Arthur Hayes, former CEO of Bitmex and cryptocurrency market analyst, has raised concerns about the potential impact of an upcoming spot bitcoin ETF on the future of bitcoin. Hayes suggests that the popularity of these ETF derivatives could lead to a concentration of bitcoin custody in the hands of a few entities, ultimately forcing miners to surrender due to a lack of blockchain activity.
The Hypothetical Scenario
In his recent blog post titled "Expression," Hayes presents a hypothetical situation in which bitcoin is primarily controlled by a small number of financial firms, such as Blackrock. If this scenario were to materialize, Hayes predicts that it would undermine bitcoin's role as a store of value, given its distinctiveness from other assets traded in financial markets.
Bitcoin's Unique Nature
Hayes argues that bitcoin is the first monetary asset in history that only exists when it is in motion. However, if no further bitcoin transactions were to occur between entities, miners would struggle to cover the energy costs required to secure the network. Consequently, this could result in the shutdown of the entire Bitcoin network, as miners would only receive fees from bitcoin transactions once the subsidy ends around 2140.
Potential Shift to Derivatives
Hayes further suggests that this scenario could unfold if users begin to perceive bitcoin as a financial asset rather than a store of value, leading to a preference for purchasing derivatives instead of the cryptocurrency itself. In the event that bitcoin meets this fate, Hayes predicts the emergence of a similar asset that would enable transactions within a non-state-owned financial system.
Hope for the Future
In conclusion, Hayes expresses hope that if such a situation were to occur again, people would refrain from entrusting their private keys to centralized entities. He emphasizes the need to learn from past experiences and avoid repeating mistakes.
Your Opinion Matters
What are your thoughts on Hayes' assessment of the potential impact of a spot bitcoin ETF on the future of bitcoin? We invite you to share your opinions in the comments section below.
Frequently Asked Questions
Do you need to open a Precious Metal IRA
You should be aware that precious metals cannot be covered by insurance. If you lose money in your investment, nothing can be done to recover it. This includes investments that have been damaged by fire, flooding, theft, and so on.
This type of loss can be avoided by investing in physical silver and gold coins. These items have been around for thousands of years and represent real value that cannot be lost. These items are worth more today than they were when first produced.
Consider a reputable business that offers low rates and good products when opening an IRA. It's also wise to consider using a third-party custodian who will keep your assets safe while giving you access to them anytime.
Remember that you will not see any returns unless you are retired if you open an Account. Don't forget the future!
What are the benefits of a Gold IRA?
The best way to invest money for retirement is by putting it into an Individual Retirement Account (IRA). It's not subject to tax until you withdraw it. You control how much you take each year. And there are many different types of IRAs. Some are better for those who want to save money for college. Others are intended for investors seeking higher returns. Roth IRAs permit individuals to contribute after the age 59 1/2. Any earnings earned at retirement are subject to tax. But once they start withdrawing funds, those earnings aren't taxed again. This account may be worth considering if you are looking to retire earlier.
The gold IRA allows you to invest in different asset classes, which is similar to other IRAs. Unlike a regular IRA where you pay taxes on gains, a gold IRA doesn't require you to worry about taxation while you wait to get them. For people who would rather invest than spend their money, gold IRA accounts are a good option.
Another benefit of owning gold through an IRA is that you get to enjoy the convenience of automatic withdrawals. That means you won't have to think about making deposits every month. Direct debits could be set up to ensure you don't miss a single payment.
Finally, gold remains one of the best investment options today. Because it isn't tied to any particular country its value tends be steady. Even in times of economic turmoil, gold prices tend not to fluctuate. This makes it a great investment option to protect your savings from inflation.
How is gold taxed in Roth IRA?
Investment accounts are subject to tax based only on their current value and not the amount you originally paid. So if you invest $1,000 in a mutual fund or stock and then sell it later, any gains are subject to taxes.
You don't pay tax if you have the money in a traditional IRA/401k. Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
These accounts are subject to different rules depending on where you live. Maryland requires that you withdraw funds within 60 business days after reaching the age of 59 1/2. In Massachusetts, you can wait until April 1st. And in New York, you have until age 70 1/2 . To avoid penalties, you should plan ahead and take distributions as soon as possible.
How much tax is gold subject to in an IRA
The fair market value of gold sold is the basis for tax. You don't have tax to pay when you buy or sell gold. It is not income. If you sell it after the purchase, you will get a tax-deductible gain if you increase the price.
Gold can be used as collateral for loans. Lenders try to maximize the return on loans that you take against your assets. This often means selling gold. The lender might not do this. They may hold on to it. They might decide that they want to resell it. The bottom line is that you could lose potential profit in any case.
You should not lend against your gold if it is intended to be used as collateral. It's better to keep it alone.
Should You Purchase Gold?
In the past, gold was considered a haven for investors during economic turmoil. Many people are now turning their backs on traditional investments like stocks and bonds, and instead look to precious metals like Gold.
The gold price has been in an upward trend for the past few years, but it remains relatively low compared with other commodities like silver or oil.
Experts believe this could change soon. They believe gold prices could increase dramatically if there is another global financial crises.
They also point out that gold is becoming popular because of its perceived value and potential return.
Here are some things to consider if you're considering investing in gold.
- Consider first whether you will need the money to save for retirement. You can save for retirement and not invest your savings in gold. However, you can still save for retirement without putting your savings into gold.
- You should also be aware of what you are getting into before you buy gold. There are many types of gold IRA accounts. Each type offers varying levels and levels of security.
- Finally, remember that gold doesn't offer the same level of safety as a bank account. Your gold coins may be lost and you might never get them back.
You should do your research before buying gold. Make sure to protect any gold you already own.
What's the advantage of a Gold IRA?
There are many benefits to a gold IRA. It can be used to diversify portfolios and is an investment vehicle. You control how much money goes into each account and when it's withdrawn.
You also have the option to transfer funds from other retirement plans into a IRA. This allows you to easily transition if your retirement is early.
The best thing about investing in gold IRAs is that you don’t need any special skills. They're available at most banks and brokerage firms. You do not need to worry about fees and penalties when you withdraw money.
But there are downsides. Gold has always been volatile. So it's essential to understand why you're investing in gold. Do you want safety or growth? Is it for security or long-term planning? Only then will you be able make informed decisions.
If you plan on keeping your gold IRA alive for a while, you may want to consider purchasing more than 1 ounce of pure gold. One ounce doesn't suffice to cover all your needs. Depending on your plans for using your gold, you may need multiple ounces.
You don't have to buy a lot of gold if your goal is to sell it. Even one ounce is enough. But you won't be able to buy anything else with those funds.
What should I pay into my Roth IRA
Roth IRAs can be used to save taxes on your retirement funds. These accounts cannot be withdrawn until you turn 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. First, your principal (the original deposit amount) cannot be touched. This means that no matter how much you contribute, you can never take out more than what was initially contributed to this account. You must pay taxes on the difference if you want to take out more than what you initially contributed.
The second rule is that your earnings cannot be withheld without income tax. So, when you withdraw, you'll pay taxes on those earnings. Let's suppose that you contribute $5,000 annually to your Roth IRA. Let's also say that you earn $10,000 per annum after contributing. This would mean that you would have to pay $3,500 in federal income tax. So you would only have $6,500 left. You can only take out what you originally contributed.
If you took $4,000 from your earnings, you would still owe taxes for the $1,500 remaining. You would also lose half of your earnings because they are subject to another 50% tax (half off 40%). Even though you had $7,000 in your Roth IRA account, you only received $4,000.
There are two types: Roth IRAs that are traditional and Roth. A traditional IRA allows for you to deduct pretax contributions of your taxable income. You can withdraw your contributions plus interest from your traditional IRA when you retire. There are no restrictions on the amount you can withdraw from a Traditional IRA.
Roth IRAs don't allow you deduct contributions. You can withdraw your entire contribution, plus accrued interests, after you retire. There is no minimum withdrawal requirement, unlike traditional IRAs. You don't have to wait until you turn 70 1/2 years old before withdrawing your contribution.
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- Want to Keep Gold in Your IRA at Home? It's not exactly legal – WSJ
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement plans
The growing trend of gold IRAs
The gold IRA trend is growing as investors seek ways to diversify their portfolios while protecting against inflation and other risks.
Owners of the gold IRA can use it to invest in physical bars and bullion gold. It can be used as a tax-free way to grow and it is an alternative investment option for people who are not comfortable with stocks or bonds.
A gold IRA allows investors to manage their assets without worrying about market volatility. Investors can use the gold IRA for protection against inflation and potential problems.
Investors also have the benefit of physical gold, which has unique properties such durability, portability and divisibility.
Additionally, the gold IRA has many benefits. It allows you to quickly transfer your gold ownership to your heirs. The IRS doesn't consider gold a commodity or currency.
This means that investors who are looking for financial safety and security are becoming more interested in the gold IRA.
By: Sergio Goschenko
Title: Arthur Hayes Believes ETFs Might Cause the Demise of Bitcoin
Sourced From: news.bitcoin.com/former-bitmex-ceo-arthur-hayes-etf-success-might-destroy-bitcoin/
Published Date: Mon, 25 Dec 2023 04:30:14 +0000