By Daniel Tozier
Past the entrance of Showcase Liquor in North Pasadena, next to the lotto tickets and racks of daily newspapers, there is a rather unusual machine. At first glance, you might mistake it for an everyday ATM, with its credit card slot and small three-inch screen. And while this machine does allow you to collect money, it’s not the green slips of paper you’re familiar with. This is an ATM for buying Bitcoin, the first in a new class of currency known as cryptocurrencies. They are not a metal coin or a paper bill. In fact, they exist only online, sans any physical form. Since its creation in 2009, the value of a single bitcoin has proven volatile, constantly in flux but trending upwards. Though they can be used to buy and sell, their meteoric rise in value has made them tempting investments.
Now buying bitcoin is one thing, but what if you wanted to take things a step further and make it part of your retirement plan? Then you’ll need to head south to Old Town Pasadena and visit the offices of the IRA firm, Noble Bitcoin.
For most, setting up an IRA involves investing funds across a multitude of different stock options. Pasadena resident, Charles Thorngren is familiar with this approach. For much of his career he watched colleagues push stocks as the de facto IRA investment. Never quite satisfied with this limited philosophy, he began branching out, exploring the ways alternative investments, like real estate and gold, could bolster people’s investment portfolios. His interest grew and in 2016, he turned down an offer from a Fortune 50 company, and started his own IRA firm, Noble Gold, where he could help clients incorporate precious metals in their retirement fund.
Noble Gold was a success but Thorngren was quickly looking to the future. That same year, Bitcoin began seeing massive rises, gaining 114 percent in value. Thorngren watched the charts closely and in 2017, he founded a sister company, Noble Bitcoin, finally allowing cryptocurrencies into his clients’ portfolios.
Since then, Thorngren has become a voice for Bitcoin, frequently interviewing for articles in Forbes, Bloomberg and on MSN, proclaiming the advantages of this burgeoning, new asset. But Thorngren is quick to stress that it isn’t just the growth potential of gold and Bitcoin that make them essential additions to a healthy IRA, it’s the safety net they provide. He recalls the catastrophic market crash in 2008 that brought global financial institutions to their knees.
“If you look at 2007, people had diversified stock portfolios. Yet almost everyone’s investment accounts fell by half, about 54 percent. They had no real diversity. All the stocks all came down together. When the stocks pulled back, people who had a portion of their investments in gold didn’t have that loss, they off set it. The gain in gold was equal and greater than their loss in their stock portfolios.”
Bitcoin, like gold, tends to do well in times of political and economic unrest. But unlike gold, its value is unstable, making it a far riskier investment.
It was by chance that we would meet with Thorngren in January, a week after Bitcoin took one of its biggest tumbles yet, falling 50 percent off its high in a matter of days. Many critics took it as proof that their predictions were spot on. It walked like a bubble and talked like a bubble and, eventually, it fell like one too. But Thorngren, along with his clients, remained unshaken.
“Our customers were not worried,” Thorngren says. “Yes, the market showed volatility, but we take the extra steps with our clients…We go through the process of explaining what it is and how it works as an investment. This market is ten years old which is infancy when you consider financial instruments. So what we make sure we tell people is that as an infant it’s going to have its ups and downs.”
For seasoned cryptocurrency investors, none of this is new—Bitcoin has seen, and endured, far worse. In 2013, the price plummeted from over $1,100 a coin to around $400. It would take four long years to make up the lost ground. In the days following the most recent drop, Bitcoin eventually found its bottom at around $8,000 before dutifully climbing back, gaining $2,000 in the next few days. But even now its price sways wildly, gaining and losing hundreds of dollars in value overnight.
With all this in mind, Thorngren stresses that Bitcoin, and any other cryptocurrency, is a long-term investment. “The way we like to say it is when it sets highs, it sets new highs, when it sets lows the lows are still higher than the previous lows, so that’s showing you upward growth. That’s your upward trend. And that’s what makes it a magnificent investment, especially when you understand it. So when you see days of corrections you don’t get upset, you don’t begin to think emotionally, you think rationally.”
At press time, a single bitcoin was valued at around $7,000. By the time this issue hits the newsstands, it could be worth thousands more or thousands less. Or it could have crashed entirely, leaving a trail of broken dreams and empty pockets in its wake. For now, the only constant is change and the only certainty is uncertainty. But if you’re looking for some more diversity in your IRA and you’re ready to take a leap of faith into the future the people of Bitcoin Noble might be able to help you out.
Disclosure: The author owns some bitcoin, litecoin and ethereum.
Who created Bitcoin?
No one actually knows. The creator(s) worked under the pseudonym “Satoshi Nakamoto” and though there have been some leads, no one has yet to identify him/her/them. But the code put out by Nakamoto is 100 percent open source, meaning anyone with a computer can pop the hood and have a look at the engine.
What is a bitcoin?
A bitcoin is a unit of currency just like any other, with two key differences. First, it has no physical representation. While a US dollar can exist as a physical piece of paper as well as data (your transaction history on your bank’s website, for instance), bitcoins only ever exist as data. And second, instead of a bank controlling and overseeing transactions behind closed doors, it’s done automatically and in the open by the bitcoin network.
What is the public leger?
The public leger is a list of every bitcoin account and how much is currently stored in each one. It exists on hundreds of thousands of computers around the world, everyone in constant communication, verifying the accounts and updating in real time. If one copy of the leger is hacked and altered, the others simply recognize it as an outlier and ignore it.
What is a digital wallet?
Digital wallets are used to validate ownership of bitcoins. They’re created with two unique keys, one public and one private. Using complex algorithms, the two keys are combined to form a new signature each time a transaction is initiated. The signature is sent out to the network where thousands of high-end computers around the world race to solve the algorithm and the first one to do so verifies your transaction, updates the public leger and receives a fraction of a newly minted bitcoin in exchange for their role in the process.