When it comes to Bitcoin and retirement accounts, the question is not whether you can buy Bitcoin in a retirement account, but whether you should.
Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain.
Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.
As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
The IRS classifies Bitcoin as property for tax purposes and requires capital gains taxes to be paid on profits from buying, selling, or trading it. This makes Bitcoin less attractive as an investment for retirement accounts, which are already subject to taxes on withdrawals.
There are also concerns about the volatility of Bitcoin’s price. It has fluctuated widely since it was first created, making it a risky investment.
The price could go up or down, and there’s no guarantee that it will be worth anything in the future.
For these reasons, it’s generally not a good idea to buy Bitcoin in a retirement account. You could end up losing money on the investment, and you’ll have to pay taxes on any profits you make.
If you’re interested in investing in Bitcoin, it’s better to do so with money that you can afford to lose.