Mainstream has taken a growing interest in cryptocurrency as the price of Bitcoin (BTC) continues to reach full-time heights. To put this interest into perspective, researchers at the Cambridge Center for Alternative Finance recently found that 101 million people across the globe currently has Bitcoin and other digital assets. The report states that the results in 2018 estimated the number of identity verified users of digital assets to be around 35 million globally.
With such growth underway, it should come as no surprise that crypto holders would get the idea of providing cryptocurrency this holiday season. Social distancing demands in the midst of the pandemic have led to virtual holiday collections and digital gifts being sent across different geographical areas.
While the idea of giving cryptocurrency to friends and family may sound appealing, there are considerations that need to be considered before sending it to your loved ones – especially beginners.
Education comes first
Bill Zielke, Marketing Manager at BitPay, a Leading Bitcoin (BTC) payment service provider, told Cointelegraph that sending crypto person-to-person has always been popular, noting that the company expects more consumers to do so this holiday given the bullish market. “While Bitcoin remains the cryptocurrency of choice, XRP and Ether (ETH) has increased dramatically in popularity and represents 8% and 7% of BitPay’s transactions, respectively, ”he said.
But when it comes to sending cryptocurrency to new users, Zielke explained that education is the key as there are many coins and several ways to store them. There are also questions as to whether the wallet used is open source and non-storage. Perhaps more importantly, the person who has received the crypto needs to know what these terms mean.
Proverb, “Not your keys, not your Bitcoin“May come to mind here. While hardware and paper wallets are known to be more secure forms of cryptocurrency storage, there are huge responsibilities that come with these mechanisms.
Dave Jevans, CEO of blockchain intelligence firm CipherTrace, told Cointelegraph that when sending crypto to a novice, it’s important to make sure they understand this basic rule: “Your value, your responsibility.” Jevans shared that it is important for beginners to understand the importance of protecting their private key, recovery phrase retention and having a safe place to store the crypto once it is received, otherwise there is a risk of losing access to funds.
For those considering a more common approach, “Crypto Wendy O”, a crypto YouTuber, told Cointelegraph that she recommends new users create an account on a well-known exchange:
“I do not like the idea of a beginner creating a ledger or purse, as this is very unrealistic and complicated. If a user loses their private keys, it is gone in these cases. For example, with Coinbase or Celsius, you can get easier access to the crypto. ”
Despite the fact that Coinbase is one of the most popular digital asset platforms in the United States, there are also disadvantages to the service. Coinbase and other popular exchanges like Binance have had technical problems as the price of Bitcoin rises higher. While regular crypto users may be aware of these service bugs, this can be very worrying for beginners.
Alternative ways to gift crypto
While sending cryptocurrency directly to another user via a wallet address may be the most common way to give crypto, alternatives such as gift cards and ATM coupons should also be considered.
Zielke shared that BitPay has seen an increase in users converting crypto to gift cards. “During the months of November and December, gift card purchases using crypto have been our best possible category,” he said. With well-known retailers like Amazon accepts gift cards purchased with Bitcoin through several native Crytpo services, this can be a great opportunity to provide crypto to beginners.
In addition, Jevans noted that cryptocurrencies like Coinme can provide depositors with coupons that can be redeemed by anyone. While this may be a good gift choice, Jevans noted that depositing $ 250 or more will require Know your customer confirmation for most Bitcoin ATMs in the United States.
Cryptodonations are also increasing
Aside from giving cryptocurrencies to friends and family, crypto donations are also a great way to give back this holiday season. Interestingly, this year has seen a number of new crypto-related fundraising opportunities from mainstream charities.
For example, “Bitcoin Tuesday”, which was scheduled for December 1 this year, encouraged users to donate cryptocurrency to organizations like Save the Children, No Kid Hungry and the American Cancer Society. Giving Block, the crypto-donation company behind the virtual event, noted that this year’s celebration was an order of magnitude larger than last year’s. Most recently, The Giving Block collaborated with The American Cancer Society to create the first cancer research fund ever based solely on crypto donations.
Alex Wilson, co-founder of The Giving Block, told the Cointelegraph that donating cryptocurrency creates a good cycle of giving, noting that higher market prices often result in more donations, leading to regular adoption. “It’s especially beneficial this year because cryptocurrency prices have risen so dramatically,” he said.
It is also noteworthy that the Salvation Army is accepting cryptocurrency donations this Christmas and launching its first ever “crypto boiler” in the western United States. This unique initiative allows donors to donate Bitcoin and Ether directly to the Salvation Army, one of the largest charities in the world. In a recent blog post, the organization noticed that these transactions are easy to make and most importantly come with tax benefits.
The tax benefits associated with crypto donations are certainly a consideration that needs to be considered. According to Taxbit’s “Guide to Taxes and Charges for Cryptocurrency Gifts and Donations, “Donating cryptocurrency to a qualified charity is not a taxable event. The guide further notes that donors will not realize income, gain or loss by donating. In addition, if a donor has had cryptocurrency for more than one year prior to the donation, they are entitled to the specified charitable deduction for the fair value of the cryptocurrency at the time of contribution in addition to not incurring a taxable gain on a valued asset.
Justin Woodward, a tax lawyer at TaxBit, told the Cointelegraph that there are huge tax incentives to donate cryptocurrency through an unrealized gain position. “By donating valued capital assets to a qualified charity, you can avoid paying capital gains on any sale,” he said.
Next year may be the turning point of crypto
While there are clearly a number of ways to give crypto this year, education is still the key when it comes to deciding how to give back. Moreover, it is clear that the widespread use of cryptocurrency is still very much in progress. As such, Zielke noted from BitPay that 2021 could be a turning point for crypto to truly “become a cool gift to receive for special occasions.”