As the adoption of cryptocurrencies increases, it is more likely that certain companies will offer their employees the option of receiving their salary or part of it in bitcoin (BTC), or another digital asset such as ether (ETH).
Also the interest of getting paid in bitcoin can come from the employee, especially if it is a freelancer familiar with cryptocurrencies. This modality of incorporating bitcoin into the payroll has both its benefits and risks, a series of characteristics that we will analyze in this article.
3 great attractions of charging in bitcoin
- The first advantage of paying payroll with cryptocurrencies is found in the speed with which they can be processed. Transfers from the company to the employees’ digital wallets are done in minutes, even if they are in different countries, except in exceptional periods of network congestion.
- Another advantage, which frequently applies in the case of freelance workers, is that the payment can eventually be made outside working hours. For example, a weekend or holiday, maintaining the aforementioned immediacy. In addition, payments are not affected by the geographical location of the recipients, since they have access to their portfolio anywhere with Internet access. You can live in Colombia or Argentina and work for a company in Europe, with minimal transfer costs.
- Payments in bitcoin and other cryptocurrencies are, on the other hand, decentralized, which eliminates the intermediaries. That is, they are carried out directly between the company and the employee, and the transactions are resistant to censorship because they are not handled by a centralized entity. The management of the money received is the sole responsibility of the recipient of the payment. This means that there is less risk of a third party blocking your money, you will always be able to access your savings if you have full custody of the wallet where it was deposited.
- bviously, everyday expenses involve a conversion to fiat money, which is also done in a decentralized way, on peer-to-peer (P2P) or peer-to-peer platforms. On the other hand, it may be easier to access legal tender with bitcoin than with the dollar. This is seen daily in Venezuela, where it is easier to obtain bolivars with bitcoin than with the US currency, as we report in this medium.
- For the savings plans that the employee wants to carry out, it is only necessary to keep the cryptocurrencies in the receiving wallet, or transfer them to a wallet intended for savings. This pays off more, in the case of conventional payroll, than leaving fiat money in a low-yielding bank account. Inflation would increasingly affect savings funds in fiat currency, something that does not happen so often with bitcoin.
A strategy that is based on the retention of bitcoin, or on holding, according to bitcoiner jargon, can yield good profits for the medium or long-term investor.
The risks of having a salary in bitcoin
- When there is an upward trend in the cryptocurrency market, the salary received in bitcoin can appreciate in days or even hours. However, it cannot be predicted how long a price rally will last. It is also possible that the trend will change and the market will remain neutral or bearish.
- It is for this reason that many bitcoin payment schemes only contemplate a certain percentage of salary. In this way, the fluctuations of the market would only affect part of the salary and would not translate into total losses.
- Given the periodicity of the payments, the volatility could have a less accentuated effect on the funds received, since the expenses are made shortly after the salary is received. Although very sudden lows can occur, the long-term trend for bitcoin has been to the upside, which is positive for those planning to hold the coin.
- Those who receive their salary in bitcoin can get more out of it if they have a minimum base of knowledge about cryptocurrency. It is necessary to educate yourself in the management of P2P platforms, as well as in the essential criteria for the custody of funds, among other aspects. Moving from fiat money to cryptocurrencies represents a transformation of personal finance. Now the management of the funds does not depend on third parties but directly on each user.
According to the legislation of each country, those who receive salary payments in bitcoin are affected differently when it comes to paying taxes. In general, in most countries there is uncertainty regarding the payment of taxes when the income is in cryptocurrencies.