As an asset, cryptocurrency is becoming more popular than ever, with an exponential increase in interest and investors just over the last couple of years.
Gone are the days when only tech nerds and hardcore investors are involved. Now, “ordinary” people are getting set up and investing in a range of crypto in order to be part of the future.
For all the critics and negative voices, there is plenty of positives and faith in the future. And for all the stories of failure, there are plenty more of success.
Some people now invest so heavily in crypto that this has become their main financial source. When this happens, people then use their crypto to make purchases as they would with fiat currency, and send crypto to friends and family as birthday gifts, Christmas gifts, and more.
With the increasing demand for shops and stores around the world to accept cryptocurrency as a payment method, as well as more businesses each year accepting crypto as a payment method, gifting Bitcoin or altcoins is making more and more sense.
So, how can you do it? Well, fortunately, it’s incredibly simple.
Sending Crypto as a Gift Explained
There are two options for sending. Let’s look at both.
Firstly, you can buy a cryptocurrency gift card from any participating retailer. These gift cards are digital and you’ll receive the card via email more or less instantly after purchase. Bear in mind, you may have to pay a small fee to buy the gift card, although this isn’t always the case.
Once you have the gift card, just send it on to the sender and they’ll be able to redeem it like with regular gift cards.
Wallet to Wallet Transfer
Secondly, you can take the traditional route of sending from your wallet to the recipient's wallet. All you need is their wallet address and your exchange to make the payment. It’s much the same as making a bank transfer and often just as fast. Although, if the network is busy, it can take around 30 minutes for some transactions to complete.
When inputting your recipient’s wallet address, double and triple-check that you have copied it exactly as there are no chargebacks or returns once sent.
The safe storage of cryptocurrencies is incredibly important. And if your recipient is new to the crypto world, then ensure they fully understand storage and wallets so they don’t lose the gift you have sent them.
What are the options for storage that everyone should know about?
A hot wallet is a wallet that is stored on an internet-connected device such as a laptop, PC, tablet, or cell phone. The vulnerability here is that the internet is hackable. And if your private key is being generated by an internet-connected device, then you are always going to be putting yourself a little at risk.
However, despite this security risk, hot wallets are convenient. It’s kind of like how making banking transactions online is far more convenient than doing them in person. It’s safer to do in person, but it’s most certainly not convenient.
People’s complacency regarding the security of hot wallets has led to numerous stories of people being hacked. There have even been accounts of owners boasting online about their BTC, only to have a hacker-genius run off with it all shortly after.
One of the best ways to keep your BTC safe in a hot wallet, aside from keeping your private keys safe and in a secure location, as well as not openly talking about your assets online or in real life is to have multiple wallets.
Next up is the cold wallet. A cold wallet is a wallet that is not held on any internet-connected device. Rather it is stored offline on a device similar to a USB. Since it is not connected to the internet, it isn’t at risk of being hacked in this sense.
An offline wallet will provide greater protection and massively reduce the risk of compromise. Although you do have to be careful with where you store your cold wallet - in a desk drawer, for example, might not be safe.
Often, people who plan on leaving their BTC for the long-term place their cold wallets in a safety deposit box at a bank for safekeeping.
But, it’s not a convenient option for anyone who trades regularly.
A paper wallet comes under the cold wallet category but it still deserves its own heading since it is a third, different, option. A paper wallet used to be considered the most secure wallet type. And while not everyone will agree this is still the case, it’s certainly more secure than a hot wallet.
A paper wallet is a wallet you can generate from several websites. From this, you get both public and private keys you print onto a piece of paper. The only way to then access the BTC is with this piece of paper.
This type of wallet is also often kept in a safety deposit box. After all, it only takes fire or flood at your home and your Bitcoin is gone forever. There are a lot of similarities between a cold wallet and a paper wallet and the final choice is often just the user’s preference.
Cold wallets and paper wallets require a little more knowledge to set up than a hot wallet so it’s important you know beforehand what you need to do. Ideally, you should know how to set up a hot wallet also in case you need it one day.
Physical coins are a relatively new concept and have yet to fully take off. You can, however, buy physical coins and even use physical coins to store your own BTC. At the moment, physical coins are only a storage option for Bitcoin.
Paying Taxes on Cryptocurrency Gifts
Since every country has its own tax laws, it’s impossible to tell you what taxes apply to your current or future situation.
However, since many countries do tax people on their crypto gifts after they have sold them, it’s essential that the recipient seeks out their country’s laws in advance.
Gifting Cryptocurrencies FAQs
1. Is Gifting Cryptocurrency an Option?
Yes! If you’d prefer to send crypto as a gift then you can just buy crypto as a registered exchange, or use your currency holdings, and send over your chosen amount to your receiver’s wallet address.
Alternatively, you can do so by buying a crypto gift card from any retailer that sells them.
It goes without saying that the receiver has to own a wallet address in order to receive your gift so this won’t be a viable option for all the gifts you need to buy.
2. Which Cryptocurrency Is the Best Option to Receive?
Given that there are currently more than 17,000 cryptocurrencies available to choose from, this is one of the harder questions to answer.
Of course, some altcoins are a bad idea. The ones that receive no attention, are young, have a low value that never changes or only decreases, for example, are all types you should avoid.
However, there are plenty of strong and viable currencies that are viable as gifts, with the more obvious ones being Bitcoin, Ethereum, or Solana to name just a few.
If you already own Bitcoin or altcoins and you’re sending your gift from your own pool of already-owned assets, then you can make the choice based on your own expectations.
For example, you may own several Bitcoin and you’re more than happy to send a fraction of a Bitcoin as a gift even if Bitcoin is doing well just because you’ll still have a lot leftover.
But if you’re buying crypto with fiat currency because you don’t already own any, then you may just base it off your own budget. For example, you have 50 bucks to spend, so you buy however much you can get of whichever popular crypto with 50 bucks.
Finally, you might make the choice based on the recipient’s goals. Say you have been into cryptocurrency and investing for a while and you have a good knowledge of what is happening in the markets.
But your recipient doesn’t understand it as well as you do but they are still interested in getting involved. You might buy a cryptocurrency for them that you believe will do well in the future and can help them learn about crypto, the network, etc.
There is no straightforward answer to the question of which is the best one for a gift. Rather, take the time to consider all angles so you can choose and give the one you think is most suitable.
3. Can You Gift a Cryptocurrency Wallet?
No. If the person you're sending the cryptocurrency to doesn’t have a wallet already, they’ll need to set one up for themselves. Since the user will likely have to register their information, including ID to create the wallet, it can’t be done in your name then gifted or transferred to someone else.
Important Points to Takeaway
- Cryptocurrency as a gift is becoming more and more popular
- It’s a safe way to send someone a gift that they can use to make purchases and use like fiat currency or they can use it as an investment
- Options for sending the crypto as a gift include a traditional transfer between wallets or by purchasing a crypto gift card
- The recipient needs to set up a wallet address if they don’t already have one
- Tax laws are different in every country so the recipient needs to be aware of their own country’s laws if they ever sell the crypto
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