The retirement investment market leans toward conservative products and would seem an odd fit with high-risk cryptocurrencies.
But Jay Blaskey, the head of sales for BitIRA, says it was investor interest that spurred the Burbank, Calif.-based company’s launch. He says last year’s sharp rally generated enthusiasm and that investors are less focused on immediate gains than on the underlying blockchain technology’s long-term potential.
BitIRA enables consumers to exchange dollars in 401(k) plans and individual retirement accounts into eight different cryptocurrencies: bitcoin (BTC), bitcoin cash (BCH), ether (ETH), ethereum classic (ETC), litecoin (LTC), Ripple’s XRP (XRP), stellar (XLM) and Zcash (ZEC). The company is an offshoot of the Birch Gold Group, a 14-year-old firm that enables investors to purchase gold, silver and other precious metals for their retirement accounts. Blaskey said the companies are separate but share some back-office functions and recommend customers to one another.
Blaskey spent five years at Birch before moving to BitIRA when it was founded 18 months ago. “There was a lot of pent-up demand for this asset,” he said in an interview with ThirtyK.
ThirtyK: How does BitIRA work? What is the process?
Blaskey: If you were contacting us, I would ask you about your knowledge, what your goals are. On the basis of that, I would send you information and talk to you. If you’re saying, “I already know I want this,” I would open an account with our back-end processing team. We would generate the paperwork that would allow the capital in U.S. dollars to be moved into an account with our custodian. You would decide when you want to enter the market, which currencies you want to buy. There would be no lock-in period. You could sell them whenever you want. You could hold them as long as you want. If you want to trade them into other currencies, you could do that.
“It’s not my job to advise someone what to do. My job is to give information with which to make the decision that’s best for his or her circumstance.”
ThirtyK: What is the relationship between Birch Gold Group and BitIRA?
Blaskey: We’re separate companies. We use certain resources (for) back-end processing. Birch has its own marketing program that gets customers to it. BitIRA has a separate marketing program. If someone asks me about precious metals, I would refer [that person] to a specialist on the precious metals side and vice-versa.
How BitIRA Was Born
ThirtyK: What are the origins of BitIRA?
Blaskey: A number of years ago, the IRS reclassified cryptocurrency, which allowed it to fall under assets permissible inside a retirement account. There are three components required for someone to have an asset in a retirement account. One, that person needs to have a custodian who is comfortable with the asset to do the required reporting to the IRS. Two, there has to be a place to store the asset, and we had to work with providers to hit the various security requirements in a retirement scenario. Three, you need a way of securely purchasing and selling assets in a manner that doesn’t expose capital to unnecessary risk.
ThirtyK: How did the company evolve in the first few months?
Blaskey: We had customers within a matter of days. There was a lot of pent-up demand for this asset. We replicated the process (Birch) had used with gold and silver.
ThirtyK: Crypto and precious metals are similar.
Blaskey: In both, you’re getting a real asset. With gold and silver, you’re getting physical precious metals. With cryptocurrency, you’re getting ownership of the token on the blockchain.
ThirtyK: What signaled the pent-up demand?
Blaskey: We had whispers from Birch customers. We saw the coverage of the space increase massively.
Crypto and Risk
ThirtyK: Isn’t crypto risky as a retirement product?
Blaskey: The majority of our customers fall into one of two [categories]. The first younger customers who have a 401(k) after a job switch. They’re not retiring for a long time. They’re looking to bet on the space. The other type of customer we have is at least 50, if not 60. They’re looking at cryptocurrency and they remember the last technology boom (the internet). These people remember if you were looking for a longer-term investment, it was an incredible place. They don’t want to get left behind again. They’re taking a smaller portion of a portfolio and putting that into cryptocurrency.
ThirtyK: Given the recent drops in crypto, have you or your investors lost confidence in cryptocurrency’s potential?
Blaskey: It’s never pleasant when you see the price of an asset go down. Ultimately this market needs to mature, and until that maturation occurs there’s going to be fear, uncertainty. Ultimately, most people who work with us aren’t looking at a six- or 12-month return. They’re betting on where are we going to be three years from now, five, 10 years.
ThirtyK: Do you emphasize blockchain’s benefits to potential customers?
Blaskey: I don’t talk up or down anything. It’s not my job to advise someone what to do. My job is to give information with which to make the decision that’s best for his or her circumstance. We’ll talk about traditional banking and compare the two methods of moving capital and transaction times and costs. If they think this is a marginal improvement, they may not attempt it. If they think this is significant, then they may want to put assets in.
ThirtyK: How will blockchain technology evolve to where it is more widely adopted?
Blaskey: As it becomes easier to buy and sell, for merchants to integrate it into their platform as a form of payment, as governments make it easier for the technology to be integrated with their services, these pieces will compound over time to create a network effect. But I don’t know how quickly we’re going to get to where I want us to be.