Giving gifts to friends and family is a cherished Christmas tradition that includes sharing any wealth we've accumulated over the past year (sorry, Scrooge). It is a way to show affection and strengthen the connection with your loved ones.
After that, cryptocurrency is a great gift option because offering cryptocurrencies as a gift can be surprising, original and rewarding for those who enjoy the earning potential.
And just think about what kind of gift bitcoin could have been, even a decade ago. Imagine give away bitcoins or another cryptocurrency whose value could have increased dramatically. (Just look at the performance of our cryptographic approach briefcase as an example of what is possible).
While there is no guarantee that cryptocurrencies will continue to grow at the same rate in the coming years, it is still a good gift due to its Store of value (SoV) state.
In this article, we look at how you can gift cryptocurrency to friends and family this holiday season.
Gift cryptocurrency through an exchange
Easy to use: Easy
The easiest way to gift cryptocurrency is through a cryptocurrency exchange, such as Coinbase either Robin Hood. If you don't own any cryptocurrency, you can easily purchase it from one of these crypto exchanges by paying with a credit card.
Many exchanges offer an easy-to-use interface. You must send the crypto to the recipient's wallet address, which can come as a QR code or a string of letters and numbers.
Coinbase and Robinhood, in particular, allow users to gift cryptocurrency to an email address, which the recipient can claim later.
Advantages:
- Suitable for beginners โ Exchanges provide a simple and intuitive platform to buy and send cryptocurrencies.
- Diversity โ you can access hundreds of cryptocurrencies to give away, and your recipient can also find ways to trade those cryptocurrencies without having to understand any major technical knowledge.
- Fast transfer โ direct transfers come to an end in seconds to an hour.
Cons:
- Security โ Centralized crypto exchanges hold funds online, making them the least secure option listed here.
- Fee โ some exchanges may charge fees for purchasing or transferring cryptocurrencies.
- Receiver address โ in many cases, it is necessary to have the address of the recipient before giving the gift, which can reduce the surprise effect. The good news is that Coinbase and other platforms allow users to gift cryptocurrency to an email address.
Give away crypto gift cards
Easy to use: Easy
If you've ever received a Visa gift card, a crypto gift card works very similarly. Crypto gift cards can be digital or physical and work like traditional ones, with the only difference being that they are loaded with cryptocurrency.
Gift card recipients can redeem the crypto in their wallet or use it to spend online. Some exchanges, such as Coinbase and Binance, offer a convenient gift card option. Specialized services, such as BitCard, allow users to gift bitcoins in more than 150 countries.
Advantages:
- tangible gift โ Physical crypto gift cards are ideal for those who prefer physical gifts.
- Ease of exchange โ redemption is simple โ recipients can transfer the crypto to their wallet at any time.
- Versatility โ cards can be used to purchase products on cryptocurrency-friendly marketplaces.
Cons:
- Limited availability โ Not all cryptocurrencies may be available in gift card form.
- Platform dependency โ some platforms, like Coinbase, require recipients to redeem their gift cards into Coinbase accounts only.
Gifting via a P2P payment app
Easy to use: Easy
Traditional peer-to-peer (P2P) payment apps, such as PayPal, Venmo, and Cash App, also allow users to buy and send cryptocurrencies, making them a great option for crypto gifting. With PayPal, BTC, ETH, LTC, and BCH can be sent to another PayPal user or to an account on Venmo and other crypto exchanges.
However, you will have to go through a more elaborate KYC verification process and have a linked payment method. Additionally, most of these apps accept US customers for crypto transactions only at the moment.
Advantages
- Convenience โ Many people use PayPal or Venmo, and to use these options you only need to have the recipient's email.
- Versatility โ Cryptocurrency can be used to make online payments as millions of merchants accept PayPal as a payment option.
Cons
- Cost โ these P2P apps charge higher fees than crypto exchanges.
- Limited options โ PayPal and similar applications only support a few cryptocurrencies.
- Limited availability โ only US users can use PayPal and Venmo for crypto transfers.
Create and fund a software wallet
Easy to use: Moderate
If you want your loved one to have more direct control over their cryptocurrencies, you can set up a wallet for them and put cryptocurrencies in it. Creating and funding a software wallet is best suited for tech-savvy users and will require more practical knowledge on the part of the recipient (knowledge that you may have to provide them with).
First, download reliable software mobile or desktop walletas MetaMask or Exodus and set up an account. The key part is to securely record the seed phrase: a series of 12 or 24 random words required for wallet recovery.
After setup, you can transfer the desired amount of cryptocurrency to this wallet. The recipient can access these funds by downloading the same wallet software and entering the seed phrase provided.
This can be a great opportunity to teach your friends or family how to get started with cryptocurrency.
Advantages:
- Total control โ the recipient has full control over their funds.
- DeFi Access โ If your friend is familiar with cryptocurrencies, you can explore DeFi yield opportunities.
- Wide range of cryptocurrencies โ you can choose from thousands of cryptocurrencies.
Cons:
- Complexity โ This approach requires technical knowledge to set up and use the wallet.
- Responsibility โ safeguarding the opening phrase is crucial; Funds cannot be recovered if they are lost.
Read more about our favorite crypto wallets.
Give a paper wallet
Easy to use: Difficult
Paper wallets are an interesting way to offer cryptocurrency. Paper wallets are cold wallets where the wallet's secret keys are printed on paper for the user to hold. The tokens in that wallet are removed from the network and "stored" in the wallet, which can only be accessed via the printed keys.
The name "paper" is a bit of a misnomer since they can be made of paper, metal, or anything that the keys are printed on. For example, cryptosteel offers cold wallets made of steel, which is much more resistant and solid.
A great aspect of this gift is that it is physical and personal (or at least customizable). It can represent a more stable gift in that you are essentially giving away a crypto wallet that the user can hold onto as an investment.
Advantages
- Customizable โ Paper wallets can be personalized in all possible ways.
- Security โ Paper wallets require more responsibility but are more secure because they store cryptocurrencies offline.
Cons
- Complexity โ Beginners may not know what to do with paper wallets. They have the private key or seed phrase registered to them, and the recipients then have to move the crypto funds to some software wallet to use them.
- Responsibility โ Recipients must keep the cold wallet safe as losing it means losing all crypto funds.
Give a hardware wallet
Easy to use: Difficult
A more popular form of cold storage is a hardware walletlike the one provided by Ledger either Sure. These devices keep crypto funds offline and can be connected to your native or other applications via the USB port.
Before gifting a hardware wallet, you should purchase the device online, set it up, and put in some cryptocurrency. The entire process may take several days, including delivery.
Advantages
- Security โ Hardware wallets are considered the most secure, although Ledger recently experienced a massive security breach.
- Control โ With hardware wallets, users have full control over their cryptocurrency holdings.
Cons
- Cost โ You should pay between $50 and $200 just for a hardware wallet.
- Complexity โ these wallets require certain knowledge to set up and use.
- Responsibility โ As with paper wallets, hardware wallets should be stored in a secure location.
Read more about crypto hardware wallets.
What about taxes on crypto donations?
In the United States, cryptocurrency gifts are subject to similar tax rules as stocks or bonds. For 2023, gifts under $17,000 are exempt from gift tax; For 2024, the exemption limit rises to $18,000. This exemption applies until the recipient decides to sell the crypto. File a gift tax return using Model 709 It is required for donations greater than these amounts. This includes smaller cumulative gifts that exceed the annual exemption limit.
Read more in our crypto tax guide.
Investor Conclusion
The joy of giving can surpass that of receiving. Giving cryptocurrencies to your loved ones is an original gesture and an investment in their financial future. Whether you opt for crypto exchanges, gift cards, payment apps, or more secure options like software and hardware wallets, each method offers unique benefits.
While the significant growth of bitcoin over the past five years highlights the potential of cryptocurrencies as a valuable gift, it is important to remember the tax implications of donations exceeding the stipulated amounts. Don't give more than you're willing to spend, and remember you're giving someone an investment, not cash.
Give them a great investment. That's the gift that keeps on giving.
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