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How to Give Cryptocurrency as a Gift

How to Give Cryptocurrency as a Gift
Written by publisher team

Cryptocurrencies are no longer just an area of ​​fintech obsessed. Even the least tech-savvy among us have heard of them, with their volatile price swings and sharp rises in value making news in nearly every corner of the world.

Opinion about investing in this asset class varies. Many experts warn that digital money like Bitcoin It will never become completely mainstream, and therefore it is overpriced and destined to depreciate. Others take a more positive view, claiming that cryptocurrencies are the future, and that people who buy them now can still make a fortune and, as a result, should be at the top of our shopping list.

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  • Cryptocurrency gifts can act as a speculative investment or simply as a cash equivalent to buying things online.
  • It is now easy to buy these digital assets and give them as a gift. Options include buying a gift card or using a cryptocurrency exchange.
  • Once you have the gift, find a safe offline place to store the information needed to access it – assuming the recipient isn’t already an investor in the cryptocurrency.
  • Cryptocurrency gifts by an individual with a value of less than $15,000 are not taxable events until the recipient decides to sell.

No matter which side of the fence you are on, the concept of cryptocurrencies that make good gifts cannot be completely dismissed. Sure, they may lose value quickly. However, most people would agree that cryptocurrencies are exciting and growing in importance.

An increasing number of e-commerce companies are now accepting digital assets as a form of payment, which means they can be used for shopping and bill payments. Add in the possibility that its value will be much greater in a few years, and you’ve got a very versatile gift.

What cryptocurrency can make a good gift?

It is said that there are now more than 6000 cryptocurrencies on the market, which makes choosing one more difficult than ever.

Unless you or the person you’re giving the gift to has something specific in mind, it may be best to settle on one of the more popular and well-established options, such as Bitcoin, Ethereum, or ripple. There has been an influx of cheaper new entrants in recent years, but it remains to be seen if they will gain the same level of popularity and staying power as more established currencies.

At the time of writing, one Bitcoin is valued at around $58,000, which is probably from most people’s budgets. You do not need to buy the whole However, Bitcoin – fractions of the currency are usually bought instead.

As an investment, cryptocurrencies are considered high-risk, and it is essential to review your options before purchasing. Do some homework on the coins that attract you most, then weigh their future prospects and determine whether it will be reflected in the price. Since this is a gift, it would also be wise to consider what the recipient might want.

Cryptocurrencies are not stable investments. Prices can fluctuate significantly from day to day, which means that it is necessary to remain calm and avoid hasty buying and panic selling.

How to gift cryptocurrency

Thanks to its growing popularity, in part due to its speculative nature, it is now much easier to buy cryptocurrencies. Here are some of the popular ways in which these digital assets can be gifted.

gift cards

Many websites sell cryptocurrency gift cards. Find one that seems trustworthy, preferably has good reviews, offers what you want, and then decide how much you want to gift and pay for it.

Once the payment is made, a gift card will be sent to the value of the amount you deposited. Similar to how standard retailer gift cards work, the recipient can redeem the gift by going to the same website and entering the details displayed on the card.

Cryptocurrency exchange

Another option is to give cryptocurrency as a gift via an exchange. If you are not already a cryptocurrency investor, you will first need to choose an exchange, create an account, and select a payment method. When you are ready to go, the purchased cryptocurrency can easily be sent to your wallet address.

Cryptocurrency storage

After purchasing the gift, you will need to find a safe place to store it. There is an option to keep it on the platform it was purchased from, although it is generally recommended to take it offline to a place where it can’t be hacked and easily stolen.

paper wallets

The cheapest way to store cryptocurrency offline is via a paper wallet. The paper wallet is generated by visiting a specialized website that randomly generates the corresponding QR codes and keys and essentially produces a printed sheet of paper containing all the information needed to access the purchased cryptocurrencies and facilitate transactions.

Once you have created and printed a paper wallet, you must make sure that it is not lost or destroyed. If this happens, the gifted will not be able to access the virtual coins sent to the address. It is also important to keep them in a safe place – if someone finds them, they can access and steal the digital assets.

Hardware wallets

The most secure storage solution is a hardware wallet. Hardware Crypto Wallets are basically a USB drive device. It’s small, waterproof, and virus-resistant, and is considered by many in the industry as the best place to ensure that private keys – critical data used to allow transactions on the blockchain network – are safe and secure.

These wallets are offline, which makes them more difficult to hack than a computer or smartphone, and they can be purchased fairly easily, at different prices depending on the features they offer.

physical coins

If you want the gift to be a bit fancier, it is possible to purchase physical coins. These coins are very impressive to look at and can be used to store digital currencies.

Each one contains a unique address and a private, recoverable key, which is located beneath the tamper-resistant hologram. Apart from serving as a useful storage tool, these coins have also become collectibles, which means that there is an opportunity to appreciate in value.

How are cryptocurrency gifts taxed?

Giving cryptocurrency to loved ones is usually not a taxable event. Unless the transfer exceeds the gift tax allowance, the Internal Revenue Service (IRS) only needs to be alerted when the asset is eventually sold by the recipient and realizes a capital gain or capital loss.

If the recipient sells the gift within one year at a profit, he will have made short-term capital gains, which are taxed as ordinary income. After this date, it becomes a long-term gain, which is taxed Low capital gain rates.

The size of the gain is determined by the amount paid by you, the giver. In other words, if a coin is purchased for $100 and then sold five years later for $500, the gift recipient will be taxed on a profit of $400.

Make sure to record the amount you paid for the gift, as well as its value when you transferred it. Without this information, the recipient would have to learn about the $0 cost basis, and increase their tax expenses.

Losses, which can be used as a deduction on an investor’s tax return, work a little differently. A capital loss is only recognized if the asset is sold at a price lower than both the amount for which it was initially purchased and its fair market value when gifted. In the event of a loss of this magnitude, the IRS will consider the lower of the two amounts.

questions and answers

Can I gift cryptocurrency?

Yes. You can buy a cryptocurrency gift card from an online retailer that offers them or go the more traditional route, buy cryptocurrency on a registered exchange and then send it to the recipient’s wallet address.

How do you send cryptocurrency to someone?

Sending cryptocurrency is often as simple as logging into the account you maintain and then sending the amount of your choice to the recipient’s wallet address – a long string of characters, similar to a bank account number. Fortunately, QR codes can take the stress out of entering these characters – which, if mistyped, can effectively mean sending money to
The wrong person.

In general, it can take anything from seconds to a few minutes for the transfer to take place. However, there may be a “gas fee” – a payment made to compensate for the computing power required to process and verify transactions on the Ethereum blockchain.

How can I gift a crypto wallet?

If the person to whom you are offering cryptocurrency is not already investing in virtual currencies, then it is likely that they will not have a wallet to hold. It is possible to store cryptocurrencies on the platform from which they were purchased, although it is generally recommended to keep them in an offline location that is more secure and less vulnerable to hacking.

One of the best options is to buy a hardware wallet. The readily available USB drive devices are small, waterproof, and virus-resistant, and are widely regarded as the most secure way to store cryptocurrency.

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