An in-depth look at what it takes to give someone an NFT and how to do it effectively.
Giving a gift digitally has become one of the top ways to shop for the holidays; it’s faster, more convenient, and you can do it from anywhere. Now, with the growing popularity of NFTs, you have a totally new (and novel!) way to expand how you can show your love for someone digitally.
That being said, giving an NFT to someone as a gift isn’t always straightforward, and there are several important aspects you should consider before gifting a non-fungible token this holiday season.
Before you proceed, it’s best to seriously consider if the person you have in mind would actually enjoy receiving an NFT. If you know they are into NFTs already, then skip on ahead. If you’re uncertain what your gift receiver thinks about NFTs, consider for a moment that there are people who have strong negative opinions about the concept.
Some people have the misinformed belief that NFTs are bad for the environment (the vast majority of them are not), while others object to the supposed “financialization” of the digital world. If you believe there is a high likelihood that your gift receiver could fall into one of those two camps, it might be worth reconsidering or trying to find out their true feelings. Otherwise, an NFT can be a fun and novel gift to mix things up — perfect for the person who has everything. (For more information about the environmental impact of the blockchains behind NFTs, checkout Filecoin Green and the Ethereum organization’s website.)
And if you’re worried about the tax implications, Experian says that, “if you receive an NFT as a gift, you will only be taxed if you choose to sell it later for a profit. If you are gifting an NFT to someone else, know that U.S. taxpayers enjoy an annual gift tax exclusion that works out to $16,000 per recipient in 2022.”
Now that you’ve determined that gifting an NFT to your recipient is a good choice, it’s time to figure out exactly what kind of NFT you should give them. There are many to choose from, but there are some basic principles to keep in mind depending on the experience level of the person you’re gifting to.
If you’re shopping for someone who is newly interested in NFTs or who doesn’t own one yet, then it’s probably best to go for something small to begin with. Because the world of NFTs can be complicated to navigate, gifting an expensive or even somewhat pricey digital object might be a little too risky for most peoples’ taste.
Another great NFT for a first timer is to give them one you create yourself! Not only can this be more meaningful and special, but it will also save you some money. Flex your creative muscles to make a meme, a unique work of art, a poem, or really anything imaginable. Once you have a digital file for the thing you made, you can take it to an NFT minting tool like Foundation, OpenSea, or even NFT.Storage itself! The key here is to use a tool that stores the NFT data on IPFS and/or Filecoin. As long as you do that, you’ll know your NFT will be built to last.
Lastly, you could gift them an NFT from your own collection! If you own multiple pieces from a given collection that they might like, this might be an easy solution.
If your intended recipient is already into NFTs, then it might be helpful to look at which NFTs they own by looking up their wallet address on OpenSea and viewing their collection. You might be able to get a better sense for their style, and you could potentially even get them a new item from a project they already own.
The beauty of NFT-giving over traditional gift-giving is that you can more easily see if someone owns something already if you know their wallet address!
Every week it seems like there is a new marketplace for NFTs popping up, so you won’t have a problem finding places to browse. The most well-known and well-used marketplace is OpenSea; it’s a highly generalized marketplace for any kind of NFT imaginable. If you’re looking for something more specific though, there are a number of specialized marketplaces that could be interesting to check out. Below you’ll find a list of marketplaces that might be worth exploring:
In order to own an NFT you and the gift recipient will likely have to practice self-custody. What does this mean? In a nutshell, it means the prospective NFT owner must have their your own personal crypto wallet that is not managed by a centralized crypto exchange (custody refers to which party has ultimate control over the wallet). With self-custody, you are in total control over your assets rather than giving them to an institution to hold on your behalf. An easy way to tell if the wallet is a self-custody wallet is if the individual knows or possesses a 12 to 24-word secret phrase that acts as the wallet’s keys. If your gift recipient has a 12 or 24-word secret phrase for their wallet address, then they are likely able to receive an NFT as a gift so long as their wallet supports the NFT’s blockchain.
The biggest barrier to sending an NFT to someone who is new to web3 is the fact that they likely do not have a wallet yet. What you do to solve this problem will depend on how much of a “surprise” you want the gift to be.
If you’re fine with them knowing something is up, you can tell them to download a wallet app like Zerion or MetaMask and follow the in-app setup guides (if your NFT is on the Solana blockchain rather than the Ethereum blockchain, then you can tell them to try Phantom). Once they have a wallet created, have them send you the address. Then, whenever you’re ready, you can initiate the transfer of the NFT to their new address from within your wallet app (if it supports NFT transfers). If your wallet app does not support NFT transfers, then you can securely use OpenSea’s transfer tool by following the instructions on their website. Just make sure that the NFT is on a blockchain that their wallet supports!
For a slightly more DIY approach, you could create them a physical card as a “stand-in” for the NFT so they’ll have something to open in-person. Your card could include the steps they’ll need to setup a wallet.
If your intended recipient is already an avid NFT collector, your job will be much easier. You just need to get the address for the wallet they use to collect NFTs. Then, whenever you’re ready, you can initiate the transfer of the NFT to their new address from within your wallet app (if it supports NFT transfers). If your wallet app does not support NFT transfers, then you can securely use OpenSea’s transfer tool by following the instructions on their website.
Regardless of how you go about gifting an NFT to your recipient, it’s important to remember that they might not know they’ve received something to their wallet address if you don’t tell them. Many wallet apps and services still don’t notify people of new incoming assets. Factor this into your presentation, and everything should go smoothly!
Disclaimer: This information is intended to be used for informational purposes only. It is not investment advice. Although we try to ensure all information is accurate and up to date, occasionally unintended errors and misprints may occur.