Payment in bitcoin is far from a new concept. In 2017, the Japanese Internet firm GMO Group employees had the chance to receive a small portion of this income in bitcoin. Some skeptics suggested that this was just a marketing stunt, while others quickly flocked to the company.
Is It Safe to Get Paid in Bitcoin
According to the digital currency’s value at an agreed day and time, some employees have received bitcoin salaries. While this makes sense for an employer that you’ve had the opportunity to work with over an extended period of time, you might be wondering if it’s possible to accept cryptocurrency as a freelancer who may not have a previous history working with a certain party.
For contractors, it is also safe to get paid in bitcoin. However, they may choose to engage with a cryptocurrency escrow service before doing so. In this blog post, we will provide a brief overview of payment types.
An employer paying bitcoin salaries will usually write the terms in the employee’s agreement with their company. Employers pay salaries per the digital currency’s value at an agreed date and time. Employees who choose to sell right away would receive the same cash as a fiat currency payment. In comparison, for those who choose to hold the currency, the value may increase or decrease depending on the time of sale.
The platform will prompt the employee to open their bitcoin wallet, where their employer can transfer the agreed-upon amount for each pay period. The process may sound complicated due to the number of steps involved in the process, but traditional payroll may disburse funds as usual. At the same time, an escrow service provider can store a percentage of bitcoin by an escrow provider to be disbursed automatically in the pay period.
Bitcoin payment for contractors
As previously mentioned, not everyone will work for a well-known company with established legal practices or a company they have grown to trust over some time. In that case, it is still safe to get paid in bitcoin.
For large contract jobs that may require many days or weeks of work, a contractor should be creating a contract to protect both parties anyways. An agreement in writing can help protect employer/employee interests and provide a freelancer safety in knowing that they can take an unpaid contract to court.
Rather than incur the risk, cryptocurrency escrow services help to protect both parties from fraud and misrepresentation.
An escrow service provider will help to facilitate the agreement as specified. Once the Employer and Contractor have a set of terms, they will abide by it, and they provide it to the escrow provider.
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The employer will then submit their funds to the escrow account. Escrow providers store the funds in the account for safekeeping. When both parties are satisfied with the completed work, the escrow will release funds from the trusted account to the Sellers’ cryptocurrency wallet with no concerns.
Suppose a dispute arises about the completeness of the task or the funds agreed upon. In that case, the escrow provider will act as the arbitrator and determine which party will receive payment.
Taxes on bitcoin payments
As far as safety is concerned, users must also be careful to handle taxes in accordance with local authorities to avoid penalties. Bitcoin is still considered young in its development, and governing bodies are still developing policies for its safe use. In the United States, the government views cryptocurrency as property that is taxed separately from employment income.
For those getting paid in crypto from a country that is not where they are working from, the tax treatment will vary. Therefore, contractors or employees must consider the taxes they must pay in the country they receive payment from.
A final word of advice
If you decide to get paid in bitcoin, it can be tempting to continue holding onto your bitcoin in the hopes that the market will spike and you’ll turn a profit. The future of bitcoin is bright. However, many who have not cashed out some of their bitcoin payment upon receiving it have ended up losing money due to poor market timing.
Employees who get paid in bitcoin should be careful to consult their paycheque to look for discrepancies and cash out a portion for fiat currencies.
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