Cryptocurrencies have transcended their fintech origins and reached a level of awareness even among those who are not adept in technology. It seems that almost everyone, regardless of technological inclination, has been exposed to the news of cryptocurrencies with their unpredictable price fluctuations and exponential growth, gaining attention on a global scale.
There is a divergence of viewpoints when it comes to deciding whether or not to allocate funds to this particular category of assets. Numerous specialists caution against the adoption of digital currencies like Bitcoin, asserting their permanent position outside the mainstream and overvaluation, ultimately leading to a significant decline in worth. Conversely, there exists an optimistic stance among some individuals who assert that cryptocurrencies inevitably represent the path forward.
The prevailing notion is that individuals who choose to purchase cryptocurrencies at this moment endure the prospect of amassing substantial wealth, rendering cryptocurrencies an imperative inclusion in our inventory of coveted items.
A surge in the number of online businesses has resulted in the acceptance of digital assets as a viable option for making payments. Consequently, these digital assets can now be utilized for shopping and settling bills. Furthermore, there is also the potential for their value to significantly appreciate in the coming years, rendering them an incredibly versatile gift option.
What digital currency would be a suitable present?
At the pinnacle of its website, CoinMarketCap consistently updates the number of cryptocurrencies circulating in the market, along with the count of exchanges and the overall market capitalization. In October 2023, an overwhelming number of over 8,900 cryptocurrencies were accessible, intensifying the challenge of selecting just a single one.
If neither you nor the gift recipient have a particular preference in mind, it might be advisable to consider one of the widely recognized alternatives like Bitcoin, Ethereum, or Solana.
In the past few years, a wave of fresh and more affordable participants has flooded the scene; yet, their capability to achieve equal acclaim and longevity as well-established coins is still uncertain.
When contemplating investments in cryptocurrencies, it is imperative to thoroughly assess the available options. Take the time to research the various coins that pique your interest, evaluating their potential and correlating it with the current market value. Additionally, it would be prudent to contemplate the desires of the recipient, given that this investment is intended as a gift.
Cryptocurrencies – A Guide to Gifting
The increasing demand and the inherent element of uncertainty have made cryptocurrencies much more accessible for purchase. Below are several popular methods for presenting these virtual possessions as gifts.
Look for a reliable website that specializes in selling gift cards for cryptocurrency. Ensure that the website has positive feedback and a good reputation. When you find such an option, pick the right sum of money and finish the transaction process.
Upon making a successful payment, you’ll receive a Gift Card whose value is equal to what you have deposited. In a similar manner to typical retailer gift cards, the card recipient can utilize the gift by visiting the identical website and inserting the information exhibited on the card.
Another way to gift cryptocurrencies is through using a cryptocurrency exchange. To begin with, choose a stock market where cryptocurrency will be sold; then open an account on this stock market, specifying your way of making payments. The remaining steps are once you achieve this stage and have managed to activate your exchange account so easily transfer the purchased digital currency straightly into the beneficiaries’ intended wallet address.
Securing Digital Currencies
Once the gift is purchased, it is important to locate a secure storage space. While the platform of purchase may offer the option to hold it there, it is highly recommended to transfer it to an offline location where the risk of hacking and theft is eliminated.
Storing cryptocurrencies in an offline manner can be done inexpensively through a paper wallet. This entails jotting down your key codes on a plain sheet of paper. Alternatively, you can generate a paper wallet by visiting a website that randomly creates key codes and corresponding QR codes. By doing so, you will obtain a printed document with all the necessary information to securely access and perform transactions with your cryptocurrencies.
After generating and printing a paper wallet, it is crucial to safeguard it from misplacement or harm. Paper wallets are highly vulnerable to damage and loss, therefore it is advisable to employ them solely as a temporary storage solution until the keys can be shifted to a hardware wallet (more details below).
The ideal option for securely storing your data is through the use of hardware wallets. These crypto wallets are similar to USB drives, compact in size, and resistant to water and viruses. Among professionals in the field, they are highly esteemed as the ultimate safeguard for your private keys, guaranteeing their utmost safety and protection.
Offline wallets, unlike computers or smartphones, provide an increased level of security by being impervious to hacking attempts. They offer a range of features and can be swiftly acquired at differing price points.
If one desires a more extravagant gift, there is the option of acquiring or crafting tangible coins featuring the key design. These coins may incorporate a holographic adhesive on their back, containing the printed key. Crafted with advanced three-dimensional printers utilizing metal or plastic, these customized coins can leave a remarkable impression.
Physical coins are not a reliable or permanent option and should be regarded as more of a curious item. Their security measures fall short compared to alternative storage methods. After gifting the coin, it is advisable to utilize the keys to transfer the cryptocurrency onto an offline medium for safekeeping. Unless the coin is crafted from a valuable metal, it is recommended to dispose of it.
How Are Cryptocurrency Gifts Taxed?
It is typically not considered a taxable event to present cryptocurrency to family and friends, as long as the transfer does not surpass the gift tax limit. However, the IRS only requires notification upon sale of the property and at that point, the receiver recognizes a capital gain/loss.
That means if the person receiving this gift decides to sell it within one year to earn a profit, he or she is deemed to have earned what is referred to as short-term capital gain which is treated as ordinary income and thus taxable. Nevertheless, as earlier stated, gains resulting from such as sale after one year will be treated as long-term and shall be taxed at lower capital gains rates.
The extent of the profit hinges on your contribution as the giver. Essentially, if you purchased a coin for $100 and later sold it for $500 after five years, then the individual receiving the gift may be subjected to taxation on the gains, provided they satisfy the remaining criteria for capital gains.
When it comes to tax returns, losses play a unique role. They function as deductions that investors can utilize. However, the dynamics of these deductions are distinct. Only when an asset is purchased for less than the original sale price and the fair market value at acquisition time is a capital loss recognized. If there is a capital loss, taxpayers may write off as much as $3,000 for being married while those filing separately get the chance to deduct $1,500 per person.
Can I Give A Cryptocurrency As A Present?
Indeed, it is within your capability to acquire a digital currency voucher through a select number of virtual vendors or embrace the conventional approach of procuring cryptocurrency from an officially recognized marketplace and subsequently transferring it to the recipient’s designated digital transactional account.
What is the process of transferring Cryptocurrency to another individual?
Frequently, the act of transferring digital currencies can be accomplished effortlessly by accessing your digital wallet or the corresponding account where you store them, and then transmitting the desired denomination to the designated wallet address of the recipient.
What is the Process of Presenting a Crypto Wallet as a Gift?
A highly recommended choice is to purchase a hardware wallet, which comes in the form of a USB drive device. These compact gadgets are impervious to water and viruses, making them a reliable and secure means of storing cryptocurrencies.
The Bottom Line
Offering cryptocurrency as a present serves as a splendid means of acquiring someone with this fresh type of currency while granting them an item that holds growth potential. Nevertheless, it becomes imperative for them to grasp the methods of accessing, conserving, and utilizing the gifted cryptocurrency, and also taking into consideration any taxable incidents that may result. It may be beneficial to provide your recipient, who lacks prior exposure to cryptocurrency, with supplementary information on usage and tax guidelines.