Cryptocurrency may be the gift that keeps on giving.
the main points
- Cryptocurrency gifts can be very versatile and may increase in value in the coming years.
- However, coding can also be choppy and unpredictable.
- There are several ways you can give Bitcoin or any other cryptocurrency as a gift.
If you are looking for a gift that is both different and practical, then cryptocurrency could be a great option. More than 14% of Americans already own cryptocurrency, and digital currencies are rising even further towards mainstream adoption in 2021.
However, it will not be the right gift for everyone. Before we get into how to buy cryptocurrency as a gift, let’s first consider some of the pros and cons of gifting cryptocurrency.
- Encryption can be quite versatile. More and more stores are accepting crypto payments, so a Bitcoin (BTC) gift may be more versatile than a regular gift card. If the recipient does not want to keep it as an investment, they can spend it or trade it in.
- This may be a gift that keeps on giving. Many people see cryptocurrency as a form of investment. In time, your crypto gift Probably increase in value. If the gift recipient chooses to hold the cryptocurrency for the long term, you will never know what its value might be in a few years.
- You can gift any amount of cryptocurrency. One bitcoin is worth about $50,000 at the moment, but you don’t have to buy a whole bitcoin (or any other currency). In fact, you can give someone 1 dollar worth of BTC. Transaction fees may make this impractical, but it is possible.
- There are no problems in the supply chain. As stores and suppliers struggle to keep up with demand, there is no chance that your crypto gift will be unavailable or stuck in a warehouse somewhere.
- Cryptocurrencies can be very volatile. A $100 crypto gift could reach $80 by Christmas Day, only to increase in value again before the New Year. Know that 2022 will bring a lot of unknowns to cryptocurrencies, such as regulation that could have a huge impact on prices.
- Encryption is not for everyone. Some people are not interested in – or don’t actually believe in – these digital assets. While they can only turn your crypto gift into dollars, there are transaction costs involved. And if they’re not very tech savvy, you probably don’t want to give them that extra hassle.
- It may not be as simple as it seems. In some cases, the recipient will need a cryptocurrency exchange account to receive the gift. They are relatively easy to open, but it is worth considering the recipient. If they are already struggling to keep track of multiple passwords, they may not want to manage another account.
- There may be tax implications. Giving cryptocurrency as a gift is not a taxable event. However, if the recipient continues to sell this crypto to make a profit, they will have to pay tax on those winnings. Keep track of what you paid for the cryptocurrency and what it was worth when you transferred it as this will help with any tax reports.
How to give a cryptocurrency as a gift
If you weigh the pros and cons and are sure that you want to go ahead with a crypto gift, follow these steps to make it happen.
1. Select the cryptocurrency you want to donate
There are thousands of different cryptocurrencies on the market. But it makes sense to stick with well-known coins like Bitcoin, Ethereum (ETH), Cardano (ADA), or even Solana (SOL) as a gift. You might also consider a stablecoin – a cryptocurrency pegged to a commodity like the US dollar – which has lower transaction fees.
The cryptocurrency market is relatively new and untested, and there is only a good chance that a limited number of tokens will survive in the long run. Considering that the lucky recipient of your crypto gift may not want to actively trade it, a more established coin or stablecoin is a better bet.
2. Decide how you want to gift your cryptocurrency
There are a few different ways to give cryptocurrency – just as if you were giving someone cash. You will need to purchase cryptocurrency before gifting it:
- You can use cryptocurrency exchange. If the person you are buying for already has a crypto wallet, you can simply send crypto to their public address. You will need to ask them for the address, so it may not work if you want to surprise them. Some cryptocurrency exchanges like Coinbase and Binance also have gift cards, but the recipient will need to open an account to use the gift.
- You can get a crypto gift card. There are a few different platforms that sell crypto gift cards. Make sure to research them carefully – gift card platforms are rife with scams. Find reviews online and only buy from a site you trust.
- You can use a paper wallet. Cryptocurrency transactions include both a public and a private key. A public key is like your bank account number, and a private key is somewhat like a PIN. A paper wallet is basically a secure way to print the key on a piece of paper (often using a QR code). The recipient can scan the code and transfer the cryptocurrency to a wallet of their choice.
- You can use a hardware wallet. If you are buying for the crypto enthusiast, a physical hardware wallet could be a great gift in itself. These are small devices that are kept offline, so they are less vulnerable to hacking.
3. Get ready to explain coding to your friends and family
If the lucky recipient of your crypto gift doesn’t yet know their blockchain from their supply chain, you might have some explanation to do. The most important thing is to make sure the recipient understands how to safely store their crypto gift – and where they can learn more if your present piqued their interest.
Cryptocurrency gifts are not for everyone. But if you are an enthusiast who wants to put some cryptocurrency under the Christmas tree, then the above steps will help you to do so.
Buy and sell cryptocurrencies on an exchange chosen by experts
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