Page 110 - Forbes - USA (February 2018)

THE INVESTMENT GUIDE

REENGINEER YOUR RETIREMENT | BITCOIN IRA

have been around since the govern- Haze and Camilo Concha, who also hospital supply-room manager to take
ment created IRAs in 1974. Self-direct- run Fortress Gold Group, which helps care of his wife, who had cancer. He
ed IRAs let people hold nontraditional people invest directly in gold through saw his retirement savings decrease
assets like real estate, gold and virtual their IRAs. First-mover advantage from $245,000 to $132,000 over eight
currencies in a retirement account. and aggressive Google advertising months, before she passed away. A year
Since cryptocurrencies are transferred campaigns have allowed them to build later he threw a proverbial Hail Mary
and stored in unique ways, Bitcoin IRA the largest presence in the crypto- and dumped all his retirement funds
has carved out a niche to help investors asset IRA space, with close to 4,000 (which amounted to $118,000 aft er
address security challenges. If you hold customers and $105 million in inflows fees) into Bitcoin IRA. Today his re-
Bitcoin, you need a private key—like a since they began accepting funds in tirement account stands at more than
password, just a string of numbers and June 2016. Those assets have bal- $500,000, and he has plans to travel
letters—to move your money. So extra looned to about $287 million due to and make home improvements.
security is critical, and In July 2017, Simpath
that’s Bitcoin IRA’s primary Srinath of Atlantis, Florida,
value proposition. took a fi ve-week hiatus

The company partners from his job as an IT man-
with Bitgo, a Silicon Valley With Bitcoin prices ager for his wife’s medi-
cryptocurrency-security whipsawing daily, cal practice to research
startup that serves as a cryptocurrencies. Aft er
wallet and creates three investing your IRA in the 62-year-old pulled his
unique private keys as- head up, he thought, “Th is
sociated with an inves- crypto is a gamble. is something that will ab-
tor’s Bitcoin IRA account. solutely change the future
Bitgo stores one key itself, And win or lose, of finance.” He has since

gives another to the IRA doubled his IRA to more
custodian, Kingdom Trust, you’ll pay a stiff than $2 million, and now
and a third to keytern. al, cover charge to get he’s telling all his friends,
a startup that provides “Go ahead and invest—at
recovery services if your into the casino. least 5%.” Steven Phung,
key is lost or damaged. All a risk-loving real estate
of these keys are stored off developer from Pasadena,
the internet, in “cold stor- California, who lost 80% of
age” locations. For the time his wealth in the fi nancial
being, residents of New York State can’t crypto currencies’ soaring prices. Ac- crisis, has turned $500,000 into
use Bitcoin IRA because Kingdom cording to the company, their average $1.4 million through Bitcoin IRA.
Trust doesn’t have a BitLicense, a state Bitcoin IRA investor earned a 172% Of course, with Bitcoin prices
requirement for companies that hold return in 2017. whipsawing daily, including its recent
cryptocurrencies. No surprise that competition is swoon from nearly $20,000 in Decem-
Any investor can create a self-di- coming. Two newcomers, Noble Bit- ber to $10,000 a month later, these
rected IRA without using Bitcoin IRA, coin and CoinIRA, offer similar ser- crypto-retirees are rolling the dice.

and there are attorneys and specialty vices, with fees ranging from 10% to an Perhaps the only model for respon-
firms like San Francisco’s Pensco Trust outrageous 25%, depending on which sible Bitcoin IRA investing is the case

that will help you invest in a host of token you invest in. Fidelity, Vanguard of Kelly Nguyen, a 45-year-old entre-
alternatives. Investing in a cryptocur- and Charles Schwab don’t off er self- preneur in Los Angeles who sold her
rency IRA yourself may require you to directed IRAs or cryptocurrency IRA specialty pharmacy business, which
set up an LLC to buy the tokens, and products. But investors in traditional had revenues of about $160 million,
you will need to select an exchange, a IRAs can choose to allocate money in 2012. Nguyen was already retire-
secure wallet and an IRA custodian. to funds like Kinetics Internet Fund, ment rich, so she committed only 10%
For its one-stop access to pure-play which has 28% in Bitcoin, or American of her retirement savings to Bitcoin
cryptocurrency IRAs, Bitcoin IRA Beacon Ark Transformational Innova- IRA. After quadrupling her hold-

charges steep upfront fees of 10% to tion Fund, with 8% in Bitcoin. ings, she cashed out 75% of her initial
15%. On top of that, Kingdom Trust As in any hysterical gold rush, investment. Now she’s gambling with
charges about 1% a year on assets. there are tales of lottery winners. At mostly winnings. “I hardly look at my
The wheeler-dealers behind Bit- 60 years old, Randy Krafft of Terlton, account,” Nguyen says, noting crypto’s
coin IRA are Chris Kline, Johannes Oklahoma, retired from his job as a hypervolatility. “It can be painful.” F

108 | FORBES FEBRUARY 28, 2018