In May 2021, I had just had a pretty intense 12 months helping move OC Bitcoin Network from a monthly meeting to a weekly meeting. In addition to the Meetup work, in the same 12 months I independently advised over two dozen small businesses on how to start implementing Bitcoin payments, and personally advised the BTCPay server in four brick and mortar restaurants as well as in several e-commerce locations. Restaurants installed companies.
The whole of 2020 felt like a real grassroots war to me. It made me open my eyes to the fact that the circular economy is at hand. It made me realize that bitcoin is not something that happens in the future. Bitcoin is one thing that is happening right now.
When the opportunity arose to work at Choice App, a bitcoin-based individual retirement account (IRA), I was obviously excited because I enjoy talking about all kinds of bitcoin products, and my wife was excited that we were coming back to dual income -Stacking after being in charge for a year. But I have to be honest, there was a little voice in my head telling me I was selling out and going corporate which made me think about a lot of things. It made me think a lot about what our way of getting Bitcoin to circulate as a currency in our lives and it made me open up the tactics that I was focused on.
Bitcoin repairs retirement accounts. This is of course positive, but at first glance it can also encounter resistance and questions such as “Why do I need an IRA when I have Bitcoin?”.
I asked myself the same question. The concepts of IRAs and retirement accounts in general feel like a holdover from the old world. For young people or old people who lived through 2008 and read the Bitcoin Genesis block, the words do not leave a good taste.
The whole concept of a retirement account makes no sense if it is based on Fiat. Realizing this led me to stop contributing to one a long time ago and instead pile up Bitcoin.
And I know from conversations with many other Bitcoiners that some had gone this route too, while others had taken the time to set up self-paced IRA accounts and were beginning to blur the two worlds. I didn’t hate this idea, but I was having a hard time researching where this type of account fits in my bitcoin stacking plan.
Bitcoin retirement accounts, capital gains taxes and the connection of both worlds
To this day, it’s still hard to talk about onboarding businesses into the BTCPay server and using Bitcoin as money. It is work that you do for the love of the game, not the paycheck. It is work that you do for your children and grandchildren who will hopefully live in a world where the bitcoin circular economy has won and has become the standard.
Despite the evolution of Strike and the clever tool it has developed, the question “What about cap profit?” The responses are still quick and angry on Twitter when the circular economy issue is discussed.
The ongoing capital gains tax issue and the IRS’s treatment of Bitcoin as property rather than currency is a major hurdle between us and the Bitcoin standard.
The more I thought about the capital gains tax deterrent to the circular economy, the more I saw an overlap between my previous job in Bitcoin payments advisory and my new role in relation to Choice App.
When I saw the overlap, I started re-interviewing the bitcoiners I knew who had bitcoin stacked in their Roth IRAs and asking them more about it.
Certain self-directed IRAs have a so-called “checkbook control”. This means that you have a bank account and check book and that you can literally invest the money in anything you want outside of two to three prohibited transactions and hold that investment and trade on that investment tax free.
Take that idea and now apply it to an IRA where you set up an LLC or trust and then with that LLC or trust you buy bitcoin and hold your own keys and have control of bitcoin in your own wallet . You are now in control of the Bitcoin wallet and apart from these two or three prohibited transactions, you are now tax protected to use these Bitcoins as money for investments.
So the worlds collide. That way, now, in the present, you can use Bitcoin as your base currency. and keep moving towards a personal bitcoin standard.
Why mining Bitcoin in an IRA is doubly interesting
Among many, the most interesting thing about Bitcoin mining for me is that the income is given in sats. There aren’t many ways to get paid in sats yet, but mining is one of them, and we know that paying in a currency is the first way to think in that currency.
When all of the mining infrastructure and hosting are housed in a tax-privileged account, you can use Bitcoin as your base currency on both the income side and the expense side with no penalties. Simply changing your mindset will be enough to make this a good move for many people. When you see this type of budgeting in action, your brain will make progress towards a personal bitcoin standard.
Roth IRAs as the third bitcoin stack
Having Bitcoin in a Roth IRA creates a guarantee that these sats can circulate as unencumbered currency during our lifetimes. We have no idea what the future holds, but the landscape of Bitcoin apps and services is getting better every day.
Imagine where the BTCPay server will be when many of us turn 59 and a half years old. Imagine no matter what the political landscape throws at us, you have a third stack to use in the circular economy. (I got bitcoin from regular exchanges like Coinbase and Cash App as the way I started stacking bitcoin; and then I also stack bitcoin by earning it, mining it at home and from Bisq and ATMs; mine Roth IRA stack is my third.)
My Roth IRA stack doesn’t replace anything I’ve done before, but it compliments it perfectly, and perfectly complements the other ways the Bitcoin standard is being advanced by showing that Bitcoin is gaining traction in retirement accounts while being circularly economic Goals.
It’s a long, winding road to get there full of what I would call “semi-advanced bitcoin game theory,” but I can honestly say I have never looked forward to seeing the state of the circular economy bitcoin so much. I can see significantly different stacks of bitcoin for different things and I can feel my budget and my family’s budget gradually being expressed in sats.
This is a guest post by Brian Harrington. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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