Crypto, NFTs and Tungsten Cubes: Giving Cash In 2021
Nonfungible tokens and digital money are an alternative for the adventurous gift giver.
4 min
Cash in little wrapped boxes or tucked inside Hallmark cards is one of the most reliable and beloved gifts. But this holiday season, cash gifts are taking a new form as cryptocurrencies and nonfungible tokens, or NFTs.
Giving digital money requires planning, though, as you can’t simply buy one of these assets and send someone a link. Instead, they need someone to have a digital wallet already created, through a provider such as Rainbow, MetaMask or Coinbase. The wallet then holds the assets, effectively acting as a bank account.
“There’s a fixed cost to getting started, and there’s no way around that,” said Lex Sokolin, head economist and global fintech co-head at ConsenSys, a blockchain software technology company. “It is like you’re showing up to your friend’s house in 2002 and giving them an MP3 player and saying, ‘Here’s an MP3 player, now go throw out all your CDs.’”
Hassles aside, many parents, children and even friends are embracing these new products—at least for the more digital-savvy in their lives. Just as stock certificates and savings bonds were gifts with a purpose in years past, gifts of crypto or NFT art can teach the recipient about financial independence, investing and saving.
“Giving money is also giving an education,” said Shari Greco Reiches, wealth manager and co-founder of Rappaport Reiches Capital Management.
With that spirit in mind, here are some of the most 2021 ways to give money—not a gift card in sight.
Crypto starter packs
One easy way to help someone dip a toe into the world of digital currency is giving them a makeshift crypto starter pack.
Alex Salnikov, co-founder and head of product of NFT marketplace Rarible, said he has set up wallets for friends with the promise of then giving them an NFT on the other side. He also recommends products such as Linkdrop, which allow the giver to send onboarding links to begin setting up their own wallets.
Coinbase offers an option to share crypto assets with those not yet set up on their network, along with a message and a “fun little welcome,” said John Zettler, senior product manager at Coinbase. Setting up a wallet on Coinbase is free.
“These are effectively the keys to the community, and with it you make the person a part of said community,” Mr. Salnikov said.
Currency
If someone has already set up their own crypto wallet, Mr. Salnikov recommends giving them the coin or cryptocurrency most useful for their preferred activities, just as you might choose a gift card for their favorite store, rather than a generic Visa gift card.
Unlike setting up the wallet—free on many platforms—these coins don’t run cheap. Bitcoin rose in price from $30,000 at the end of 2020 to nearly $70,000 in 2021. Ethereum, another popular coin, is less expensive at close to $4,300. You can purchase portions of cryptocurrency, however, and every bitcoin is divisible, which means you can buy a slice of one at almost any amount you would like.
Memecoins, or a cryptocurrency related to an Internet joke, such as dogecoin, won’t set you back as much. (At its peak, dogecoin reached 75 cents in May 2021.) Sending these is “really like the financial equivalent of sending a funny cat picture,” Mr. Sokolin said.
NFTs
NFTs are best described as vouchers of authenticity for digital assets, be it art or music or anything else. They have surged in popularity this year, only a few years after they were first created in 2017. Marketplaces such as Rarible, Open Sea and Nifty Gateway can offer multiple ideas for NFT gifts, such as an animated rainbow cat illustration for 0.6 Ethereum and a GIF of dancing Taco Bell tacos for 4 Ethereum.
“It’s a unique digital 1-1 item that only you can own, and that can represent so many different things. So it comes down to: What does the recipient of the gift like?” Mr. Zettler said.
Depending on the desirability and availability of the given item, NFTs can also rise in value. NBA Top Shot allows users to purchase key moments in basketball history; legendary auction house Christie’s now offers original works of art to be purchased as NFTs; and bands such as Kings of Leon are releasing albums as NFTs.
Keep an eye on the price tag: These original collectibles can cost anywhere from a single dollar to the multimillions.
Financial products for children
Setting up a custodial investment account for a child can introduce them to investing, said Jordan Wexler, co-founder and chief executive of gifting platform EarlyBird.
Many brokerages and firms offer this option. Mr. Wexler’s product allows parents, grandparents or other adult gift givers to set up custodial investment accounts for children from birth, complete with video messages for particular celebrations, such as holidays and birthdays.
“There’s such an interesting movement in people not wanting waste anymore and leaning heavily into, ‘How can you charge something emotionally, more than a toy you give?’ ” Mr. Wexler said.
Givers can give anywhere from $15 to $2,500 at a frequency of their choice, doing so as either a recurring or one-time deposit.
Ms. Reiches has a more traditional recommendation: Give money to a 529 plan, which allows parents, grandparents and other adults to invest money that can be used for a beneficiary’s qualified education expenses.
Memestocks
Memestocks surged at the start of this year. Then they fell. Then they rose again. Amid it all, GameStop, AMC and other tickers have become household names.
Giving a share of these stocks is one option to bet on memestocks. You can also purchase a fractional share, Ms. Reiches said. Showing your recipient how to track the progress of their investment can be its own experience.
“Talk to the child about what companies they like and what companies they’re following,” she said. “It can teach discipline, long-term thinking and delayed gratification.”
Tungsten cubes
The Tungsten cube holds special appeal for people who want to take the intangible—the world of cryptocurrency, NFTs and decentralised finance—and make it tangible. These crypto enthusiasts do so with small grey cubes of the metal tungsten, a substance nearly twice as dense as lead. The cubes run anywhere from US$400 for a 2-inch cube to US$3,000 for a 4-inch cube.
Nic Carter, one of the original champions of the cube, said he has previously given them to family and friends for the holidays. But for those out of the joke, the gift may not resonate the way you hope.
“I’d only recommend that as a gift of someone who’s very, very into crypto and on crypto Twitter. Otherwise they’re going to stare at you with a blank face like, ‘What is that?’ ” Mr. Zettler said.
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Food prices continue to rise at a rapid pace, surprising central banks and pressuring debt-laden governments
4 min
LONDON—Fresh out of an energy crisis, Europeans are facing a food-price explosion that is changing diets and forcing consumers across the region to tighten their belts—literally.
This is happening even though inflation as a whole is falling thanks to lower energy prices, presenting a new policy challenge for governments that deployed billions in aid last year to keep businesses and households afloat through the worst energy crisis in decades.
New data on Wednesday showed inflation in the U.K. fell sharply in April as energy prices cooled, following a similar pattern around Europe and in the U.S. But food prices were 19.3% higher than a year earlier.
The continued surge in food prices has caught central bankers off guard and pressured governments that are still reeling from the cost of last year’s emergency support to come to the rescue. And it is pressuring household budgets that are also under strain from rising borrowing costs.
In France, households have cut their food purchases by more than 10% since the invasion of Ukraine, while their purchases of energy have fallen by 4.8%.
In Germany, sales of food fell 1.1% in March from the previous month, and were down 10.3% from a year earlier, the largest drop since records began in 1994. According to the Federal Information Centre for Agriculture, meat consumption was lower in 2022 than at any time since records began in 1989, although it said that might partly reflect a continuing shift toward more plant-based diets.
Food retailers’ profit margins have contracted because they can’t pass on the entire price increases from their suppliers to their customers. Markus Mosa, chief executive of the Edeka supermarket chain, told German media that the company had stopped ordering products from several large suppliers because of rocketing prices.
A survey by the U.K.’s statistics agency earlier this month found that almost three-fifths of the poorest 20% of households were cutting back on food purchases.
“This is an access problem,” said Ludovic Subran, chief economist at insurer Allianz, who previously worked at the United Nations World Food Program. “Total food production has not plummeted. This is an entitlement crisis.”
Food accounts for a much larger share of consumer spending than energy, so a smaller rise in prices has a greater impact on budgets. The U.K.’s Resolution Foundation estimates that by the summer, the cumulative rise in food bills since 2020 will have amounted to 28 billion pounds, equivalent to $34.76 billion, outstripping the rise in energy bills, estimated at £25 billion.
“The cost of living crisis isn’t ending, it is just entering a new phase,” Torsten Bell, the research group’s chief executive, wrote in a recent report.
Food isn’t the only driver of inflation. In the U.K., the core rate of inflation—which excludes food and energy—rose to 6.8% in April from 6.2% in March, its highest level since 1992. Core inflation was close to its record high in the eurozone during the same month.
Still, Bank of England Gov. Andrew Bailey told lawmakers Tuesday that food prices now constitute a “fourth shock” to inflation after the bottlenecks that jammed supply chains during the Covid-19 pandemic, the rise in energy prices that accompanied Russia’s invasion of Ukraine, and surprisingly tight labor markets.
Europe’s governments spent heavily on supporting households as energy prices soared. Now they have less room to borrow given the surge in debt since the pandemic struck in 2020.
Some governments—including those of Italy, Spain and Portugal—have cut sales taxes on food products to ease the burden on consumers. Others are leaning on food retailers to keep their prices in check. In March, the French government negotiated an agreement with leading retailers to refrain from price rises if it is possible to do so.
Retailers have also come under scrutiny in Ireland and a number of other European countries. In the U.K., lawmakers have launched an investigation into the entire food supply chain “from farm to fork.”
“Yesterday I had the food producers into Downing Street, and we’ve also been talking to the supermarkets, to the farmers, looking at every element of the supply chain and what we can do to pass on some of the reduction in costs that are coming through to consumers as fast as possible,” U.K. Treasury Chief Jeremy Hunt said during The Wall Street Journal’s CEO Council Summit in London.
The government’s Competition and Markets Authority last week said it would take a closer look at retailers.
“Given ongoing concerns about high prices, we are stepping up our work in the grocery sector to help ensure competition is working well,” said Sarah Cardell, who heads the CMA.
Some economists expect that added scrutiny to yield concrete results, assuming retailers won’t want to tarnish their image and will lean on their suppliers to keep prices down.
“With supermarkets now more heavily under the political spotlight, we think it more likely that price momentum in the food basket slows,” said Sanjay Raja, an economist at Deutsche Bank.
It isn’t entirely clear why food prices have risen so fast for so long. In world commodity markets, which set the prices received by farmers, food prices have been falling since April 2022. But raw commodity costs are just one part of the final price. Consumers are also paying for processing, packaging, transport and distribution, and the size of the gap between the farm and the dining table is unusually wide.
The BOE’s Bailey thinks one reason for the bank having misjudged food prices is that food producers entered into longer-term but relatively expensive contracts with fertilizer, energy and other suppliers around the time of Russia’s invasion of Ukraine in their eagerness to guarantee availability at a time of uncertainty.
But as the pressures being placed on retailers suggest, some policy makers suspect that an increase in profit margins may also have played a role. Speaking to lawmakers, Bailey was wary of placing any blame on food suppliers.
“It’s a story about rebuilding margins that were squeezed in the early part of last year,” he said.
