Cryptocurrency in everyday life will soon become inevitable. Many online retailers and companies now accept digital currencies as payment, making them a flexible gift option. If you’re thinking about giving cryptocurrency as a gift, there are a few things you should keep in mind. You’ll need to choose the right coin, figure out how to store it securely, and understand any tax implications. Read on as we’ll break down the process of giving crypto as a gift. Choosing the Right Cryptocurrency There are so many cryptocurrencies available today. Some are new and untested, while others are well-established and widely used. When selecting a cryptocurrency as a gift, it’s best to choose a trusted and stable option. Popular Cryptocurrencies for Gifting: Cryptocurrency Symbol Reason to Gift Bitcoin BTC Most recognized and widely accepted Ethereum ETH Supports smart contracts and decentralized apps Solana SOL Known for fast transactions and low fees USD Coin USDC A stablecoin tied to the US dollar It’s always best to first research the coin before you purchase it. Keep in mind the recipient’s interests and how they might use the gift. Ways to Gift Cryptocurrency There are several ways to give cryptocurrency. Every method has its pros and cons. 1. Gift Cards Many websites sell cryptocurrency gift cards. The recipient can redeem the card on the same platform where it was purchased. This is a beginner-friendly option. 2. Sending Crypto from an Exchange Buy the cryptocurrency on an exchange like Coinbase, Binance, or Kraken. Transfer it directly to the recipient’s wallet address. This method is fast and simple but requires the recipient to have a wallet. 3. Paper Wallets A paper wallet is a printed document containing private and public keys. It is created using an online generator. This is a low-cost way to store crypto offline, but it can be lost or damaged easily. 4. Hardware Wallets A hardware wallet is a physical device that stores crypto securely. It is the safest option, as it is offline and protected from hacks. Some well-known brands include Ledger and Trezor. 5. Physical Coins Some companies sell metal or plastic coins with embedded crypto keys. These coins often have holographic seals to protect the private key. They are a novelty but should not be relied on for long-term storage. Storing the Gifted Cryptocurrency Once you’ve purchased the cryptocurrency, you need to store it securely. Leaving it on an exchange is risky because online accounts can be hacked. Storage Method Pros Cons Exchange Wallet Easy to access and use Vulnerable to hacking Paper Wallet Offline storage, free to create Can be lost or damaged Hardware Wallet Highly secure, offline Costs money to purchase The greatest option for long-term storage is a hardware wallet. Give guidelines on how to secure cryptocurrency if you’re giving it to someone who is unfamiliar with the field. Are Crypto Gifts Taxed? Giving cryptocurrency as a gift is typically not taxable. However, when the recipient sells the cryptocurrency, taxes can be due. Key Tax Rules: The recipient may be required to pay short-term capital gains taxes if he sells the bitcoin within a year. He pays long-term capital gains tax, which is significantly less, if the sale is made after a year. Taxes are to be paid by considering the value at which originally purchased. Even in the event that the gifted bitcoin loses value and is sold at a loss, the recipient can still qualify for an exemption. A unique way to introduce someone to the world of cryptocurrencies is to give them a gift of digital assets that have the potential to appreciate in value and make a very progressive gift. This will help the recipient through some things they need to know in storing, using, and protecting their gift. If they have never been into cryptocurrencies, providing instructions or guiding them through will make it easy. Gifting cryptocurrency can be a fun and valuable present for any occasion; all one needs is to go about it correctly.
