Using Individual Retirement Accounts (IRAs) to buy crypto has become a popular way to invest in your future. But taking control of your account is not straightforward.
So, which IRA approved crypto tokens are available, and which of them should you invest in?
Among the crypto tokens that are IRA approved are Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and Stellar Lumens (XLM). Different IRA companies may approve a broader diversity of crypto tokens.
There are several IRA companies out there that approve specific crypto tokens, and it’s helpful to know not only which crypto is approved by IRA companies but also about the tokens themselves, their history, and why they could make for great long-term investments.
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Top 5 IRA Approved Crypto
You may be tempted to invest in some of the crypto tokens, but we strongly recommend that you focus on more stable, established cryptocurrencies with bigger market caps.
Here are some reliable IRA approved Crypto tokens that we recommend investing in:
1. Bitcoin (BTC)
Price (November 2020): $15,606.20 Price (November 2021): $61,411.40 Year-on-year growth (Nov 20/21): +293%
Bitcoin was the first and is the biggest and most expensive crypto token on the market. It is practically synonymous with cryptocurrency and has been around since 2009, making a meteoric rise in value that has set a lot of early investors up for retirement.
However, Bitcoin’s value, as much as it has risen exponentially, is prone to plunging through the floor as well. It may be a bit late to get into the game, given Bitcoin’s price as it is – but it is big enough to bounce back from market downturns and would be a sound long-term investment as an IRA approved crypto token.
2. Ethereum (ETH)
Price (November 2020): $3,515.30 Price (November 2021): $4,537.78 Year-on-year growth (Nov 20/21): +29%
Ethereum is Bitcoin’s primary competitor but was only released more than five years after Bitcoin – which, by then, was the only major player in the cryptocurrency market.
However, unlike Bitcoin, Ethereum has smart-contract functionality, making it more useful for anyone trying to create their own cryptocurrency or blockchain-based application.
So Ethereum may not be as valuable as Bitcoin. Still, it does have more utility and certainly has the potential to step out of Bitcoin’s shadow, given how widely Ethereum’s platform is used within crypto marketplaces.
The other advantage Ethereum brings is its use of a Proof of Stake (PoS) consensus mechanism, as opposed to Bitcoin’s Proof of Work (PoW) mechanism, which uses a lot of power and is harmful to the environment.
3. Litecoin (LTC)
Price (November 2020): $173.79 Price (November 2021): $202.90 Year-on-year growth (Nov 20/21): +16%
Litecoin was one of the earliest cryptocurrencies to emerge as a competitor to Bitcoin when it was released in 2011. Technically, it’s almost identical to Bitcoin.However, Litecoin uses a script in their PoW algorithm, which means transactions require less memory. Litecoin aims to process blocks on The Litecoin Network at a rate four times faster than Bitcoin, which means it can confirm transactions faster.
Litecoin is also significantly cheaper, and you could be getting good value for money as well.
4. Ripple (XRP)
Price (November 2020): $0.25 Price (November 2021): $1.19 Year-on-year growth (Nov 20/21): +376%
Ripple was another early competitor to Bitcoin that has shown a lot of growth since its release in 2012. However, Ripple aims to facilitate cryptocurrency, fiat, commodity, and other forms of transactions with very low fees.
The Ripple protocol and Ripple payment method/exchange have been revolutionary. Ripple can validate accounts and payments within seconds. However, Ripple is not decentralized, like other cryptocurrencies, and is owned by the company of the same name.
It’s also a payment settlement system that’s an alternative to SWIFT payment systems that banks offer. So crypto “purists” may not see Ripple as a de facto cryptocurrency.
As an investor, though, it’s clear that Ripple’s payment mechanisms are favored by people and merchants alike because it seems the best of both crypto and fiat.
And its meteoric rise in value, even at such a low price, shows that the potential for enormous returns from your IRA is certainly three.
However, you must note that Ripple Labs and two executives were sued by the SEC in December 2020 for the exchange of unregistered securities. There have been concerns in the past over the lack of regulations and potential security risks.
So, consult with your custodian to assess the risk of investing in Ripple.
5. Stellar Lumens (XLM)
Price (November 2020): $0.08 Price (November 2021): $0.37 Year-on-year growth (Nov 20/21): +362.5%
Stellar Lumens is another altcoin that was released in 2014. Stellar is a “cross-border” payments platform. Using consensus mechanisms to process transactions, the Stellar network can process transactions within seconds.
In addition to this, it allows users to trade fiat currencies with ease. This means that it can still have its uses if cryptocurrencies do prove to be a fad, the Stellar network, and your Stellar Lumens tokens will continue to have value within the context of the legacy financial system.
But, if cryptocurrencies take off, the value of Stellar Lumens will surely continue to rise at its current “moon-like” rate. It is also a cheap IRA approved crypto that you can buy in large quantities.
Add to this the reduced long-term risk, and you have an investment that would be perfect for an IRA and will add stability to a potentially volatile portfolio.
If you’re considering opening an IRA and investing in cryptocurrencies through it, you need to do your research to ensure that your hard-earned savings are safe and have the potential to yield high returns.
Because cryptocurrency markets are so new, they can be a dangerous place to invest.
However, if you familiarize yourself with some stable, promising IRA approved crypto like Bitcoin, Ethereum, Litecoin, Ripple, and Stellar Lumens, you can build a diversified portfolio that, if the crypto market grows at its current rate, set you up for a long, abundant retirement.