How to Give Bitcoin as a Gift
By: Jason Deane
Tags: Bitcoin, Money, Cryptocurrency, Gift Ideas, Gifts

How to Give Bitcoin as a Gift

Image: Licenses adobe stock, by Andrii

Most if us are lucky enough to have had a childhood where we experienced at least once the joy of opening a birthday or Christmas card and watching with excitement as a currency note fluttered to the ground. It was usually a small denomination, but in our minds, we were rich!

Many of us still use notes in cards as gifts at special times of year, but as we grow older we find that we’re now the ones providing them rather than receiving them, such as it should be.

So while the process for cash is well proven and millions of dollars, pounds, euros and many other currencies change hands every year in little envelopes physically sent through the traditional mail system, how does this line up with the ever increasing digital world? How do you do it with something like Bitcoin?

And why would you bother anyway?

Your childhood dollar vs your child’s Bitcoin

The biggest cash gift I ever got was £15 from my late grandad when I was about eleven. I distinctly remember the three old style five pound notes falling out of the card one by one and feeling so excited. I had simply never seen so much money.

That’s the equivalent of £51.35 today according to inflationtool.com, which gives an annual average inflation rate of around 3.6% a year. That’s an amount that probably wouldn't cause the same level of excitement in today’s generation of kids who are far more used to larger cash gifts.

However, the true value of the £15 I received in 1981 is actually zero since I no longer have either the cash or any of the Lego, Meccano or Airfix models I spent it on. I do, however, have a great memory and something to be forever thankful for. Some would say that is priceless in itself.

To take this true example further, had I simply retained that money in a piggy bank to this day (as unlikely as that seems) it would now be worth only £3.48 in terms of buying power according to in2013dollars.com. Almost certainly, therefore, I was far better off spending it at the time.

After all, the model P51 Mustang I remember buying from WHSmith’s that same year was £4.65 . It’s now £22.99 (according to Airfix’s official site) and far beyond what my original £15 could stretch to today. And, of course, there have been three generations of five pound notes since then and I’d have to find a place to change them over.

Giving the equivalent amount in Bitcoin, had it been available at that time, would have been a very different story, as we now know.

Not only would its value have increased significantly, it would have been safely preserved forever, assuming it had been set up correctly in the first place.

Bitcoin, therefore, is a far superior gift for the future based on that one simple premise, even without all the other arguments and fundamentals that support it.

So, if that’s the case, what’s the easiest and most secure way to do it?

Things to remember

Clearly we are talking about “no-coiners” here, that is, people who have no Bitcoin and you want to give them a great gift AND introduce them to a world they probably nothing about it.

Where someone already uses it, it’s simply a matter of getting their address and sending it over. Not quite as exciting as opening one of those old fashioned cards, but easy to do nevertheless.

Since no-coiners have no way to store it, there is nowhere to send it, so you have to solve both problems at the same time for them.

Depending on the amount, some people talk about getting hardware wallets, setting them up and handing them over, but think this creates more issues than it solves with new users. Usually, it takes some time to understand it and get to the stage where you understand why cold storage wallets are needed and how they’re used.

However, we do need to think about security and make sure the person receiving it understands it too.

Fortunately this can all be done in a simple way that still incorporates some of the excitement of the “old days.”

The simplest way to give Bitcoin

It probably comes as no surprise that I have given away quite a few Bitcoin gifts over the years.

Usually, I gift only a small amount to start with — say around £10 — because I want the recipient to get set up and understand what they’re dealing with, even at a very basic level. You can add to it later, and I sometimes do.

The chances are they won’t really appreciate it at first and may even not complete the process to actually collect it, so a low amount is immaterial if lost. That said, there’s something you can do to retain control of it until they’re ready, and we’ll look at that later in this article.

I have tried various ways over the years, but by far my favorite is setting up a wallet and sending a key that the recipient can simply restore from. You simply have to make sure it’s the right wallet.

Excluding cold storage options, there are two main main types of wallet — loosely grouped as “custodial” and “exchange.”

For the latter, you need to set up an account at places such as Luno, Coinbase, Kraken or one of the many others, and provide KYC (Know Your Customer) and AML (Anti Money Laundering) details. These don’t work, therefore, for someone who needs an account and whose details you don’t have, or anyone who is under 18.

However, there are several software wallets that can be set up with no information at all and are designed to be simple, secure places to keep Bitcoin safe. As long as you’re sensible, they provide decent security and certainly enough for a new user with a small amount. I usually use either Exodus, which is intuitively pretty, or Electrum, which is very logical, although others are available.

When giving Bitcoin as a gift to a no-coiner, I will simply create a new wallet using either of these, get the address, send some Bitcoin over and then, once confirmed, print out the seed key.

All I do then is create a nice little sheet on A4 paper that provides the appropriate congratulatory message, the seed key and a set of instructions on what to do. This consists of downloading the wallet, using the seed phrase to “recover” the bitcoin and a short note on why keeping that piece of paper very safe is a wise thing to do.

The very cool thing about this is that you can fold up the piece of paper and send it in a card (see below) so that the recipient still gets the thrill of paper dropping out of the card, but in a different, slightly more mysterious way.

Finally, if I’m actually with them (for example I have hand delivered the card), I’ll help them set it up there and then. If not, I’ll follow it up a few days later and go through it at that point.

Sure, it takes a few minutes, but ultimately it’s simple enough for both the giver and recipient to operate and it remains secure at all times.

Even so, there’s a couple of other things worth remembering.

Sending, security and what happens next

It goes without saying, but NEVER send the seed key through an email. If you do so, you have to assume it has been compromised, even if you have no evidence that it has.

Instead, always send via physical post as in the card example above. Even better, I always send using some form of tracked and insured delivery system. This way you can check online for delivery and assume it hasn’t been compromised en route. If you are sending a chunky amount, you might want to consider sending the seed phrase in two halves on different days.

This is important because this is one way in which Bitcoin is very different from fiat cash. Sure, it would be sad if little Jonny’s card didn’t arrive with the ten bucks in it, but the loss would be limited to that ten dollars. In Bitcoin’s case, someone could potentially clear out everything that wallet ever held if they had the key. Security is important.

I also keep, at least to start with, my own copy of the seed key. This is considered controversial by some, but the reality is this is only kept by me until I have properly “passed the torch” to the recipient. That is, I have confirmation that they have accessed it, and have control of the wallet. Once that is the case, the key is destroyed by shredding.

It’s essential to make the recipient understand the importance of that seed key and provide best practice to store it. That means, for example, avoiding rookie mistakes like taking a photo of it and keeping it on your phone or keeping an electronic copy on your PC. Keep it in paper only and store it in a secure place.

Gift Reactions

Be prepared for a range of emotions!

Some people have been really chuffed with their gift and get immediately stuck in with understanding it and, in some cases, adding to it. Many of these people will call you occasionally and ask questions about it and that’s great! Most of those will be very grateful to you in years to come.

The other group will look at you as though there’s something wrong with you and may, or may not, proceed with accessing it. Don’t take it personally, it just means they are not ready — yet — to start their journey with Bitcoin. Your seed key backup can remain safe until they’re ready.

But whatever happens, giving the gift of Bitcoin — particularly someone’s first Bitcoin — is an exceptional gift and, in some cases, really can change people’s lives.

And I, for one, will never stop giving it.