Should I Crypto or Not?
Despite Bitcoin and crypto currencies becoming a common alternative to fiat currency transactions, financial institutions still has an upper hand over digital assets in the area of salary payments.
While daring effort have been made by brands such as BitWage; which provides payroll services and allow organizations to pay workers a portion of their salaries in BTC, a lot of us still choose bank accounts as our default choice. Let’s look at the Advantages and disadvantages of receiving your salary via Bitcoin.
The Key Advantages of Digital Currency Salaries
Prior to the pandemic many freelancers had adopted the work from home system but COVID-19 and the gig economy also meant compulsory working from home and online for many freelancers. Some of these people own businesses online and that suggest they have clients away from their location and around the world. For such service providers, a major challenge they may face working with clients around the world is exchange rate being too expensive and eating into their profit.
Advocates claim that Bitcoin transfers are more cost effective than using PayPal or a remittance service, and Bitcoin payments can be converted into U.S. dollars easily.
In the case of a dispute, Blockchain also provides an accurate, transparent record of the wage settlements that have taken place. And, if an employee continues to maintain their BTC, particularly in a Bull Run market, they could see the value of their salaries increase over time.
NEW MARKET OPPORTUNITY
Accepting Bitcoin salaries may even offer freelancers new market opportunities, opening up their network to crypto companies and startups that also pay employees in crypto than more conventional companies.
Funds received in an Ethereum or Bitcoin wallet arrives quickly and that’s an added advantaged compared to the old- fashioned bank accounts which may often take days or weeks to clear salary transfers, greatly inconveniencing those who have bills to pay.
The Disadvantages of Crypto Salary Payments
While some of the irritating issues associated with bank accounts and credit cards are solved by digital currencies, they also generate completely new problems. Employees would also have to pay income tax, although many accountants are conversant with how cryptocurrencies run right now. And, if, after being paid, Bitcoin salaries increase significantly in value, the question of capital gains tax might arise.
The instability of cryptocurrencies such as Bitcoin, Ethereum and Bitcoin Cash also means that their value could fall significantly in the span of a few hours except these digital assets are quickly converted into a fiat currency.
Let’s say you received $4,000 monthly salary in BTC on Thursday mid-day, only to find out at Thursday mid-night that a flash crash occurred and that means it’s now worth $2,200. When you explain why you can’t pay your rent, your landlord may not be too sympathetic. It puts you in a tight corner.
DIFFICULT TO USE
In as much as it would be a huge boost for mainstream adoption to use Bitcoin to pay workers, the average user might find it difficult to understand cryptocurrencies and crypto mining. Bank accounts are fairly simple and easy to use. If they forget their password or attempt to send funds to the wrong place, there are also safeguards that protect them.
Some cryptocurrency exchanges do not provide these safe guard features, which mean that if a long Bitcoin address is typed incorrectly, there is a chance of making expensive mistakes.