Arthur Hayes, renowned cryptocurrency market analyst and former CEO of Bitmex, has expressed concerns over the potential success of an upcoming spot bitcoin ETF and its impact on the future of the cryptocurrency. According to Hayes, the widespread adoption of these ETF derivatives could lead to the consolidation of bitcoin custody in the hands of a few entities, resulting in minimal movement of the cryptocurrency and causing miners to surrender due to lack of activity in the blockchain.
Potential Demise of Bitcoin, as Envisioned by Arthur Hayes
In a recent blog post titled "Expression," Arthur Hayes shared his belief that the proliferation of a spot bitcoin ETF could pose a serious threat to the very existence of the Bitcoin network. Hayes presents a hypothetical scenario in which major financial firms, such as Blackrock, hold a significant portion of all available bitcoins.
If this scenario were to materialize, Hayes predicts that it would undermine bitcoin's value proposition as a store of wealth, as it would deviate from the nature of other tradable assets in the financial markets.
Bitcoin is the first-ever monetary asset that relies on continuous movement. However, in a world where no further transactions occur, miners would be unable to cover the energy costs required to secure the network.
This would inevitably lead to the shutdown of the entire Bitcoin network, as miners would struggle to sustain their operations once the subsidies end around 2140 and their only source of revenue becomes transaction fees.
Hayes further suggests that this outcome could materialize if users begin to prioritize bitcoin as a financial asset rather than a store of value, opting for derivatives instead of the cryptocurrency itself. In the event of such a scenario, Hayes envisions the emergence of a new asset class that enables transactions within a non-state-controlled financial system.
Concluding his post, Hayes remarked, "Hopefully, in the future, we will learn not to entrust our private keys to centralized entities."
We would love to hear your thoughts on Hayes' perspective regarding the potential impact of a spot bitcoin ETF on bitcoin. Please share your opinions in the comments section below.
Frequently Asked Questions
What amount should I invest in my Roth IRA?
Roth IRAs can be used to save taxes on your retirement funds. The account cannot be withdrawn from until you are 59 1/2. If you decide to withdraw some of your contributions, you will need to follow certain rules. First, your principal (the deposit amount originally made) is not transferable. This means that no matter how much you contribute, you can never take out more than what was initially contributed to this account. If you take out more than the initial contribution, you must pay tax.
The second rule states that income taxes must be paid before you can withdraw earnings. Also, taxes will be due on any earnings you take. For example, let's say that you contribute $5,000 to your Roth IRA every year. Let's say you earn $10,000 each year after contributing. This would mean that you would have to pay $3,500 in federal income tax. That leaves you with only $6,500 left. You can only take out what you originally contributed.
You would still owe tax on $1,500 if you took out $4,000 of your earnings. Additionally, half of your earnings would be lost because they will be taxed at 50% (half the 40%). So even though you received $7,000 in Roth IRA contributions, you only received $4,000.
There are two types if Roth IRAs, Roth and Traditional. Traditional IRAs allow you to deduct pretax contributions from your taxable income. You can withdraw your contributions plus interest from your traditional IRA when you retire. You have the option to withdraw any amount from a traditional IRA.
Roth IRAs are not allowed to allow you deductions for contributions. However, once you retire, you can withdraw your entire contribution plus accrued interest. There is no minimum withdrawal required, unlike a traditional IRA. You don’t have to wait for your turn 70 1/2 years before you can withdraw your contributions.
What does a gold IRA look like?
You can purchase physical gold bullion coins anytime. You don't have a retirement date to invest in gold.
An IRA allows you to keep your gold forever. When you die, your gold assets won't be subjected to taxes.
Your heirs will inherit your gold, and not pay capital gains taxes. It is not required that you include your gold in the final estate report because it remains outside your estate.
You'll first have to set up an individual retirement account (IRA) to open a gold IRA. Once you've done so, you'll be given an IRA custodian. This company acts as a middleman between you and the IRS.
Your gold IRA custodian is responsible for handling all paperwork and submitting the required forms to the IRS. This includes filing annual reporting.
Once your gold IRA is established, you can purchase gold bullion coins. The minimum deposit is $1,000. A higher interest rate will be offered if you invest more.
You will pay taxes when you withdraw your gold from your IRA. If you're withdrawing the entire balance, you'll owe income taxes plus a 10 percent penalty.
You may not be required to pay taxes if you take out only a small amount. There are exceptions. However, there are exceptions. If you take 30% or more of your total IRA asset, you'll owe federal Income Taxes plus a 20% penalty.
It is best to not take out more than 50% annually of your total IRA assets. A violation of this rule can lead to severe financial consequences.
What is the tax on gold in an IRA
The tax on the sale of gold is based on its fair market value when sold. When you purchase gold, you don't have to pay any taxes. It's not considered income. If you decide to sell it later, there will be a taxable gain if its price rises.
You can use gold as collateral to secure loans. Lenders seek to get the best return when you borrow against your assets. This usually involves selling your gold. This is not always possible. They might keep it. Or, they may decide to resell the item themselves. You lose potential profits in either case.
So to avoid losing money, you should only lend against your gold if you plan to use it as collateral. It's better to keep it alone.
What are the fees associated with an IRA for gold?
Six dollars per month is the fee for an Individual Retirement Account (IRA). This includes account maintenance fees and investment costs for your chosen investments.
To diversify your portfolio you might need to pay additional charges. These fees can vary depending on which type of IRA account you choose. Some companies offer free check accounts, but charge monthly fee for IRA accounts.
In addition, most providers charge annual management fees. These fees can range from 0% up to 1%. The average rate is.25% annually. However, these rates are typically waived if you use a broker like TD Ameritrade.
What precious metal should I invest in?
The answer to this question depends on how much risk you are willing to take and what type of return you want. While gold is considered a safe investment option, it can also be a risky choice. For example, if you need a quick profit, gold may not be for you. If you have the patience to wait, then you might consider investing in silver.
If you're not looking to make quick money, gold is probably your best choice. If you are looking for a long-term investment that will provide steady returns, silver may be a better choice.
What are the benefits of a Gold IRA?
You can save money on retirement by putting your money into an Individual Retirement Account. You can withdraw it at any time, but it is tax-deferred. You have total control over how much each year you take out. There are many types of IRAs. Some are better suited for college students. Others are intended for investors seeking higher returns. Roth IRAs are a way for individuals to make contributions after the age of 59 1/2, and then pay taxes on any earnings upon retirement. Once they start withdrawing money, however, the earnings aren’t subject to tax again. This account may be worth considering if you are looking to retire earlier.
Because it allows you money to be invested in multiple asset classes, a ‘gold IRA' is similar to any other IRAs. Unlike a regular IRA that requires you to pay taxes on the gains you make while you wait to access them, a gold IRA does not have to do this. People who want to invest their money rather than spend it make gold IRA accounts a great option.
Another benefit of owning gold through an IRA is that you get to enjoy the convenience of automatic withdrawals. This means that you don't need to worry about making monthly deposits. To avoid missing a payment, direct debits can be set up.
Finally, gold is one the most secure investment options available. Because it isn’t tied to any specific country, gold’s value tends to stay stable. Even in economic turmoil, gold prices tends to remain relatively stable. Therefore, gold is often considered a good investment to protect your savings against inflation.
What are the advantages of a IRA with a gold component?
There are many advantages to a gold IRA. It is an investment vehicle that can diversify your portfolio. You have control over how much money goes into each account.
You also have the option to transfer funds from other retirement plans into a IRA. This will allow you to transition easily if it is your decision to retire 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. Withdrawals are made automatically without having to worry about fees or penalties.
But there are downsides. Gold is historically volatile. Understanding why you invest in gold is crucial. Do you want safety or growth? Is it for security or long-term planning? Only after you have this information will you make an informed decision.
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 the purpose of your gold, you might need more than one ounce.
A small amount is sufficient if you plan to sell your gold. Even one ounce is enough. But, those funds will not allow you to buy anything.
- 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)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.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)
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- You want to keep gold in your IRA at home? It's not exactly legal – WSJ
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How to Hold Physical Gold in an IRA
The most obvious way to invest in gold is by buying shares from companies producing gold. However, this method comes with many risks because there's no guarantee that these companies will continue to survive. Even if they do survive, there is still the possibility of losing money to fluctuating gold prices.
Another option is to purchase physical gold. You can either open an account with a bank, online bullion dealer, or buy gold directly from a seller you trust. The advantages of this option include the ease of access (you don't need to deal with stock exchanges) and the ability to make purchases when prices are low. It is also easier to check how much gold you have stored. The receipt will show exactly what you paid. You'll also know if taxes were not paid. You're also less susceptible to theft than investing with stocks.
However, there can be some downsides. You won't get the bank's interest rates or investment money. Additionally, you won’t be able diversify your holdings. You will remain with the same items you bought. Finally, the taxman might want to know where your gold has been placed!
BullionVault.com is the best website to learn about gold purchases in an IRA.
By: Sergio Goschenko
Title: Former Bitmex CEO Arthur Hayes: Success of Spot Bitcoin ETF Could Spell Disaster for 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
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