These are the best crypto gifting options this Diwali

Diwali is around the corner and people are scrambling to find the perfect gift for their loved ones. While gifting gold has been an age-old tradition in India and a good investment option as well, the young and restless are blazing a new path by gifting cryptocurrencies this Diwali.

Why crypto has become a gifting option

There is a fascinating connection between Diwali and wealth as this festival is seen as an auspicious time to acquire new assets and make new investments. For years, people in India have been investing in gold.

The purchasing and gifting of gold is usually customary during Diwali as it is one of the leading instruments of long-term investment. However, this year, with the digital-first mindset, youngsters are shifting towards gifting cryptocurrencies.

“Several see cryptocurrency as digital gold, a superior store of value and investment than gold. Crypto can also be backed by assets, so gold-backed token PAX gold can be an option and thus, an ideal investment choice to fund the future during the auspicious time of Diwali,” says Tarusha Mittal, COO and Cofounder of Unifarm, a group staking platform.

Even as the current crypto market is down, investors are optimistic about long-term gains.

According to Anurag Dixit, Founder of Kunji, a centralised crypto asset management platform, crypto is a better gifting option than gold this year as the returns on digital assets are bound to be multifold shortly.

“Investing has witnessed a paradigm shift led by digitisation due to changing times and trends, with people preferring to invest in sovereign gold or digital gold. Recently, the emergence of Bitcoin (BTC) has become a profitable consideration over digitised gold," he says.

Shrikant Bhalerao, CEO of blockchain and digital infrastructure platform Seracle, says that the beauty of crypto gifting is that it is just the right option for everyone, individuals or companies. Individuals can either leave the investment to grow or liquidate it whenever required, he adds.

While gifting crypto can be an amazing investment option, Medha B Dey Roy, Head of Branding at KuCoin India, believes that one must be mindful of the receiver’s knowledge of crypto.

“In case your receiver doesn't know how to access or secure the crypto, it might be wiser for you to tell them how to deposit or transfer. It will be an exciting gift for the receiver,” she adds.

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Experts say these are the best crypto gifting options for Diwali 2022:

Bitcoin

The world’s largest cryptocurrency by market cap is one of the most preferred choices by industry insiders for gifting this Diwali.

“Undoubtedly, Bitcoin is the best gifting option if you’re going to be doing so this Diwali. Unlike most other cryptos, Bitcoin is decentralised and has proved its credibility over years,” says Mohammed Roshan, CEO and co-founder of Bitcoin rewards platform GoSats.

“Although Bitcoin alternatives are everywhere, there is an extremely high probability that these cryptos eventually die out unless they have a strong use case and adoption.” he added. Roshan suggests that companies can also gift Bitcoin as a bonus to their employees this Diwali.

There is no doubt that Bitcoin is one of the most popular cryptocurrencies to date. Marc Despallieres, Chief Strategy and Trading Officer at CFD trading platform Vantage, also backs Bitcoin.

“The most well-known cryptocurrency of all is Bitcoin. It single-handedly accounts for almost 40 percent of the market cap of all cryptocurrencies. And one Bitcoin is worth more than Rs 16 lakh. Of course, the value is broken up into much smaller denominations, and a gift could be of any value of Bitcoin. So, it’s possible to present someone with, say, Rs 5,000 in Bitcoin,” he says.

Crypto gift basket

While Bitcoin is one of the most popular cryptocurrencies, there are other tokens in the market as well with immense potential and greater use cases. Crypto Investment Platform Mudrex’s founder Edul Patel suggests gifting a wholesome crypto gift basket this Diwali.

“Curated crypto baskets containing cryptocurrencies with the highest market cap such as Bitcoin, Ether, etc., could be best for gifting crypto because they serve as a store of value similar to gold,” Patel says.

Tokens such as Tezos, Neo, and Litecoin are all also backed by experts and can be included in the customised crypto gift basket.

Crypto gift cards

Similar to a gift card of a retail store, crypto gift cards can be exciting for the sender and receiver alike. Additionally, it is a gift that could wind up being worth a lot more in the future, believe industry experts.

Rajagopal Menon, Vice President of Marketing at crypto exchange WazirX, which also introduced the gift card feature this festive season, says, “We believe that the gift card feature will go a long way in converting no-coiners to proud crypto users. The Muhurat trading and WazirX Crypto Gift Cards will let users share the joy of owning Crypto with their loved ones.”

Non-fungible tokens

NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency, meaning while cryptocurrencies are identical and can therefore serve as a medium for commercial transactions, NFTs can't.

NFTs have gained immense popularity among netizens. From individuals to brands, everyone loves the several real-world use cases of NFTs. Even though the market seems down, the craze for investing in NFTs is not going anywhere any time soon, say the experts.

Asif Kamal, the founder of Web3 fine art fintech startup Artfi, says, “Giving a high-quality NFT as a gift can be a way to teach a loved one about the world’s latest technologies. It may also be a way to join a community. For example, basketball fans may like to share NBA Top Shot NFTs as a way to express their love for their favourite team.”

weTrade CEO Prashant Kumar believes that NFTs are good gifting options this Diwali as they are unique and largely safe from plagiarism. The company offers an NFT for every login. Users can claim their NFT once they log in to the app and share the NFT on their Facebook, Twitter or LinkedIn feed, Kumar explains.

Stablecoins

Stablecoins are cryptos whose value is pegged to that of another currency, commodity, or financial instrument. These coins aim to provide an alternative to the high volatility of the most popular cryptocurrencies, including Bitcoin, which has made crypto investments less suitable for common transactions.

Amanjot Malhotra, Country Head of crypto exchange Bitay, believes that Stablecoins such as USDT and USDC are a very stable form of gifting. “Individuals can give gifts to other individuals in their network. Companies can send crypto gifts to their employees on Diwali,” he says.

Will taxation be a problem?

While gifting cryptocurrencies this Diwali, one concern will be over the current state of taxation on these assets in India. However, experts have cleared this confusion.

The government is required by law to charge tax on gifts that are received in cash, immovable property, or certain moveable assets, such as shares, jewellery, paintings, and other items.

Virtual digital assets are proposed to be categorised as movable assets in Union Budget 2022. As a result, the receiver is not required to pay taxes on gifts of VDAs from certain relations. However, non-family members’ virtual digital assets worth more than 50,000 are taxed.

“Only if the received gift of VDAs (Virtual Digital Assets), like Bitcoin or NFTs, etc exceeds Rs 50,000 is it taxable, per your applicable income slab rate. However, you are completely exempt from taxes if the gift is from a relative,” says Anmol Chawla, co-founder of TaxCryp, a tax computation platform of VDAs.

Similarly, Abhijit Shukla, CEO and Founder of Revolution Games and crypto banking platform Tarality, says that the presents that a bride or groom receives on their wedding day are tax-free. “The bridegroom’s or bride’s parents cannot, however, profit from an exemption,” he adds.

“If you later sell or swap (if only there is a gain) you’ll also be liable for a 30% tax on any profit,” Punit Agarwal, Founder and CEO of crypto tax calculation platform KoinX, explains.

However, one should always keep in mind the volatility of the cryptocurrency market while investing. Volatility in financial markets refers to changes in the price of an asset.

It can be healthy, with steady increases or decreases within a general range but can also be extreme, with sudden price movements in either direction. The crypto market is more volatile than the stock market and hence experts time and again warn against making investment decisions based on the current state of the market.