Should I Get Paid In Bitcoin For My Services?
Many businesses now accept Bitcoin as a form of payment, and for good reason. In the past 12 months, Bitcoin has gone being valued at around $6000 to its current value at over $60,000. So, if you are considering accepting BTC for services rendered, now is the time to start.
While you cannot use cryptocurrency to buy everything, there are many ways to makes Bitcoin work for you and your business. This includes using a Bitcoin exchange to sell your cryptocurrency for USD or CAD, for example.
Why Is Bitcoin So Valuable Today?
There are many reasons that Bitcoin’s value has exploded over the past few years. One of the most recent reasons is that Elon Musk and Tesla recently purchased $1.5 Billion of Bitcoin. This purchase came shortly after the most recent halving of Bitcoin occurred in May 2020.
So not only has one of the business/tech-savvy men in the world endorsed Bitcoin and moved the market, but Bitcoin miners are now only rewarded with 6.25 Bitcoins for mining transactions. This is a decrease from a 12.5 BTC reward. All of this means that Bitcoin is moving closer to scarcity.
But perhaps more importantly, Bitcoin as well as other cryptocurrencies, have achieved wider applicability in recent years. And as we move to more digital and remote solutions, using a secure digital and global currency just makes good sense.
The Pros of Getting Paid in Bitcoin
Bitcoin is particularly useful for participating in a global market. Because of its design, peer-to-peer transactions are safe and easy. That means that you no longer need to rely on third parties, such as banks, to ensure the credibility of those you transact with.
Cryptocurrencies such as Bitcoin operate on blockchain technology with decentralized nodes all around the world. That means that transactions cannot be forged because of the design of the blockchain and the complexity of encryption.
It also means that Bitcoin runs on a very clear code. Decentralized nodes (computers) compete to confirm Bitcoin transactions if and only if the code is completed by the digital security keys. When these transactions are confirmed, the node is rewarded with Bitcoin and a transaction fee.
This also means that you cannot promise to pay someone with Bitcoins that you do not have in your possession. Unless your account reflects the necessary balance, your transaction will not be approved. All of these features make Bitcoin ideal for transacting with strangers.
Although Bitcoin remains one of the most valuable cryptocurrencies and assets in the world, certain limitations ought to be considered as well. Adoption rates for cryptocurrencies continue to rise. However, there is still limited usability. Cryptocurrencies are not accepted for everything, so to pay for basic needs and small daily purchases, you will still need to use fiat currencies for the foreseeable future.
Many also worry about the volatility of cryptocurrencies, which is also a legitimate concern. While it is unlikely that Bitcoin will drop way below its current price, it is difficult to predict its future because the asset has not been around for long and is still in a developmental stage. Again, this is not necessarily a bad thing, just the reality of the situation.
However, what it does mean is that making small transactions with Bitcoin is not necessarily advisable. For example, if you buy a cup of coffee for 0.00003 BTC, you must still pay a transaction fee, and currently, transaction fees are around $20. $20 is a small fee when you are buying $5000 of BTC, but in this example, you have paid $23 for a cup of coffee.
As such, there are only certain purchases that you will likely want to use Bitcoin for. But that is not necessarily a reason not to be paid in BTC. It is merely an important consideration.
Bitcoin is Taxable Income
Finally, Bitcoin and other cryptocurrencies are treated as taxable income in many countries, including the US, UK, and Canada. As such, if you accept digital currencies for services rendered, you are required to report some or all of this on your income tax.