DAIM Issue 20 - Don't Miss This Deadline

March 8, 2023
  1. Importance of a Crypto IRA
  2. Ordinals
  3. Nostr
  4. Media and Mentions

    1. The deadline for 2022 IRA contributions is fast approaching. If you haven’t made a 2022 IRA contribution, you have until tax filing day which falls on Tuesday April 18th of this year. The limit for 2022 is $6,000 (it rises to $6,500 for 2023). If you have made a 2022 contribution, great! If you haven’t, don’t let the opportunity slip away. Given the rising cost of living you may think that $6,000 is a trivial amount that won’t make a difference in retirement. But you’d be mistaken. Making steady contributions to an IRA can add more than a million dollars to your retirement nest egg if you start early and are diligent about making annual contributions. For example if you have 35 years to retirement and contributed $6,000 per year, you would need to earn an average of 7.5% on your investments every year to hit that million dollar goal. That return assumption may seem high to traditional investors, but is something that digital asset investors have come to expect. And we don’t think it is absurd to expect those returns over a long time horizon.


    Let's look at Bitcoin for example. On 1/1/2023 Bitcoin was at $16,500. If it averaged a 7.5% return over the next 35 years it would reach a final value over the time period of $207,386. Seems doable right? Certain investment “experts” think that we could be over $1,000,000 in just 7 years. While we feel that prediction is ambitious, we don’t think that an average annual return of 10% over the next few decades is unreasonable. And remember there are no taxes paid while your investments are in an IRA. So you can aggressively realize capital gains without paying taxes. If you contribute to a Roth IRA there is an additional advantage, the distributions are tax free in retirement! So don’t miss out on the opportunity to make your 2022 IRA contribution. A little can go a long way.

    2. Ordinals - Hallelujah! If you were waiting for the day when you could memorialize your fart on the Bitcoin blockchain, you can rejoice. That sound is here. Artistic expressions are now possible thanks to Casey Rodarmar, who created the “Ordinal Theory.”  Ordinals are a way of ordering individual satoshis (1/100,000,000th of a BTC). Once satoshis have a distinct order they become unique, like a serial number. It is at this point users can attach arbitrary data to these satoshis which are called Inscriptions. Most Inscriptions have been images which have likened the project to NFTs for Bitcoin. But as we pointed out above, there are other ways to get your creative juices flowing with an Inscription.

    But what does this mean for digital asset investors? We think Ordinals/Inscriptions are a positive development. Bitcoin has long been touted as digital gold, a digitally scarce store of value. Critics have argued that, like gold, it has no utility and therefore the value proposition is weak. Ordinals help change that. Adding to Bitcoin’s element of programmability shows that the digital asset can be more than a digital store of value. You can argue the merits of Ordinals (some say that they are just arbitrary data adding bloat to the network) but the crypto space has responded favorably in the past to artistic expressions stored on a blockchain. Just like NFTs generated billions of dollars of on-chain economic activity, Ordinals could do the same. And this is just one sign of things to come. Who knows what future upgrades could bring. We do know that through all of this Bitcoin will maintain its status as a digitally scarce hard asset with a proven track record. We think that Ordinals only improve the investment case.

    3. Nostr - Nostr is an open protocol that enables global, decentralized, and censorship-resistant applications. The primary use case right now is a Twitter-like message board. For more on what Nostr is read this. The main takeaway is that decentralized protocols like this are based on the core tenets of Bitcoin and allow individuals to have even more autonomy in all aspects of their daily life. If Nostr can gain mainstream adoption people will get comfortable with using decentralized applications to interact socially. We think it is only natural that people will then be drawn to a decentralized, verifiable, digitally scarce form of money that gives them autonomy over their net worth. Nostr and Ordinals are developing storylines to keep an eye on as we approach the next bull cycle.

    4. Media and Mentions

    DAIM in the press - Bitcoin making moves

    DAIM in the press - How Ordinals Proved Bitcoin Can Evolve With the Times

    Sign up for our conference - Investing in Financial Innovation: Opportunities & Challenges

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