Why and how to get paid in crypto
The first sport athlete to get paid in crypto in the public eye was the Canadian speed skater Ted-Jan Bloemen. When participating in the Winter Olympics 2018, he struck a sponsorship deal with ONG Social, a social network for crypto and part of that included being paid in crypto. In Japan employees of GMO Group, a company group that includes a big cryptocurrency exchange, have the option to receive a portion of their salary in cryptocurrency.
While the majority of employees is still getting paid in fiat currencies for the services they provide, with the increasing popularity of cryptocurrencies, it’s just a question of time for those already invested in crypto, to ask for at least a part of their salary to be paid in crypto. And it’s not just individuals considering a change in the way they get paid.
Just one month ago, the city commission of Miami made it known on social media that they were considering to allow city workers to receive a part of their salary in crypto. The city’s major stated that “This allows our residents to pay for fees in Bitcoin, and would also allow the city manager to cooperate with Miami county for taxes to be paid in Bitcoin. “
Another well-known brand out of the traditional payments sector, MasterCard, also announced late last year, that they were hoping to support at least some form of crypto on their immense infrastructure sometime this year, as digital assets are becoming increasingly important. This could provide companies with more confidence in processing crypto payments.
Getting paid in crypto does offer some benefits:
- Speed of transfer: Especially cross-border payments can still take days until the money arrives in the employee’s account. While you wouldn’t want to receive your salary in ETH during a time of high network congestion, usually block times for cryptocurrencies can be measured in minutes and you can track the transaction with the transaction ID.
- Transparency: For employees on the more paranoid side, blockchain offers an amazing way to track the status of all transactions. As long as the transaction ID is provided every party involved can check, how much crypto is being transferred and get a rough idea of how long it’ll take until the transaction is credited to the destination address. This can be especially useful for remote workers.
- New Business/Job opportunities: With crypto operating worldwide, foreign exchange risk is somewhat mitigated. As crypto can be transferred in even smaller amounts efficiently, freelancers can take small jobs worldwide without having their pay being consumed by taxes and transaction fees. Accepting crypto-payments also opens up doors to work for exciting up and coming crypto and blockchain companies. Most of them will at least offer an option to be paid in crypto
- Access: If you’re already invested in crypto, getting paid in it you can skip the first conversion and directly trade for your favourite assets. Just a small benefit, but a benefit nevertheless.
As with everything, receiving your salary in crypto can have some downsides as well:
- Taxes: You won’t come around taxes, even if you receive your salary in crypto. Depending on the jurisdiction you’re in, crypto income might be taxed just as normal income like in Korea, or you have to include it in your self-assessment. In many countries taxation of crypto, income is not yet clearly regulated.
- Volatility: Volatility is great for trading but less helpful to pay rent and other living expenses denominated in fiat. It’s not uncommon for crypto to have changes in the price of 20% within just one day. However, the volatility issue can be resolved by asking to be paid in a stable coin. By doing so, the value will be preserved and one can still enjoy the benefits of cryptocurrencies.
- Usability: Anyone who has ever shared a crypto wallet address with someone else has experienced a level of anxiety of not having gotten it right. Wallet addresses as a string of numbers and letters are still hard to remember and not very userfriendly. Some organizations might not be ready to take on that level of responsibility.
- Regulation: This could potentially be a problem in countries where cryptocurrencies are restricted or declared illegal.
Most of the downsides of being paid in crypto could eventually be remedied as public acceptance and regulatory oversight increase.
How to get paid in crypto?
Once all risks associated with receiving one’s salary in crypto are well-acknowledged, an employee has 3 options to get paid in crypto.
The first and one most likely to fail unless they work in a very technologically forward-thinking company, is asking their current employer to pay them in crypto.
The next-best option is to use a service that offers conversion of fiat salaries to cryptocurrencies. Bitwage, an Atlanta-based company, has been offering payroll services for several years to companies and individuals. Instead of asking employers to get involved with crypto, individuals seeking to get paid in crypto, can simply open an account on Bitwage and share those bank details. Bitwage will then convert fiat into crypto and deposit it into the individual’s wallet address. They charge a small fee on all conversions, however, individuals can pay a flat fee each month and in return receive fee-free fiat-to-crypto. This is particularly useful for bigger amounts.
The third option for individuals seeking to get paid in crypto is to join a company in the crypto and blockchain space. These will likely offer compensation in either their own token or other major cryptocurrencies such as Bitcoin, USDT or Ethereum.
All in all, acceptance of cryptocurrencies has increased over the years making it more attractive for employees and individuals to seek compensation in crypto. While some hurdles remain, with increasing adoption, regulation and technological advancements these might be resolved eventually. For now, individuals will still need to mitigate some risks regarding tax and volatility, but as long as they’re aware, receiving money in crypto can be a great alternative for regular employees as well as freelancers.