To Retire With Crypto? More Likely Than You Think

Retiring? With Bitcoin? It might be possible – both retiring and doing so with a Bitcoin allocation, that is. 

Fidelity Investments is launching a new product that will allow plan sponsors to offer Bitcoin in 401(k) plans, making it the first provider to offer crypto in a retirement savings medium of this caliber. As part of it, more than 20.4 million plan participants at more than 23,000 employers could be eligible to add Bitcoin to their plan. 

As you’d expect, Business intelligence firm MicroStrategy will be among the companies piloting the Bitcoin 401(K) allocation in their retirement accounts. They’ll begin offering it by the middle of this year.

401(k) plans allow employees to take a tax deduction for the money they contribute from their salary to a retirement plan. Since Fidelity is the country’s largest 401(k) provider, this Bitcoin offering will potentially “mainstream-ize” holding crypto in tax-privileged portfolios. 

“There is growing interest from plan sponsors for vehicles that enable them to provide their employees access to digital assets in defined contribution plans, and in turn from individuals with an appetite to incorporate cryptocurrencies into their long-term investment strategies,” said Dave Gray, head of workplace retirement offerings and platforms at Fidelity Investments.

Through this new proprietary account, called the Digital Assets Account (DAA), companies will be able to access Bitcoin and add it to their customers’ retirement savings accounts. Fidelity does not specify how much employees can invest in cryptocurrencies in its announcement, but per media reports, employees could allocate up to 20% of their retirement fund in cryptocurrency.

Bitcoin can be added to a 401(k) plan just like any other investment. Participants can opt to direct some of their regular savings contributions directly into a Digital Asset Account (DAA), where their Bitcoin is held. Also, they can transfer money to their DAA from other investments in the plan.

Fidelity will be assisted with this plan by one of the public market’s most ardent supporters of Bitcoin — MicroStrategy, which provides embedded analytics and cloud-based services, among other things. The firm’s CEO Michael Saylor has a reputation for aggressive bitcoin acquisitions. Earlier this month, it bought 4,157 bitcoins for about $190.5 million, bringing the total number of bitcoins it currently owns to 129,218 or $5 billion.

The joint efforts of Fidelity and MicroStrategy might be a positive sign of crypto adoption, but it might encounter difficulty with authorities. Last month, the Labor Department expressed concerns about including cryptocurrencies in retirement plans. They pointed out that crypto prices are extremely volatile, so including them in 401(k) plans might not be the best idea. Their recommendation was for Fidelity to provide educational resources to inform potential investors of the inherent risk they are taking.

Labor Department’s point is valid since anyone would prefer stability and low risks after retirement. For now, the interesting thing will be whether employers will use Bitcoin for their employees, as well as how employees will react.

If you want to search for something on the internet, you’ll navigate to a URL. For example, if you want to find something on StockTwits, you type www.stocktwits.com. This is due to the Domain Name Service (DNS), which provides a readable username to the websites. 

But this wasn’t the case in the early days of the internet. Initially, instead of typing the name, we were supposed to write the IP address, which is a string of numbers, such as 123.1.876.980. 

The story of cryptocurrency is still very much in the IP address era, where users are supposed to remember long and difficult wallet addresses to send a crypto payment.

The Ethereum Name Service (ENS) simplifies crypto by replacing long numbers with usernames — just like DNS did with websites. It is an open, distributed, and expandable naming system that works with the Ethereum blockchain.

So, for example, if Natasha’s wallet address is 0xs7hs4bfq9fmoj3c…, the ENS system can change it into a human-readable name such as “natasha.eth.”

 With the ENS, users can buy and manage their own domains, which allows for secure and decentralized transactions to take place without having to deal with long and complex addresses. It reduces the likelihood of typing mistakes when entering the recipient’s address for fund transfers.

ENS looks like DNS, but its unique features make it different.

ENS is a decentralized autonomous organization (DAO), and its native token is $ENS.X. Domain owners who owned one of the ENS domains on October 31, 2021 were eligible for an airdrop of the $ENS.X governance token. 

An ENS name can be obtained by checking on https://app.ens.domains/ and registering it. Simply connect your wallet and type in the domain you want. ENS domains will require a yearly renewal fee payable in Ether. If your name has five characters or more, renewal is $5 per year. However, as the number of characters decreases, the renewal fee goes up.

The ENS domain names use non-fungible tokens (NFTs) to represent unique addresses. If you want, you can trade domain names by selling them as NFTs to someone. You may also buy a unique Ethereum domain name and rent it to other users. However, most popular names, such as God, America, were initially auctioned off.

The controversy 

Despite its decentralized appearance, the ENS is not free from controversy. In February, ENS director Brantly Millegan was attacked over some controversial tweets he made in 2016. TNL, the nonprofit “that funds and organizes development on [ENS],” terminated his contract in response, and users voted against him to remove him from the ENS foundation. 

The bottom line 

The ENS is a step forward in the world of decentralized networks, allowing easy access to blockchains. It does more than just provide names, as it has other benefits, like airdrops, NFTs, uniqueness, and others, which makes the project more valuable.

Less than a year ago, the Central American country El Salvador ignited a fire by adopting Bitcoin as a legal currency. Now, the fire has spread to Africa, where the Central African Republic (CAR) has accepted the world’s largest cryptocurrency as its legal tender. As a result of this move, CAR’s citizens will be able to use Bitcoin for day-to-day business and for tax payments.

The adoption of Bitcoin as legal tender was a cakewalk since lawmakers unanimously approved a bill legalizing cryptocurrencies in the country. President Faustin Archange Touadera then signed the bill, making Bitcoin and existing CFA franc legal tender.

The CAR “is the first country in Africa to adopt bitcoin as legal tender,” said President’s chief of staff Obed Namsio. “This move places the Central African Republic on the map of the world’s boldest and most visionary countries.”

The sub-Saharan country has been working toward legalizing crypto as legal tender for a while now. Finance Minister Herve Ndoba said during an interview with Bloomberg earlier this week that an African country will be one step ahead of other nations in adopting new technology.

Although the adoption of Bitcoin in CAR might resemble that of El Salvador, the reality in both countries is quite different. El Salvador has a largely unbanked population, but most of them have access to the internet. While in the CAR, most people do not have access to the bank and only 11% of the population uses the internet. Those are two potentially massive headwinds to crypto adoption in the country – because, how do you use Bitcoin without a device? (Lol, you don’t.)

Besides that, there are some unanswered questions that the African nation needs to understand, such as: Is Bitcoin adoption as legal tender going to boost the country’s economy? This is crucial because many experts think El Salvador’s experiment with Bitcoin was a big failure. 

In spite of the debate over whether Bitcoin should be accepted as legal tender, it is true that many countries continue to be drawn to the largest cryptocurrency. Malaysia’s Deputy Minister of Communications and Multimedia Zahidi Zainul recently suggested the country should recognize Bitcoin and other cryptocurrencies as legal tender. Many other countries and cities are on the verge of adopting Bitcoin and other cryptos as their currency.