but this could be a future possibility. In the meantime, if you are excited to become part of the cryptocurrency investment boom, please contact CoinIRA and speak to a cryptocurrency expert to learn how you can acquire cryptocurrencies as part of your retirement planning or personal investment holdings.