How to Give Cryptocurrency as a Gift
The holiday season between Thanksgiving and New Year’s Day is the time to surprise and delight those we love with the perfect gift. If you think traditional gifts are repetitive and boring but still want to show love and appreciation to those special to you, you’re in the right place. A crypto gift is a new type of click-of-a-button gift to surprise your loved ones and help them achieve financial freedom. According to a BlockFi survey, one in 10 people gave crypto as a gift the last holiday season, so your family and friends surely must have heard or read about people who made life-changing money through crypto.
While struggling to figure out what to get your loved ones for the holidays can sometimes be a hassle, finding the perfect gift really feels great. So, in this article, we'll provide a detailed guide on how to gift cryptocurrency to friends and family for the holidays.
Key Takeaways
- A crypto gift is a new type of click-of-a-button gift to surprise your loved ones and help them achieve financial freedom.
- The current bear market could be the best time to gift crypto as you could buy it at historically low levels and wait for the bull run.
- In addition to making a gift that might increase in value, you can contribute to the social integration of crypto by increasing familiarity and involving new users.
- A gift card is among the options for gifting crypto.
Why Gift Cryptocurrency?
If you want to buy cryptocurrency for your loved one, there are several reasons to do so. As a cryptocurrency investor, who has made decent profits from trading crypto, you can set family and friends on a wonderful journey of making life-changing money, achieving financial freedom, or earning steady passive income.
In addition to making a gift that might increase in value, you can contribute to the social integration of crypto by increasing familiarity and involving new users. Your crypto gift will create the perfect opportunity for you to make the most of this year’s holiday and discuss crypto investment advantages with your family members and friends as long as they remain curious and open to the conversation. If every crypto enthusiast gifts cryptocurrency to just one person, the social integration of crypto will increase exponentially.
Buying gifts is certainly a skill, and when your loved ones learn their crypto can increase by value shortly, you'll most likely gain this year's "best gift giver."
Crypto Gifting Guide
Now that you've decided to gift crypto to your loved ones, there are some things to consider before you send them out. Some of the most common ones are highlighted below.
Own Crypto
Before gifting cryptocurrency, you must have a sufficient amount yourself. If you trade them but don't own any, you must buy some crypto for yourself. Depending on your investing skills, geographical location, deposit methods, etc., you can either buy cryptocurrency from a centralized crypto exchange or a decentralized exchange. Most centralized crypto exchanges, like Binance, Coinbase, etc., allow you to buy cryptocurrency directly through your bank account or credit or debit cards directly using fiat currency. All you need to do is register a Binance or Coinbase account, deposit funds, and you're good to go. Ensure you buy enough crypto to cover the network fees and the transaction costs. To learn more, visit our detailed guide on "How to Buy Cryptocurrency".
After you've purchased crypto from the crypto exchanges of your choice, we highly recommend storing your coins securely in a non-custodial wallet.
Educate Your Loved Ones
This is probably one of the most complicated steps in gifting cryptocurrency. While you don't have to do anything for those already familiar with crypto and the risks associated with digital currency, much explanation is needed for those utterly unaware of crypto assets.
Get into detail about crypto's unregulated and highly volatile nature and explain how they can protect their crypto gifts against the most common risks, like high volatility, rug pulls, the collapse of exchanges, scams, etc. Teach them how to keep their cryptocurrency assets safe by storing them in hardware or cold wallets used to store cryptocurrencies offline. Introduce them to software wallets such as Metamask, Trust, CoinStats Wallet, etc., and the meanings of such key terms as "wallet address," public and private key. Ensure they understand they shouldn't give out their private key to anyone under any circumstances and that if they lose or forget the private keys, their virtual currency and digital assets will be lost forever.
You might also want to teach them how to receive cryptocurrency or send cryptocurrency. The gift recipient must understand that if they want to receive cryptocurrency or send Bitcoin, it's paramount to correctly enter the recipient's wallet address.
How to Gift Cryptocurrency?
Now that you know the basics of cryptocurrency gifts, let's explore a few options to actually gift crypto to family and friends.
Send the Crypto Gift to a Crypto Wallet
Gifting crypto to people who've already invested in crypto or regularly trade crypto is easy. You can send crypto gifts directly to their wallets. Just ensure you don't enter the wrong address of the recipient's crypto wallet or that the network you're using to send crypto is the same at both ends. Follow the steps described below to send your crypto gift:
- Enter the recipient's wallet address and the network correctly before sending crypto. You can also enter it by scanning the wallet's QR code.
- Enter the amount of crypto you wish to gift and complete the transaction.
- There should be no issue with sending cryptocurrency if you're using the crypto wallets provided by the cryptocurrency exchange and you've entered the address correctly.
- If you're using self-custody crypto wallets, consider issues associated with crypto transactions, such as network congestion. You can always track cryptocurrency transactions and ensure they go through successfully by paying higher network fees.
Gift Crypto in a Wallet
If you want to make a crypto gift to someone who isn't into trading or investing and isn't technologically well-versed, giving the crypto gift in a cryptocurrency wallet would be a great idea. You can either store the digital assets you're gifting in a hardware wallet/cold wallet or set up a software wallet/hot wallet. Ensure to hand over the passwords, public and private keys, etc., to them. You could also set up a paper wallet for them. With a paper wallet, you'd only be handing them the keys to their digital money written on a piece of paper that they should store securely.
Gift Physical Coins
You can also get the physical coins of the gifted cryptocurrency. A digital asset, along with its physical iteration, is among the best creative gift presentation ideas and will make a perfect gift.
Congratulations! Now you know how to gift crypto to your loved ones this holiday season.
Bonus Tip
Connect your gifted cryptocurrency wallet to the CoinStats Crypto Portfolio Tracker, and empower the gift recipient to track the performance of their gift in real-time.
Concerns Associated With Gifting Crypto
Now let's look into some of the most common concerns associated with crypto gifting:
Which Crypto to Gift
If the gift recipient is a crypto investor or enthusiast, you can gift them any crypto of their choice. On the other hand, if it's someone unfamiliar with crypto, you'd better gift them only blue chip crypto such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin, etc. This is because these coins have been proven historically to be less volatile. Most crypto exchanges, like Binance, let you choose which crypto you wish to gift with the gift card so that you can select only Bitcoin in the gift card.
Tax Implications: Are Cryptocurrency Gifts Taxed?
As with any financial gift, you have to pay gift taxes on crypto as well. The Internal Revenue Service (IRS) considers digital assets as property for taxation; hence the recipient will have to pay taxes on them. However, there is a standard annual gift tax exclusion by Internal Revenue Service. So, if you're sending crypto up to the gift tax allowance amount, there is no need to pay tax. Moreover, cryptocurrency gifts are only taxed when withdrawing crypto and selling, trading, or using it to make any payment. If the person receiving a crypto gift sells it after more than a year, it counts as a long-term capital gain, which is taxed just like ordinary income tax. Hence, receiving a crypto gift isn't a taxable event, but using crypto gifts is taxed. Ensure you don't exceed the limit set by the IRS if you want to avoid the hassle of taxation.
Pro Tip
To avoid paying taxes on the gifted cryptocurrency, ensure it doesn't exceed the annual gift tax allowance.
Final Thoughts
Gifting crypto to your loved ones is an excellent way to help them embark on a beautiful crypto journey and contribute to the cryptocurrencies' mass adoption. Moreover, since we're in a bear market, and the mood in crypto markets is at an all-time low, gifting crypto right now might just turn out to be the best decision of your life. We hope you've learned what to consider before making crypto gifts.
Disclaimer: This article is only meant for educational purposes, and nothing written here is a piece of financial or investment advice. Cryptocurrencies are highly volatile and unregulated, and users should do their own research before investing in them.
Read more: https://coinstats.app/blog/how-to-gift-cryptocurrency/
Text source: CoinStats Blog
