Credit cards have sign-up bonuses, bank accounts generate interest, and there are even techniques to receive cash back while buying online, so discerning customers are used to getting free money.
Many of the same benefits are now available in cryptocurrencies rather than credit card points or US cash.
If you’ve already included cryptocurrencies to your investing portfolio, these alternatives can help you get more money for your money – but you should understand how it works first. You should also be aware of the additional duties that free cryptocurrency may entail, particularly as tax season approaches.
While some forms of free crypto, such as crypto credit card rewards, are only taxed on capital gains when you cash out (just like any other crypto you buy with your own money), others may be considered taxable income when you receive it, and you must declare it to the IRS. Make sure you’re aware of your individual tax requirements by doing some study ahead of time.
If you have already invested in cryptocurrency and are willing to put in a little more effort to keep track of your holdings, here are some free ways to increase your holdings.
A cryptocurrency credit card operates similarly to other rewards credit cards, except that instead of cash back or points, you’ll get cryptocurrency for every swipe. While we enjoy straightforward cash back incentives (and you can always use your cash back earnings to buy crypto), these cards can help you add to your crypto portfolio more easily.
Fintech businesses including BlockFi and Upgrade, as well as Gemini and other exchanges, have revealed plans for cryptocurrency rewards credit cards. These cards provide rewards categories that are comparable to those found on many regular cash back credit cards. For example, after earning 3.5 percent back for the first 90 days following account setup, the BlockFi Credit Card gets a flat 1.5 percent back in Bitcoin on every purchase you make.
Each of these cards has a different redemption value in addition to varied rewards rates. The Gemini card allows you to choose any crypto you want to redeem your earnings in, whereas BlockFi earns Bitcoin rewards and others limit your rewards to specific cryptocurrencies.
The points you earn with these cards, like any credit card, are only worthwhile if you avoid paying exorbitant interest rates. If you want to earn crypto rewards with a credit card, make sure you charge just what you can afford to pay off in full and on time each month, so you don’t end up with a debt.
When you shop with its retail partners, for example Lolli, a Google Chrome or Firefox browser extension, gives you “Bitcoin Back.” It works in a similar way to browser extensions like Rakuten or Honey, which provide discounts and cash back when you shop online through the portal or extension. Lolli, like those schemes, rewards you for spending conventional money when shopping online – not for buying crypto.
Nike, Sephora, and Malaysia Airlines are among the retailers on Lolli. Depending on the shop and product, rewards range from 1 percent to 30 percent Bitcoin back. Your incentives will be deposited in your Lolli account, which you can subsequently transfer to a cryptocurrency wallet or exchange account.
For using their services, certain cryptocurrency exchanges provide sign-up or referral bonuses. Coinbase previously gave a $5 sign-up incentive to new customers who wanted to invest in cryptocurrency, and the exchange now gives a $10 bonus to both you and your referrer if they open an account and trade at least $100.
Make sure you read the fine print on these freebies. To claim these benefits, you may be required to give additional personal information or take further steps. If you already have an account, most of these offers aren’t enough to justify joining up for a new exchange, but whether you’re a novice, keep an eye on exchanges you’re considering to see if they provide a sign-up bonus or a referral program for other friends who might be interested.
A well-known Bitcoin exchange for using the platform’s Learn center, Coinbase offers incentives. To receive the free crypto, you must first view Coinbase’s videos and complete quizzes, after which Coinbase will reward a tiny amount of cryptocurrency into your wallet. Because the curriculum is usually centered on a single cryptocurrency (such as GRT or BOND), these are the coins you’ll receive for completing the lessons.
Because altcoins aren’t suggested for long-term investments, you can exchange them for Bitcoin or Ethereum once you’ve earned them. Keep note of these transactions, though, because every crypto-to-crypto trade is taxable. Additionally, you should use Coinbase Earn to track the price worth of all your earnings and submit them as income on your federal tax return. Coinbase will provide you with a Form 1099-MISC if you earn more than $600 through the program, which you can use to record your earnings.
To start earning with Coinbase Earn, you must have a funded Coinbase account, reside in an eligible country, and validate all of your personal information.
You may earn interest on your Bitcoin assets on a few crypto exchanges. For example, Gemini Earn is a lending platform where you can earn up to 7.4 percent APY by lending your cryptocurrency to institutional borrowers. BlockFi has a comparable product called BlockFi Interest Account, which pays up to 7.5 percent interest. Lending your cryptocurrency to these organizations can add to the inherent danger of cryptocurrencies, so read the terms carefully before signing up and don’t lend more than you can afford to lose.
Staking on some crypto exchanges, such as Binance.US, can potentially earn you money. Staking refers to the practice of keeping cryptocurrency in your wallet in order to receive incentives or interest. You are assisting in the upkeep of the blockchain network by doing so. You can normally only bet particular coins on an exchange, thus reaping the rewards may need investing in more riskier altcoins.
Interest earned on your cryptocurrency, as well as staking revenue, are both taxable and must be reported as income. If you decide to participate, you’ll need to keep track of your earnings’ cost basis throughout the year so you can include it on your tax return.
Airdrops carry the biggest risk of any strategy for earning free crypto, and we believe the danger is greater than the gain for most investors. When developers seek to gain popularity for their new coin, they use airdrops. Simply put, they give away currencies in the hopes of gaining adoption.
You can find out when airdrop projects are taking place by looking online, they’re frequently advertised on the company’s website, as well as by users on social media platforms and on some cryptocurrency news sites. If you meet the requirements, the developers will frequently send the stated quantity of coins to your digital wallet address.
Any new cryptocurrency endeavor should be approached with caution. Hackers frequently utilize fake airdrops and ICOs (initial coin offerings). Even when they are genuine, many of the coins distributed in airdrops are not good investments. Experts advise newbies to stay with the most well-known cryptos, such as Bitcoin and Ethereum. If you follow such advice, you should avoid airdrops. How to keep your cryptocurrencies safe?
Any cryptocurrency you get as a result of an airdrop is taxed. According to the IRS, you’ll have to report it based on its fair market value on the date it was recorded on the distributed ledger (in most cases, when you get the airdrop into your digital wallet).
Even though there are ways to acquire extra Bitcoin for free, don’t be swayed by the lure of freebies. Cryptocurrency is a risky, new investment, and you should only invest what you can afford to lose.
It’s possible that free crypto won’t be free come tax season. Any cryptocurrency that may be deemed income, as well as crypto-to-crypto conversions or holdings cashed out for US dollars, is taxable. When it comes to reporting to the IRS, you’ll need to keep note of the market price of any crypto you acquire when you receive it and again when you sell it.
Kiara Sofia Smith
My current focus is blockchain technology and cryptocurrency. One could even call me a blockchain “enthusiast.” I have worked for almost a decade on several financial projects related to the stock market news, fundamental research and technical analysis for several blogs.
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