Since 2011, cryptocurrency has been the talk of the town. Crypto enthusiasts talk about the impressive amount in their wallets. So, have you invested in Bitcoin or another cryptocurrency yet?
Due to this crypto boom, some businesses have started accepting crypto payments. Many employers also ask their employees whether they want to get paid in crypto. From 50 Cent to Russell Okung, many celebrities prefer to receive a part of their earnings in cryptocurrency.
Accepting salary in the form of crypto coins can have its perks. But the major dip in crypto value in recent months has made it difficult to decide which option works best.
So, let’s look at its pros and cons to find out if it’s a good idea to get paid in cryptocurrency.
Positive Aspects of Getting Paid in Crypto
Ease of Payment
When transferring local payments, you may opt for Venmo, bank transfers, or other payment options. For international payments, PayPal is the most popular option.
But it’s also true that sending or receiving payments from other parts of the world isn’t always easy. Also, it may take a few days for clearance. In countries with strict remittance laws, this time period may stretch further. With the cryptocurrency of your choice, you can overcome this challenge.
Digital currency enables you to quickly send and receive global payments. The transaction gets processed in no time. Also, it reduces the payment processing time. Unlike traditional payment methods, you need not wait for days or weeks to receive the payment.
Further, in a country where other payment options aren’t available, you can go for crypto payments. This option can work great if you are a freelancer or have a job with an international firm.
Prospective Gains
The crypto market is highly volatile. One day it’s up, the next day it’s down. But did you know this volatility can work in your favor if the timing is right?
If you get a specific percentage of your salary in crypto and don’t withdraw it right away, it can generate profits. You can gain significant profits if the crypto value climbs. And your investment can be worth a lot if you are patient and make the right decisions.
So, it’s true that with long-term crypto investments, you can reap benefits down the road.
When you get paid with crypto, there are certain risks. If things work in your favor, its volatility can generate profits for you. So, if you have long-term plans and believe that crypto is the currency of the future, then accepting your salary in crypto can be a good idea.
Low Fee Structure
Regardless of the online payment method you choose, you have to pay a percentage to the platform. This processing fee often makes up 4-5% of the transaction or even more depending on the option. And the fee goes up further up in case of international transactions. Also, you may have to pay additional exchange rates to transfer the amount in your currency.
So, how can you avoid paying such unreasonably high transaction charges?
Cryptocurrency can save you from worrying about a high transaction fee. The transfer fee is relatively low. And the best thing is that the sender is supposed to take care of the fee. So, you can get paid in crypto and avoid paying high transfer fees.
Taxation Benefits
Crypto is a new method of payment. So, taxation laws vary from country to country. Some countries have 0% taxes on the crypto exchange. Whereas others charge up to 30% on capital gains.
For instance, Brazil exempts crypto profits of up to 30,000 BRL/month. In the US, you have to pay 10-37% on income. But remember, this rule is applicable to crypto gains held for less than a year. As for long-term investors, taxes are limited to 0-20%.
Isn’t that a great deal?
So, depending on your place of residence, you may be able to enjoy lower tax rates on crypto payments.
Drawbacks of Accepting Crypto Payments
Cybersecurity Threats
Remember when the Twitter accounts of many famous people tweeted crypto giveaways? The posts claimed that whoever sends $1,000 to the wallet will receive double the amount. The accounts of Elon Musk, Barack Obama, Joe Biden, and many other high-profile personalities posted this.
Result? Scammers earned at least $121,000 in 400 payments at that time. It later came to highlight that hackers had taken control of accounts and created fake posts.
Aside from scam risks, cryptocurrency also faces the risk of cyberattacks. Cybercriminals try to take control of crypto wallets through different techniques. And the risk of losing your investment is very much present.
For this purpose, they may use tactics similar to SMS or email phishing. Or they may try to take control of your device through malware. If you aren’t careful, you may find it challenging to protect your crypto investment.
Volatility
Cryptocurrency is volatile. Whether it’s Bitcoin, Ethereum, Dogecoin, or other digital currency, the value is unstable. You can’t predict if the value will be up or down the next day.
While the volatility of crypto can make it a profitable option, it can also ruin your finances. What if the currency crashes? Then you will get only a fraction of the payment or salary than what you could earn in dollars.
Odell Beckham Jr. had earlier decided to accept a part of his pay in Bitcoin. Some sources say that OBJ accepted money and then bought Bitcoin with his after-tax income.
Anyways, he earned merely $35,400 after the recent Bitcoin crash. Before the market crash, his income was $750,000. So, the highly volatile currency can plummet your income without a warning.
Conclusion
The decision to get paid in crypto can have its pros and cons. With market volatility, your income can increase with time. Or due to volatility, it can significantly reduce too.
Through crypto payments, you can easily transfer and receive payments internationally. It can lower transaction fees and processing time. Another benefit is that you may enjoy lower income taxes in some countries. In the US, long-term investments can bring down your tax rate as well.
But a potential drawback is the security of the digital currency. Crypto wallets are at risk. And scammers may try to steal your hard-earned money.
Crypto is the currency of the future. In the world of metaverse, you’d need digital currency for payments. So, it can be a good idea to invest in crypto or accept a percentage of salary in cryptocurrency. But make sure you create long-term goals and choose your best option. Also, don’t forget how much risk you can bear before making any decision that can affect your finances.
What is your take on the trend to get paid with crypto? Would you accept this payment option from your employer? We would love to hear your thoughts!