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Cryptocurrency Investing

Types of Cryptocurrency Explained…

December 4, 2019
Learn about the potential tax advantages, how to get started and more about digital currency in a self-directed retirement account

Cryptocurrency in an IRA

Visit our YouTube channel to watch a video on the types of cryptocurrency explained.

Video: Types of Cryptocurrency Explained

2. Litecoin (LTC)

Litecoin was launched in 2011 as an alternative to Bitcoin. Like other cryptocurrencies, Litecoin is an open source, global payment network that is completely decentralized, meaning there are no central authorities.

What’s the difference between Bitcoin and Litecoin?

Here are a few differences between these digital currencies:

  • Litecoin is believed to feature faster transaction times.
  • The coin limit for Bitcoin is 21 million and Litecoin is 84 million.
  • They operate on different algorithms, Litecoin’s being “scrypt” and Bitcoin’s is “SHA-256.”

3. Ethereum (ETH)

Created in 2015, Ethereum is a type of cryptocurrency that is an open source platform based on blockchain technology. While tracking ownership of digital currency transactions, Ethereum blockchain also focuses on running the programming code of any decentralized application, allowing it to be used by application developers to pay for transaction fees and services on the Ethereum network.


4. Ripple (XRP)

Ripple was released in 2012 that acts as both a cryptocurrency and a digital payment network for financial transactions. It’s a global settlement network that is designed to create a fast, secure and low-cost method of transferring money.

Ripple allows for any type of currency to be exchanged, from USD and Bitcoin to gold and EUR and connects to banks, unlike other currencies. Ripple also differs from other types of digital currencies because its primary focus is not for person-to-person transactions, rather for moving sums of money on a larger scale.


5. Bitcoin Cash

Bitcoin Cash is a type of digital currency that was created to improve certain features of Bitcoin. Bitcoin Cash increased the size of blocks, allowing more transactions to be processed faster.


6. Ethereum Classic

Ethereum Classic is a version of the Ethereum blockchain. It runs smart contracts on a similar decentralized platform. Smart contracts are applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interface. Like Ethereum, it provides a value token called “classic ether,” which is used to pay users for products or services.


7. Zcash (ZEC)

Zcash is a digital currency that was built on the original Bitcoin code base. Conceived by scientists at MIT, Johns Hopkins and other respected academic and scientific institutions, it was built on a decentralized blockchain. A core feature and differentiation of Zcash is an emphasis on privacy. While not a function available to investors on Equity Trust’s platform, users can send and receive Zcash without disclosing the sender, receiver or the amount transacted.


8. Stellar Lumen (XLM)

Stellar lumen is an intermediary currency that facilitates currency exchange. Stellar allows a user to send any currency they own to someone else in a different currency. Jed McCaleb founded the open-source network Stellar and created the network’s native currency in 2014.


Video: Maximizing Cryptocurrency Profits: Investor Shares Path to 70% ROI


Did you know that you can invest in these cryptocurrencies within your IRA at Equity Trust?

Learn about the potential tax advantages, how to get started and more about digital currency in a self-directed retirement account with our free guide.

Offer - SDIRA Digital Currency and Cryptocurrency Investing with IRAs Guide

With a self-directed IRA, your investments are up to you, within the bounds of the IRS rules and guidelines. The IRS does note provide guidance on what investment types are permitted, but dictates only what is NOT permitted. Examples of prohibited IRA investments include collectible (such as artwork, stamps, rugs, antiques and gems), certain coins and life insurance. See IRA Publication 590 for more information about prohibited investments.


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