You spend all your time working in the digital world. Why not get paid there too?
Despite the wild fluctuations in value for crypto, quite a few companies offer to pay part of your wages with it. What should you do if the offer falls on your plate? Let’s take a look at the good, the bad, and the ugly of money’s next frontier.
So how does this work?
Generally speaking, you wouldn’t realistically take your entire paycheck in crypto. We’ll go over the biggest reasons in more detail, but the long and short of it is that it’s not very realistic. That being said, a lot of companies that offer this as an option will do so at a certain percentage of your salary; 5-10%, for example, so that you can invest that money while still having a “regular” paycheck coming in. That’s not to say there aren’t outliers, though. A few companies, particularly FinTech ones that deal in crypto, will pay full salaries in Bitcoin, Ethereum, and the like.
There are some obvious benefits to getting paid in crypto, from seeing your hard work rise in value to getting your cash in hand much faster than your luddite coworkers who are opting to stay in the Dark Ages of payment.
This is a double-edged sword, but anyone who’s been watching values go up and down knows there is risk involved in cryptocurrency and is likely willing to accept it. Even as we watch the market fluctuate day to day, the trend is moving towards it becoming normalized as a way to exchange money all over the world. El Salvador and the Central African Republic already accept it as an official currency! With that in the purview, investing in it now means big payoffs down the road. And with the way 401(k) accounts have been looking lately? It can’t feel like that much of a gamble, can it?
While this isn’t the case in the U.S. (with the exception of Puerto Rico), there are plenty of countries that don’t tax crypto income, creating even more value in taking these payments. Germany, Switzerland, Singapore, Portugal, Malta, Malaysia, Belarus, and the Cayman Islands all have various rules and classifications around crypto that mean it isn’t taxed like normal income. Same goes for El Salvador where, as a part of their acceptance of crypto as payment, they even go as far as offering a government-issued digital wallet.
Get paid faster
When money comes straight to your digital wallet, it happens FAST. Like, seconds fast. No more hoping that check hits the account at midnight, or waiting for the email that says “You’re getting paid today! You should see it in your account by 8pm.” You get paid almost instantly. And as someone who spent my 20’s waiting for every nickel and dime to come in, I’d say that’s a piece of mind I’d be pretty happy with.
You knew it was coming, so let’s just get it over with. This isn’t a magic bullet to payday woes, but if you do want to get paid in crypto, you should at least know what pitfalls lay ahead. You should already be aware of the volatility issue, so let’s take a look at what else there is to think about.
Ideally, one of the most useful features of crypto is that it’s super secure. In reality, there are scams going on almost constantly that are designed to get some of that sweet, sweet space money out of hands big and small, and into the wallets of nefarious tricksters. And unfortunately, it’s both easier to get scammed out of crypto and harder to get it back than it would be in a traditional bank account. Its status as an emerging currency means a lot of the protections that are in place for bank accounts simply don’t exist.
On the other side of the tax-friendly-country coin, we have the U.S., where you will not only get taxed on your crypto payments the same way you get traditional funds taxed, but you may even incur a second round of paying The Man when you go to sell it. Depending on how much your cryptocurrency has appreciated since you first got it, you could be staring down some pretty serious capital gains taxes when you go to sell. The IRS considers it a digital asset, which they put in the same category as stocks and bonds.
Many of the fees traditional banks require payment for are more or less taken care of by simply joining the bank–deposits, withdrawals, and transfers are all the name of the game. But you technically pay for those by “letting” the bank use your money for their own large-scale investments. When it comes to crypto, you’re going to be on the receiving end of a lot of those. Depositing money can cost 2-5% of the total deposit. Want to trade? You’re going to get slapped with either a flat fee or a percentage fee. And now you want to actually use the money you earned? News flash: there’s a fee for that.
As you can see, there’s an upside and a downside to getting paid in cryptocurrency, but there’s no denying its widespread use is in our future. If you can handle not seeing part of your paycheck in your traditional account and you have an employer who offers crypto payments as a perk, go ahead and give it a go! Start small and see if the risk and investment are worth it for you.
Want to get paid in real money, on time, every time? We can help with that. We can probably also find you someone who pays in crypto.