Over the past year, the Bitcoin Renaissance has brought significant attention to BTCfi, or "Bitcoin DeFi" applications. Despite the hype, very few of these applications have delivered on their promises or managed to retain a meaningful number of "actual" users.
The Leading Platform: Liquidium
To put things into perspective, the leading lending platform for Bitcoin assets, Liquidium, allows users to borrow against their Runes, Ordinals, and BRC-20 assets. Where does the yield come from, you ask? Just like any other loan, borrowers pay an interest rate to lenders in exchange for their Bitcoin. Additionally, to ensure the security of the loans, they are always overcollateralized by the Bitcoin assets themselves.
Current State of Bitcoin DeFi
How big is Bitcoin DeFi right now? It depends on your perspective. In about 12 months, Liquidium has executed over 75,000 loans, representing more than $360 million in total loan volume, and paid over $6.3 million in native BTC interest to lenders.
For BTCfi to be considered "real," these numbers need to grow exponentially and become comparable to those on other chains such as Ethereum or Solana. However, over time, comparisons may become irrelevant as all economic activity may settle on Bitcoin.
Impressive Achievements
These achievements are impressive for a protocol that's barely a year old, operating on a chain where even the slightest mention of DeFi often meets with extreme skepticism. Liquidium is already outpacing altcoin competitors such as NFTfi, Arcade, and Sharky in volume.
Bitcoin is evolving in real-time, without requiring changes to its base protocol — a promising development.
The Rise of Runes
After a rocky start, Runes are now responsible for the majority of loans taken out on Liquidium, outpacing both Ordinals and BRC-20s. Runes is a significantly more efficient protocol that offers a lighter load on the Bitcoin blockchain and delivers a slightly improved user experience. The enhanced user experience provided by Runes not only simplifies the process for existing users but also attracts a substantial number of new users. In contrast, BRC-20 struggled to acquire new users due to its complexity and less intuitive design. Additional financial infrastructure like P2P loans is marking a step forward in usability and adoption.
Frequently Asked Questions
Who is the owner of the gold in a gold IRA
The IRS considers anyone who owns gold to be “a form money” and therefore subject to taxation.
You must have gold at least $10,000 and it must be stored for at the least five years in order to take advantage of this tax-free status.
While gold may be a great investment to help prevent inflation and volatility in the market, it's not wise to keep it if you won't use it.
If you are planning to sell your gold someday, it is necessary that you report its value. This can affect the capital gains taxes that you owe when cashing in on investments.
It is a good idea to consult an accountant or financial planner to learn more about your options.
What are the advantages 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. There are many types and types of IRAs. Some are better suited for people who want to save for college expenses. Some are for investors who seek higher returns. Roth IRAs permit individuals to contribute after the age 59 1/2. Any earnings earned at retirement are subject to tax. The earnings earned after they withdraw the funds aren't subject to any tax. So if you're planning to retire early, this type of account may make sense.
An IRA with a gold status is like any other IRA because you can put money into different asset classes. 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 advantage to owning gold via an IRA is the ease of automatic withdraws. This eliminates the need to constantly make deposits. You could also set up direct debits to never miss a payment.
Gold is one of today's most safest investments. Its value is stable because it's not tied with any one country. Even during economic turmoil, gold prices tend to stay relatively stable. This makes it a great investment option to protect your savings from inflation.
How much of your IRA should include precious metals?
It's important to understand that precious metals aren't only for wealthy people. You don’t need to have a lot of money to invest. There are many methods to make money off of silver and gold investments.
You could also consider buying physical coins like bullion bars, rounds or bullion bars. You could also buy shares in companies that produce precious metals. Or, you might want to take advantage of an IRA rollover program offered by your retirement plan provider.
You will still reap the benefits of owning precious metals, regardless of which option you choose. These metals are not stocks, but they can still provide long-term growth.
Their prices are more volatile than traditional investments. This means that if you decide on selling your investment later, you'll likely get more profit than you would with traditional investing.
How do I Withdraw from an IRA with Precious Metals?
First, determine if you would like to withdraw money directly from an IRA. Then make sure you have enough cash to cover any fees or penalties that may come with withdrawing funds from your retirement plan.
You should open a taxable brokerage account if you're willing to pay a penalty if you withdraw early. This option will require you to pay taxes on the amount that you withdraw.
Next, you need to determine how much money is going to be taken out from your IRA. This calculation is dependent on several factors like your age when you take the money out, how long you have had the account, and whether or not your plan to continue contributing.
Once you have determined the percentage of your total savings that you would like to convert to cash, you can then decide which type of IRA to use. Traditional IRAs allow for you to withdraw funds without tax when you turn 59 1/2. Roth IRAs, on the other hand, charge income taxes upfront but you can access your earnings later and pay no additional taxes.
Once you have completed these calculations, you need to open your brokerage account. Many brokers offer signup bonuses or other promotions to encourage people to open accounts. It is better to open an account with a debit than a creditcard in order to avoid any unnecessary fees.
You will need a safe place to store your coins when you are ready to withdraw from your precious metal IRA. Some storage facilities will accept bullion bars, others require you to buy individual coins. Before you choose one, weigh the pros and cons.
Bullion bars are easier to store than individual coins. However, each coin will need to be counted individually. You can track their value by keeping individual coins.
Some prefer to store their coins in a vault. Others prefer to place them in safe deposit boxes. Regardless of the method you prefer, ensure that your bullion is safe so that you can continue to enjoy its benefits for many years.
Is gold a good choice for an investment IRA?
Anyone who is looking to save money can make gold an excellent investment. It can be used to diversify your portfolio. There is much more to gold than meets your eye.
It has been used as a currency throughout history and is still a popular method of payment. It's often referred to as “the world's oldest currency.”
But unlike paper currencies, which governments create, gold is mined out of the earth. This makes it highly valuable as it is hard and rare to produce.
The price of gold fluctuates based on supply and demand. The economy that is strong tends to be more affluent, which means there are less gold miners. The value of gold rises as a consequence.
On the flip side, people save cash for emergencies and don't spend it. This causes more gold to be produced, which lowers its value.
This is why both individuals as well as businesses can benefit from investing in gold. You will benefit from economic growth if you invest in gold.
Your investments will also generate interest, which can help you increase your wealth. You won't lose your money if gold prices drop.
Which precious metals are best to invest in retirement?
Gold and silver are the best precious metal investments. They are both easy to trade and have been around for years. You should add them to your portfolio if you are looking to diversify.
Gold: One of the oldest forms of currency, gold, is one of mankind's most valuable. It is stable and very secure. Because of this, it's considered a good way to preserve wealth during times of uncertainty.
Silver: Silver is a popular investment choice. It is an excellent choice for investors who wish to avoid volatility. Silver is more volatile than gold. It tends to rise rather than fall.
Platinium: Another form of precious metal is platinum, which is becoming more popular. It's durable and resists corrosion, just like gold and silver. It is however more expensive than its counterparts.
Rhodium: Rhodium is used in catalytic converters. It is also used in jewelry-making. It is also very affordable in comparison to other types.
Palladium: Palladium has a similarity to platinum but is more rare. It's also less expensive. Investors looking to add precious and rare metals to their portfolios love it for these reasons.
Do you need to open a Precious Metal IRA
It is essential to be aware of the fact that precious metals do not have insurance coverage before opening an IRA. If you lose money in your investment, nothing can be done to recover it. This includes any loss of investments from theft, fire, flood or other circumstances.
Protect yourself against this type of loss by investing in physical gold or silver coins. These items are timeless and have a lifetime value. 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. A third-party custodian is a good option. They will protect your assets while giving you easy access whenever you need them.
When you open an account, keep in mind that you won't receive any returns until your retirement. Keep your eyes open for the future.
Statistics
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
External Links
finance.yahoo.com
forbes.com
- Gold IRA, Add Sparkle to Your Retirement Nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
bbb.org
irs.gov
How To
The History of Gold as an Asset
Gold was a currency from ancient times until the early 20th century. It was universally accepted due to its purity and divisibility, beauty, scarcity, and durability. In addition, because of its value, it was traded internationally. However, since there were no international standards for measuring gold at this point, different weights and measures existed worldwide. One pound sterling, for example, was equivalent in England to 24 carats, and one livre tournois, in France, to 25 carats. A mark, on the other hand, was equivalent in Germany to 28 carats.
The United States began issuing American coin made up 90% copper, 10% zinc and 0.942 fine-gold in the 1860s. This led to a decline in demand for foreign currencies, which caused their price to increase. In this period, large amounts of gold coin were minted by the United States, which caused the gold price to drop. The U.S. government was unable to pay its debts due to too much money being in circulation. To do this, they decided that some of their excess gold would be sold back to Europe.
Many European countries didn't trust the U.S. dollars and started to accept gold for payment. Many European countries started to accept paper money as a substitute for gold after World War I. The value of gold has significantly increased since then. Even though gold's price fluctuates, it is still one of the most secure investments you could make.
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By: Guillaume Girard
Title: Exploring the Growth and Potential of Bitcoin DeFi Applications
Sourced From: bitcoinmagazine.com/takes/bitcoin-defi-is-finding-product-market-fit-with-runes
Published Date: Tue, 14 Jan 2025 19:57:19 GMT
