Not a day goes by without bitcoin being in the news. And given the cryptocurrency's phenomenal price rise, from zero to approximately $32,000 in a little over a decade, you like many other individual investors may be tempted to buy in. But how?

Actually, you can invest in finance's newest asset via one of its most familiar vehicles: the IRA. Yes, you can buy bitcoin for a good old individual retirement account.

Cue the excitement? Maybe. In many ways, bitcoin investments are well-suited to an IRA. But, as with any investment strategy, there are pros and cons to consider.

Bitcoin is a type of cryptocurrency (sometimes called a digital or virtual currency) the oldest, and most popular of the dozen varieties available for trading and investment. So a bitcoin IRA is a type of investment retirement account that includes bitcoin within its portfolio.

Although these accounts may carry the name "bitcoin," they also allow you to invest in other cryptocurrencies, like ethereum, litecoin, and bitcoin cash.

You can't put bitcoin into a pre-existing, regular IRA that holds your stocks, bonds, ETFs, or mutual funds. Instead, you have to set up a special one, technically known as a self-directed IRA (SDIRA). The reason: The Internal Revenue Service (IRS) deems cryptocurrencies like bitcoin a type of property, which is off-limits to regular IRAs.

"A self-directed IRA has a little bit looser IRS rules, so you can hold things like property," or other alternative investments, confirms Victoria Bogner, a certified financial planner and chief executive officer of McDaniel Knutson.

In some ways, bitcoin IRAs work like regular IRAs. While you can set one up with any amount of funds, they have annual contribution limits set by the IRS: You can only contribute $6,000 a year for 2020 and 2021 (or $7,000 a year if you're age 50 or older). Any returns, income, or gains generated by the investments within them grow tax-free.

You can also establish a bitcoin IRA as either a traditional account (for which contributions are tax-deductible, and funds taxed upon withdrawal) or a Roth account (no tax break on contributions, but distributions are tax-free).

Of the two, the Roth version might have an edge, says Bogner, especially "if you are of the mindset that Bitcoin is going to explode" in price in the future. Roth IRAs are preferred by investors who project they'll be in a higher tax bracket when they retire and start withdrawing money from the account. Since the Roth is funded with after-tax dollars, they won't owe anything on their bitcoin gains even if the currency has gone up 10 or 20 times.

Bitcoin IRAs do operate differently in a few ways, though.

As the "self-directed" implies, these IRAs are directly managed by the account holder (as opposed to a financial advisor or money manager). And your regular brokerage, bank, or investment app probably doesn't handle them. Self-directed IRAs are only available through firms that specialize in the type of asset you're interested in.

So, to open a bitcoin IRA, you'd work with special custodians that can hold and deal in cryptocurrency. Some custodians require an application, walking you through the process. If you move forward, you can then fund these accounts via a rollover of funds from an existing IRA or another tax-advantaged account, or contribute new funds.

Some of the better-known, established companies that let you set up bitcoin IRAs include:

This is still a young field, and information on a firm may be hard to come by. Frankly, some are little more than sales platforms. So, no matter which custodian you're considering, be sure to do your due diligence on it.

Visit its website or call its customer service line to confirm and compare its fee structure, operations. Ask how your bitcoins will be stored, exactly, and about security procedures and measures you don't want your account holdings vulnerable to hackers.

There are plenty of positives to consider with bitcoin IRAs.

No investment is without risk. Potential issues also exist with bitcoin IRAs.

Quick tip: An IRA custodian should never promise your account is protected against losses due to a drop in your holdings' price or value. It's not. Protection against literal loss, due to theft or the firm going bankrupt, possibly. Protection from investment loss, never.

Bitcoin IRAs can offer an opportunity for investors who believe in the crypto's future, but who want some tax savings along with their gains. Plus, the ease of dealing with a familiar type of account.

But there can be higher fees and account minimums when compared to other IRAs, so determine whether the trade-off is appropriate for you. Bear in mind that there are other ways to hold bitcoin, in regular accounts on crypto trading platforms like Coinbase and Binance US.

If you decide to open a bitcoin IRA, choose a custodian carefully. And only commit to bitcoin an amount that you can afford to lose, and think long term. Says Bogner: "Twenty years later, hopefully it's worth more than what you put in."

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How to buy bitcoin in a IRA: Rules, benefits, risks, and where to buy - Business Insider - Business Insider