Buzz
First step: Purchase the cryptocurrency
If you’re new to the crypto world, stick to popular cryptocurrencies like Bitcoin or Ethereum. Use reliable platforms such as Coinbase or Binance for your transactions. Many exchanges, such as Binance, even offer gift cards that can be sent directly to the recipient. After receiving the card, the recipient will need to set up an account to claim their crypto.
To get started, select a mainstream cryptocurrency like Bitcoin or Ethereum and use well-known platforms such as Coinbase or Binance. Some exchanges, like Binance, offer gift cards that can be sent directly to the recipient, who will then need to create an account to access their funds.
Once the recipient receives the cryptocurrency, they can transfer it to a secure crypto wallet, which will allow them to store and trade the currency. Alternatively, you can buy the crypto and deposit it directly into a wallet created for the recipient. If the recipient already has a wallet, simply send the funds to their wallet’s address.
Setting up a crypto wallet
Crypto wallets are essential for storing digital currencies, enabling transactions, and updating the blockchain ledger. Online wallets, known as “hot wallets,” are more vulnerable to hacking but are quick and convenient to use (CNET offers some helpful recommendations here).
Another option for a more secure wallet is a “cold wallet,” which is accessed offline. A simple cold wallet could be a paper wallet, created using a wallet generator site that produces random keys and QR codes (this blog post guides you through the process). According to Investopedia bitcoinpaperwallet.com offers holiday-themed paper wallets.
To avoid the risk of paper wallets being lost, damaged, or stolen, you can gift the recipient a durable, waterproof hardware wallet with password protection. The College Investor has compiled a great list of hardware wallets here, and popular options include the Trezor Model T and the Ledger Nano S.
Tax considerations when giving cryptocurrency as a gift
Gifting cryptocurrency doesn’t trigger any income taxes. However, if the recipient decides to transfer or sell the crypto, taxes will apply at that point. Fortunately, unless you are extremely wealthy, you likely won’t have to worry about gift taxes, as only gifts exceeding $15,000 require filing a gift tax return (you’ll need to submit IRS Form 709 to report the gift).
