Things To Know About Getting Paid In Bitcoin

Would you be willing to accept your salary in the form of Bitcoin (BTC)?

Some people are willing to accept their salary in the form of cryptocurrency like Bitcoin. These are not just ordinary people, but includes athletes, celebrities, social influencers and even politicians. It is becoming a popular way for some brands to gain exposure by building up the hype around Bitcoin and other cryptocurrency by using public figures as ambassadors.

In the sports world, you have athletes like Aaron Rogers, Odell Beckham Jr., Russell Okung and Sean Culkin who have agreed to accept some part of their salary in the form of Bitcoin. These athletes did not have to do that, but the incentives are great. Either they had done their own research or someone may have advised them on the value of Bitcoin.

Some politicians have also agreed to get paid in Bitcoin. One example is Miami mayor Francis Suarez, who agreed to get a paycheck in Bitcoin. This falls in line with the mayor’s own plans of transforming Miami into a cryptocurrency hub. Another example is the mayor of New York, Eric Adams, agreeing to have his first salary paid in Bitcoin. These moves could be politically motivated to promote their respective cities as being open to the crypto space. Nonetheless, it sends a positive signal.

There are countries that are also allowing Bitcoin as payment for salaries. At the top of this list is El Salvador, which is officially the first country to accept Bitcoin as a form of legal tender. Prior to El Salvador, New Zealand had been the first country to allow salaries in Bitcoin, back in 2019. Elsewhere in Latin America, there are proposals in Brazil to accept Bitcoin as an option for salary payments. 

Since the world has become more global in terms of business, Bitcoin is also providing a way for companies to pay for workers who are based overseas. There are now crypto payroll services that process such transactions. What is important here is that these services meet legal requirements, in order to be able to allow companies to pay their workers in Bitcoin. It is much easier with integration to Layer 2 payment rails like the Lightning Network (LN). The LN works with apps to allow Bitcoin payments to be made quickly and cheaply, so it is just like sending any electronic payment. This can be made using a smartphone app, which can help adoption since many users around the world own a smartphone.

Getting paid in Bitcoin is not yet common, but gaining popularity. What is important for anyone who accepts their salary in Bitcoin is to understand that this is a volatile asset. Prices are subject to swings, where the value can fall by 40%, but it can then suddenly recover much higher. This also does not excuse anyone from not paying taxes. Treating it more as an investment asset rather than as just another form of currency is the whole idea of Bitcoin. It may not be ideal if you need fast liquidity like cash, but more so for storing value in the long run.

Another important thing to know about getting paid in Bitcoin are tax laws in respective jurisdictions. In the US, this is a taxable event. An accountant or lawyer who has an understanding of virtual currency laws as it relates to cryptocurrency can help. The taxes are to be paid in fiat, unless the jurisdiction accepts BTC for tax payments. There are states like Arizona which will allow it, so if a payment is received in BTC, the taxes can also be paid in BTC that is commensurate to the fiat amount of that payment. For the most part, taxes are paid in fiat based on the conversion from the Bitcoin payment.

It is easy to just convert Bitcoin to fiat currency after every paycheck. However, it has future price appreciation in valuation for holders which is just like stocks. You also get the benefits of a non-confiscatable store of value that grows over time. If you custody your own Bitcoin in your own digital wallet, it cannot be frozen or taken by anyone. As more people realize that there is more to Bitcoin than currency, perhaps they will be more open to considering it for their next paycheck.

(Photo Credit by David McBee)

Disclaimer: This is not financial advice. The information provided is for reference and educational purposes only. DYOR always to verify any information.

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