Cryptocurrencies made their debut in 2009 with the introduction of Bitcoin. Created by Satoshi Nakamoto, this form of digital currency is used as a means of trade medium in virtual exchanges. Individual retirement account (IRA) holders who monitor trending investment options often as the professionals at Royal Legal Solutions about the merits of Bitcoin. Below, we discuss the legality and options available when it comes to Bitcoin investments.Bitcoin InvestmentsAt present, the Internal Revenue Service (IRS) treats Bitcoins as a “property”. As such, it is an allowable investment option for those with a self-directed IRA (SDIRA). For tax purposes, the property aspect helps prevent Bitcoin investments from having to pay penalties or other special IRS tax fees.In 2017, Bitcoin saw record high investment returns. In fact, self-made millionaires, like the Winklevoss Twins, have claimed to see over $1 billion returns on their Bitcoin investments. If you use your SDIRA to invest in Bitcoins, pay close attention to trends. (Our custodians have years of experience with trends and can provide valuable insight regarding how to spot potential investment bubbles. They are also able to quickly identify trades that may violate IRS regulations and cause you to be penalized.)Why use a Roth IRA?Most individuals opt for a SDIRA over a typical IRA for two reasons:The potential for a much more diverse portfolio protected from economic fluctuationsThe ability to see much higher potential returns.As stated above, there are potentially high-returns that can be gained through Bitcoin investments making it an ideal SDIRA investment opportunity. SDIRAs exist as both Traditional or Roth IRAs. While a traditional SDIRA will allow you to invest in Bitcoins with pre-tax dollars, a Roth IRA may be the better choice. Roth IRAs use post-tax dollars for investments. This means the taxes have already been taken out and you are absolved of having to pay them again. So what does this mean regarding Bitcoin investments? If you use these post-tax dollars to invest in Bitcoins, the capital gains taxes are completely eliminated. (By comparison, Traditional IRAs are only tax-deferred – meaning you will have to pay taxes on your gains once you begin to pull funds out upon your retirement.) An IRA LLC may be your best means of Bitcoin investment. A qualified trusted custodian can assist you with setting up an LLC and explaining how it works for your account and meets your specific needs.Use a Trusted CustodianNot all SDIRA custodians allow for alternative investments in items like Bitcoins. As such, you need to make sure you look for a reputable, specialized firm, like Royal Legal Solutions, who will. For a SDIRA, the custodian is simply an agent trusted to act solely on your directions. You are the account owner and the one who makes all decisions regarding your SDIRA account.Your custodian cannot provide financial direction but can help you to understand the regulations and explain anything you have questions about. Bitcoin is relatively new to the investment scene with very little input from the IRS. Overtime, laws may change. If you are considering using your Roth IRA to invest in Bitcoins, hire a custodian who understand the nuances of IRS regulations and Bitcoin trends.