Should I Get Paid in Crypto for My Services
It is true bitcoin and cryptocurrencies have many benefits over transactions with fiat currencies. With Covid-19 and an overall increased focus on freelance work, many have taken up additional side hustles or switched their careers to manage a full-time contract schedule. Doing so is more possible than ever before due to the idea of international firms hiring contractors from anywhere. That said, contractors will also face several different payment options, including PayPal, a remittance service or even crypto. So, what makes the most sense for service providers?
Below are some benefits and drawbacks of accepting crypto for your services and how users can do so securely with sites like cryptoexchange.
Benefits of getting paid in crypto
You might be wondering, “why should I get paid in crypto?” Below are some of the most compelling reasons.
Get paid quickly.
Users who choose to get paid in crypto will receive funds into their Ethereum or bitcoin wallet quickly. In comparison receiving funds from PayPal to your bank account can take a few days or up to a week; wire transfers can take the same. Receiving funds instantly can prove a huge advantage for those with bills and other expenses to pay with strict deadlines.
You will know exactly where your funds are.
Blockchain technology, an immutable record of all the transactions that occur, is the foundation for all cryptocurrencies. Therefore, when you deposit funds into your cryptocurrency wallet, users have full transparency to the timing of the transfer and if their funds are still in transit. Service providers also have full insight into the increase in payment over time as the digital asset increases in value.
More of your funds will go to you.
Unfortunately, many platforms take a large cut of a service provider’s wage to transfer their money. Fees cut into overall profits and may make certain deals seem less worthwhile. Furthermore, if the payment currency is different from the contractor’s local currency, they may also need to pay unfavorable conversion fees. In comparison, cryptocurrencies have significantly lower fees and don’t need to be transferred to fiat money until the receiver needs to make a purchase. Therefore, if funds aren’t needed immediately, they may also experience some appreciation on their pay.
New business opportunities
Accepting cryptocurrencies for their salary can also provide freelancers with new business opportunities. Many cryptocurrency startups or tech-based companies may only offer payment in crypto. So, by accepting crypto for your services, you make yourself available to new clientele.
Drawbacks of getting paid in crypto
Paying taxes may require a professional
Accepting cryptocurrency may be cheaper. However, like other income, citizens must pay taxes on their earnings. In the United States, cryptocurrency is currently treated as an asset and taxed differently from other income. Additionally, if the price of the cryptocurrency rises and the provider sells their assets, they may also be required to pay capital gains taxes. Therefore, users who accept a large portion of their wages in crypto may require the help of a tax expert to help determine what they must pay.
Price fluctuations make some payments sound like a rip-off.
A second drawback is the volatility of cryptocurrencies like bitcoin, Ethereum, and other popular currencies. Prices may increase suddenly, giving the user access to extra funds. However, the opposite may occur, and prices may fall drastically. Therefore, if a service provider needs to use their funds immediately, they may need to convert funds into their local fiat currency upon receiving it.
Slightly more difficult to use
Receiving money into your bank is simple. In contrast, cryptocurrency wallets require a little more learning. A string of letters and numbers known as a public key or receiving address is what is given to your employer to allow you to receive funds. Many have concerns about copying the address 100% accurately. If a user misses even a single letter or number, funds will permanently go to the wrong wallet.
Lack of trust
Since transactions are immutable, another concern may arise. That is, what if you provide services to a new party that doesn’t end up paying you. Other times, the client may argue that your services have not been provided at a quality enough standard to receive payment. Even worse, what if you provide the services only for the counterparty to state they no longer have the funds to pay you? Like any other contract agreement, users will have to confront these risks head-on.
Accepting cryptocurrency for your services
To help protect small businesses and service providers, a cryptocurrency escrow provider can help facilitate these transactions. Before deciding on a platform, users are encouraged to research it with the same vigor as a new cryptocurrency exchange.