For some professions, it doesn’t matter how you get paid. You either get an invoice for your work, or you have a contract with a company where you receive your salary monthly. However, there are some jobs where the payment method is up to the employee.
Nowadays, many companies are offering their employees to get paid in cryptocurrencies like Bitcoin and Ethereum. This is because they want to encourage people to learn more about them and how they can be used in the future. Cryptocurrencies are already present on the market, but many people still don’t know how they work. So, this is one of the main reasons why companies are offering this type of payment method.
If you are thinking about getting paid in cryptocurrency for the first time, you need to know about the pros and cons related to this payment method before making a final decision.
The Pros of getting paid in Crypto: crypto lower transaction fees
There are not so many crypto wallets that require any type of fees for sending and receiving payments. The majority of them do not charge anything whatsoever. This is a major advantage because most other services have some kind of fee which users need to pay every time they decide to use them.
As an example, banks charge various fees on transactions, deposits, or withdrawals, and it is one of the reasons why people are moving away from traditional banking systems. Moreover, cryptocurrencies do not have additional charges when you use them abroad or send them to someone overseas. There is usually no difference between local and international transfers when it comes to transaction fees related to crypto payments.
Crypto Quick transfers
Over the last couple of years, blockchain technology has become more sophisticated, and transactions have evolved faster than ever before. With some of the biggest cryptocurrencies on the market, such as Bitcoin or Ethereum, transfers can be made almost instantly.
While this still depends on many factors, such as how busy the network is at that particular moment and how much you pay for a transaction fee, it is still faster than when you transfer fiat money from one bank account to another. In many cases, it will take only a few minutes until your transaction is processed and completed.
No middlemen
When you get paid in cryptocurrencies, you don’t need middlemen for payments such as banks or payment processors. These institutions charge fees for transactions which can be quite high at times. As a result, the amount of fiat money you receive is lower than the amount of cryptocurrency you get initially. You will have full control over your funds when getting paid in cryptocurrency without having to wait for a bank or payment processor to process your payment.
You can get an early start on saving for retirement
Cryptocurrency is a highly volatile investment. If you own some, you’ve probably seen its value shift over time. It’s also considered more speculative than other investments because it doesn’t have an intrinsic value like physical goods or real estate do. Despite those things, many people are choosing to buy cryptocurrency and hold onto it long-term – they believe it will eventually appreciate.
If you don’t have much money saved up for retirement, getting paid in cryptocurrency could help you build wealth over time just by holding onto your coins instead of converting them into fiat currency (the legal tender issued by a government). Just make sure to research the best ways to store your coins before investing so you don’t lose them by accident.
Crypto is a good hedge against inflation.
Currency values are constantly in flux because the value of money is based on an economy’s strength, stability, and growth – all of which can change quickly. When economies are strong and growing, their currencies tend to rise in value against those of other countries. But when economies slow down or shrink, their currencies can lose value against other currencies. This makes it more expensive to travel to those countries, buy goods from them and make investments there.
During inflationary periods, when prices are rising because more money is being printed than goods are being produced, currency values can drop even more rapidly than normal. And that can be dangerous for savers and investors who don’t have some protection against this type of devaluation.
When you get paid in cryptocurrency, you’re hedging against these types of fluctuations. Although the price of cryptocurrencies is extremely volatile, it has generally risen over time as more people invest in them as a form of alternate currency that they believe will hold its value better than traditional fiat money. It’s also decentralized and not controlled by any government or central bank.
Cryptocurrency isn’t subject to the whims of governments
The value of the US dollar, for example, fluctuates over time based on how well (or how poorly) the US economy is doing at any given moment. And if you live in a country with high inflation rates or currency controls, your paychecks might not be worth as much from one month to the next. Cryptocurrency doesn’t have this problem because it’s not backed by any government.
The value of fiat currencies is subject to changes in monetary policy and economic conditions, which can lead to inflation. Cryptocurrency values are based on supply and demand, much like gold. If the supply increases but demand stays the same or increases slowly, the price will go down. If demand exceeds supply, the price will increase.
There’s also no central authority controlling cryptocurrency, so you don’t have to worry about your government declaring that your money is worthless or freezing your assets for political reasons, as has happened in countries like Zimbabwe and Venezuela.
Crypto is anonymous and can earn you more money
If you’re concerned about keeping your financial information private, getting paid in digital currency is an ideal solution. Cryptocurrency transactions are anonymous, so nobody will know how much money you have or where it came from. It’s like the way cash works — except that it’s digital and can be used anywhere in the world.
You can earn money by holding cryptocurrency. When it comes to fiat currency, your employer gives you money, and that’s it — there’s no chance for that money to make more money. But if you get paid in cryptocurrency, you can hold onto the coins or tokens and watch them appreciate over time (if they do). You benefit from that appreciation even after your pay period is over — something that doesn’t happen with typical fiat payments.
The cons of getting paid in Crypto
You can be paid less in cryptocurrency when compared to your local currency.
For example, if you are paid in Bitcoin (BTC) and BTC is worth $20,000 today, but $5,000 tomorrow, then you have just lost money on what you could have earned. This is not unlike the fluctuations of stocks or bonds.
Cryptocurrency values change all the time. Most, if not all, cryptocurrencies have a very volatile market value; this means that getting paid in cryptocurrency can be a gamble.
Some people lost their fortunes by investing in cryptocurrencies like Bitcoin and Ethereum (ETH) because they peaked at high prices only to crash down to earth later on.
Cryptocurrency can be very volatile
Cryptocurrencies like bitcoin and Ethereum are based on blockchain technology, which requires a lot of computing power to run. That’s why mining coins requires expensive processing equipment and massive amounts of energy — it’s not just the cost of the currency itself that needs to be accounted for when you’re cashing out.
As with any investment, there’s no way to know when a cryptocurrency is at its peak, so selling too early might seem like a regrettable decision in retrospect. But if a particular coin takes off in value, selling too late means missing out on potential profits. If you missed bitcoin’s boom in 2017, for example, it would have been easy to convince yourself to keep holding until the price started to tank in 2018.
Since it is volatile, it can disappear at any time if the market crashes
This makes cryptocurrency a riskier proposition than other currencies. Unlike the U.S. dollar, which has a relatively long history of stability and is backed by an enormous economy (and therefore doesn’t change in value very much), cryptocurrencies have no guarantee that their value will remain consistent. If you have $1 in Bitcoin or another cryptocurrency today, tomorrow it could be worth $0.10 or $10 — there’s no way to know for sure.
If you are paid in Bitcoin, it might not be worth anything tomorrow — or even an hour from now. This is why many companies prefer to pay people in Bitcoin “futures,” which are contracts that guarantee the current price of Bitcoin for a set period (usually several months).
How does cryptocurrency get taxed?
Cryptocurrency is taxed the same as stock trading, which means there are short-term (less than a year) and long-term (more than a year) gains and losses that can be offset against each other.
Capital gains taxes are not assessed until a cryptocurrency position is sold for some other currency. As with anything else, you will only be taxed on the portion of your profit that exceeds your purchase price. For example, if you purchased Bitcoin at $5,000 and sold it at $7,500, only $2,500 will be considered taxable income.
The IRS has ruled that cryptocurrencies should be treated as property rather than currency. That means cryptocurrency transactions are subject to capital gains taxes. (They’re also generally non-deductible.)
For most people who trade cryptocurrency often enough to incur significant gains or losses, it’s important to keep track of these things for tax purposes. Most exchanges do not track this information for their customers.
How to receive payment in cryptocurrency
Here’s how to accept payments in cryptocurrency:
- Start by either opening a dedicated cryptocurrency wallet or using the wallet provided by your exchange.
- Find your cryptocurrency address for receiving payments (you can simply copy and paste it).
- If you’re using a mobile wallet, scan the QR code displayed on the checkout page to receive the payment details directly into your wallet app.
- Provide the payment address to your customer and ask them to send the payment from their wallet to yours (using either the public key or QR code).
- When you are ready to turn it back into USD, just transfer the money from your wallet or exchange it back into your bank account!
Conclusion
Despite the significant risks of getting involved with payment in cryptocurrency, many benefits make this type of payment more appealing than credit cards and other forms of payment.
If you’re confident that the price of your chosen cryptocurrency will rise so that you can sell it later, getting paid in cryptocurrency might be a good idea. On the other hand, if you’re uncertain about the future of the cryptocurrency market, it might be better to stick with traditional income methods.