Step by Step Guide to Giving an NFT as a Gift:
Step by Step Guide to Giving an NFT as a Gift
NFTs are the rave everywhere. These assets have seemed to attract the attention of virtually every age and social group globally. This attention is primarily due to the huge purchase prices attached to a handful of NFTs in recent months. These purchase prices have created a general perception: that NFTs are a lucrative investment option.
Unsurprisingly, NFT investment has increased in the past year. CNBC shows that NFT trading increased by over 21,000% between 2020 and 2021. This shows that more people are clamoring to get on the NFT wave. However, aside from NFT investment, NFT gifting has become a trend. According to the Washington Post, many Americans received NFTs as holiday gifts. This article provides a detailed guide on NFT gifting.
How to Gift an NFT
It is important to note that NFTs can be gifted in two major ways: the cold wallet option and the hot wallet option. A cold wallet is an offline wallet. It is not connected to the internet and can only be accessed through a seed phrase. Your NFT can be transferred to the cold wallet, and the receiver can be given access to the wallet.
Another gifting method is through a hot wallet. A hot wallet is a wallet that can be accessed through an internet connection or a digital device. To gift an NFT via a hot wallet, follow these guidelines:
Purchase an NFT
If you do not already have an NFT to gift the receiver, purchasing an NFT is the first step. This can be done by selecting an NFT marketplace. There are various marketplaces to purchase NFTs from, but some marketplaces sell specific NFTs. Marketplaces like OpenSea offer a wide range of NFTs.
Connect Your Wallet to the Marketplace
After picking an NFT marketplace, the next step is to connect your crypto wallet to the marketplace. This wallet must contain enough cryptocurrencies for you to purchase an NFT. Ethereum is currently the most accepted cryptocurrency for purchasing NFTs. After funding your wallet, proceed to pick an NFT of choice from the marketplace. Purchase it and pay the gas fees for the transaction. After the transaction is approved, the NFT is automatically moved to your wallet.
Transfer your NFT to the Receiver’s Wallet
When your NFT is secure in your wallet, select the option to transfer it to the receiver. Depending on the marketplace you use, you will be required to input the wallet details of the receiver. At this point, it is essential to double-check the receiver’s wallet address. It will be impossible to retrieve your NFT once it is sent.
The decision to gift an NFT can be due to many reasons. However, you must note that some jurisdictions may have tax implications for NFT gifting. For example, in the United States, the NFT gifter may incur tax obligations if the NFT’s value exceeds $16,000. Thus, it is important to double-check your legal obligations before proceeding with gifting.