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Cryptocurrencies are becoming increasingly popular, with people saying they would like to get their salaries in digital assets like Bitcoin (BTC/USD). Examples are Miami mayor Francis Suarez, New York mayor-elect Eric Adams, and American football quarterback Tom Brady. However, it is worth noting that this trend has spread beyond influential persons to include contract workers and musicians.
Speaking during an interview on December 21, CNBC’s Sharon Epperson pointed out that many people want to get paid in crypto because of the upside potential of digital currencies. The interview highlighted the story of Stephen Gerrits, who has a gig that involves convincing people to download an app that ranks sports oddsmakers.
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Gerrits, a college senior, took this job because it offered an option to get paid in crypto. According to him, getting paid in crypto was an enticing part of the deal with his employer SharpRank. He pointed out that crypto is an exciting thing at the moment and that he wanted to be part of it.
The CEO and co-founder of SharpRank, Chris Adams, the company decided to offer crypto as a payment option for its employees because it stood out as an opportunity for the firm to differentiate itself from its competitors. He added that crypto also helped SharpRank position itself as a market leader, regarding how its brand ambassadors communicate with potential users of the app.
An exciting, but risky ride
While getting paid in crypto might seem an exciting option, it is worth noting that the inherent volatility of cryptos makes them risky. For instance, BTC traded between $30,000.00 (£22,643.55) and $68,789.63 (£51,921.38) in 2021.
This means anyone that got paid in BTC in November when BTC was trading above $60,000.00 (£45,282.30) and decided to hold the amount in the cryptocurrency would have incurred significant losses because BTC is trading at $48,558.68 (£36,651.36) at the moment.
However, some people are willing to take this risk to get a foothold on the crypto market. An example is Tiyanna Brown, an artist that makes physical art as well as non-fungible tokens (NFTs). According to her, NFTs have presented an opportunity that is similar to licensing her art. As such, anytime anyone uses her art, she gets a percentage.
She also pointed out that the value of her art increases as more people use, share, or purchase it. Brown added that she hopes NFTs will help take the word starving out of the description of artists.
Crypto payments come with hefty taxes
Although cryptocurrencies have a lot of potentials, Epperson said anyone willing to accept digital currencies for payment should be prepared to pay taxes to the government.
According to her, paying taxes to the Internal Revenue Service (IRS) might prove a complicated process because employees must report the total amount of crypto they received in dollars based on the value of the coin they got and the time they got it. With the volatility of cryptos in mind, she said employees might end up paying taxes on income that has dropped in value.
On top of this, employees that accept salaries or wages in crypto have to pay capital gains taxes whenever they swap or sell their crypto.