245
Do you have a cool boss that pays you in Bitcoin or other cryptocurrencies, or are you a business that allows customers to pay in crypto? As the crypto industry grows, many people are accepting payments in crypto. From online merchants to freelancers, cryptocurrency has become the go-to payment option for many.
Being paid in crypto comes with several benefits in most instances, but there are some disadvantages involved. In this article, we will highlight what everyone should know before accepting payment in Bitcoin or other cryptocurrencies.
Pros of Being Paid in Crypto
Perfect For Cross-Boarder Transactions
Cryptocurrencies such as Bitcoin have helped speed up globalization and the creation of a universal economy. The start of the 21st century saw a shift towards new work trends backed by the popularity of the internet. People can now work from home and work for global brands from different parts of the world. One of the most important components of remote work is payment, which was initially facilitated mainly by traditional payment systems like bank transfers and fintech apps like PayPal.
Being paid via these systems has never been available for some people in different parts of the world, cutting them off from the global internet economy. What this means is that people from those parts of the world may not be able to work online and receive payment properly. For instance, African countries like Ghana and Nigeria do not have access to PayPal, making it difficult for freelancers to get paid for their gigs online.
However, Bitcoin and crypto solve that. With no restrictions due to its decentralized nature, anyone can create a crypto wallet and receive payments without limitations. What’s more, businesses from countries cut off from major international payment processors also struggled with selling to international buyers before the advent of cryptocurrencies such as Bitcoin.
Crypto as a payment method has connected the unbanked and underbanked to the global economy by removing limitations in the traditional financial system.
Lower Fees
For some freelancers or merchants, there are several traditional payment methods to choose from. Unfortunately, these payment methods come with expensive fees that significantly affect their income. For instance, some international money transfer applications charge between 10% to 20% for every transaction, a hefty sum that gets even bigger for larger transactions.
Bitcoin and cryptocurrency transactions, on the other hand, are much more affordable. Depending on the blockchain used, transactions can cost less than a dollar or a little bit over that for larger transactions. This feature of cryptocurrencies helps people get paid without losing a good chunk to fees.
Hedge Against Inflation
Money can lose its value, especially fiat. Some workers or merchants save their earnings in banks or other traditional financial institutions to cater to emergency needs or build wealth as they get paid. The rate of inflation across the globe makes this difficult with fiat.
Some countries have seen high rates of inflation. Countries like Venezuela and Zimbabwe have seen their currencies lose almost all their value. At the time of writing, 10,000 Zimbabwean dollars is worth around 27 USD. Even major economies have not been spared by inflation. The United States of America saw its highest level of inflation in 40 years in January 2022, with prices rising by 7.5% from a year ago.
Bitcoin and other cryptocurrencies like Ethereum have become the go-to for many investors who want to keep and increase the value of their earnings. Similar to gold, the scarcity of Bitcoin has made it an asset that has performed very well over the years. Despite its volatile nature, most people who have bought and held Bitcoin over a long period have turned a profit, making it a very popular hedge against inflation, with some experts calling it “digital gold.”
Accepting payment in crypto makes it easier for you to save in a way that preserves your value and helps you deal with the shocks of the dwindling global financial system.
Cons of Being Paid in Crypto
Volatility
Accepting payments in Bitcoin and crypto can be nerve-wracking after a 30% drop in prices in the crypto market overnight. For businesses or individuals who need to spend money that they receive immediately or in the short term, being paid in crypto such as Bitcoin can be a problem.
The crypto markets are always open, unlike traditional markets. What’s more, there can be wild periods of volatility that can cause your holdings to fluctuate. A $100 worth of Bitcoin in the morning can be $80 in the evening.
Volatility is not entirely bad since it also includes the upward movement of the price. However, in instances where prices fall, people who are paid in Bitcoin and other cryptos could have a tough time.
Tax Implications
Depending on the region you find yourself in, being paid in crypto could mean special tax arrangements on your earnings. For instance, the IRS regards cryptocurrency as “property” for tax purposes in the USA. What this means is that you must report all payments accepted in crypto as gross income. It also gets a bit technical with the various rules around this. You have to track the value for each crypto transaction on the day you received or sold it to report your tax correctly.
Paying extra or special tax may not be an issue for many, but it can nonetheless be an inconvenience.
Where There Is A Will, There Is A Way
Being paid in Bitcoin or other cryptocurrencies has become easier in recent times. There are several ways to navigate the issues discussed in this article. For instance, volatility can be dealt with by using stablecoins (cryptocurrencies pegged to traditional assets or currencies like the US dollar). Issues with reporting taxes can also be fixed with several services that have jumped on the crypto scene.
Receiving payments in crypto may seem like a huge new step at the start, but with the right tools and education, it can greatly benefit the end-user. Despite the issues that may come with being paid in crypto, when there is a will, there is a way.
You can create an account on to get a free crypto wallet for receiving payments in Bitcoin or other cryptocurrencies.
