As a freelancer, you may be wondering whether you should accept crypto payments. Here, we'll cover the pros and cons of taking payment in crypto.

Getting Paid in Cryptocurrency: Pros and Cons

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Crypto-hysteria has been hard to avoid the past few years. Indeed, these new digital currencies have had a huge impact on everything from the economy to the art scene to education and beyond, cementing them as part of the current zeitgeist. 

But despite all the excitement and media attention surrounding this asset class, the average person will often find themselves wondering, “what the heck is crypto actually used for?”

Sure, Ethereum offers a decentralized network and IOTA helps connect resources in the internet of things, but what about actually using cryptocurrency as, well, currency? After all, isn’t the point of any currency, crypto or otherwise, to use it to pay and get paid?

As a freelancer, you may have already had some clients propose to pay you in crypto, seen job postings offering compensation in Bitcoin, or you might simply be wondering if this is the way of the future and whether you should jump on now and start accepting crypto payments. 

Whatever your situation may be, here we’ll cover the pros and cons of getting paid in cryptocurrency so that you can make a more informed decision for yourself and your business. 

What’s the Point of Cryptocurrency? 

Before getting into specific advantages and disadvantages, let’s frame the conversation by taking a look at what the key ideas behind cryptocurrency are. Just by understanding these points, you’ll get a pretty decent idea of why you might want to get paid in cryptocurrency. 

At heart, cryptocurrency was designed to be a decentralized currency. That means that unlike fiat currencies, which represent debts or “IOUs” backed by a government, there isn’t any singular governing body that backs cryptocurrency. Instead, the market value is based solely on what the users of that currency think it’s worth. 

This brings several benefits with it. For one, decentralized currencies are harder to forge, so there’s less of a risk of counterfeiting. Secondly, transactions are generally more confidential than using credit cards or checks. Plus, the security of these currencies is set to improve over time, so you may end up with a more secure payment method eventually. 

Pros and Cons of Getting Paid in Cryptocurrency for Freelancers

Now that we have an idea of the benefits and use cases of cryptocurrency in general, let’s expand on this and see how this all applies to freelancers. 

Pros of Getting Paid in Cryptocurrency

Fast Transactions Across Borders

When you get paid through a check, bank transfer, or similar method, you typically have to wait until your payment is processed to receive the funds. 

While there are some instant payment solutions available, they often don’t work internationally — Venmo, for example, is a very popular instant payment option in the US, but it’s only available in the US. In Norway you could use Vipps for the same purpose, but once again, only for transactions taking place in Norway. PayPal does work internationally, but if you want to actually transfer the money in your account to your bank, you’ll have to either wait a few days or pay a processing fee of up to $10. 

This can be a problem, especially in today’s freelance landscape where you’re likely to have clients from all over the world. 

Cryptocurrencies, on the other hand, by nature offer “instant” transactions. However, the word “instant” needs quotes because the degree of immediacy depends on the coin you’re using: Bitcoin tends to be slower, and large transactions can take several days due to the nature of blockchain processing. That said, you can usually expect Bitcoin transactions to go through between 1 and 60 minutes, which is faster than the average bank payment in many cases.

Other currencies, like Ripple, Solana, and Avalanche can consistently reach finality within just a few seconds, making them ideal for fast transfers.

Overall, if you want to get paid fast and platforms like Venmo and Zelle aren’t options, cryptocurrency is worth considering. 

Lower Transaction Fees

One of the most disheartening parts of freelancing is sending out your invoice and realizing that your payment processor is going to take a chunk of your money. If you receive payments via PayPal, you’re looking at a fee of 3.49% plus $0.49 per invoiced transaction. If you’re getting paid with wire transfers, you’ll be staring down an average of $15 per incoming payment. 

That means that if you invoice for $100 with PayPal, you’d receive $96.02. If you bill for $100 to be paid by wire transfer, you’d likely receive $85 (the precise amount will depend on your bank). Billing with PayPal quickly becomes uneconomical for larger amounts while wire transfers become more economical as the payment sum rises —  a $10,000 invoice would leave you with a $349.49 PayPal fee but still only a $15 wire transfer fee. 

With crypto, however, transaction fees are typically paid by the sender, not the receiver. That means that if you ask your client to pay you in crypto, you won’t have to worry about any pesky fees — if you bill for $100, you’ll receive $100. End of story. 

Crypto Is Chic

In some circles, accepting crypto can be seen as something of a badge of honor — a way to show that you’re part of the in-crowd and can sit at the cool kids’ table. In short, accepting crypto payments can make you appear as part of the cutting-edge and forward-thinking. 

If this is your only reason for wanting to accept crypto, it’s likely not a particularly good one on its own. However, if you’re already leaning towards accepting Bitcoin, Litecoin, Ethereum, and the like, then this may be just enough to tilt the scales. 

Volatility: The Possibility of Gains

The volatility of cryptocurrency is the main reason that it’s been all over the news the past few years, and it’s one of the aspects of accepting crypto payments that can be considered both a pro and a con. Because of that, we’re putting it in both sections.

So, what makes volatility an advantage? The market values of cryptocurrencies have risen to astounding levels, and many believe they will continue to climb. If you believe in the future of cryptocurrency, then accepting payments in this digital asset could be a great way to invest — the payment you receive could be worth a lot more in the future. 

Cons of Getting Paid in Cryptocurrency

Volatility: Unstable Values and The Possibility of Losses

While volatility means that there’s lots of potential for major gains, it also means that there’s lots of potential for huge losses.

However, a bigger problem is that it’s practically impossible to know how much you’re charging in US dollars or any other stable currency when you ask for payment in bitcoin or ethereum. For example, in a period of just 9 days from May 10 to May 19, 2021, the price of one Bitcoin fell from just under $60,000 down to $30,000 — a 50% drop in just over a week. 

That means that if you had billed someone for 0.0167 BTC on May 10, 2021, which came to approximately $1,000 at the time, and you sent the invoice on net 15 terms, then by the time your payment was due, you may have actually ended up charging for only around $500. 

Even when this works in your favor, and the price increases rapidly, it can cause problems. Just put yourself in your client’s shoes: if you received and paid for a bill for 0.1 BTC on Dec 7, 2021, then you could have thought you were paying anywhere from $1,350 to $1,969 depending on what time of the day you decided to pay. If you thought you were paying $1,350 and ended up paying almost $2,000, you would not be happy, and you might consider disputing the bill. 

The reality is that even though cryptocurrency is becoming more popular, the world still runs on fiat currency at the moment, so most people will be doing their pricing calculations in USD and then converting to crypto. A solution for this is to charge clients in dollars and get paid in crypto stablecoins. Then you can exchange the stablecoins for other crypto.

Taxes Are More Complex

It’s probably a safe bet that you don’t enjoy doing your taxes. So, here’s some bad news: charging for your services in crypto will make tax season even worse

The IRS treats cryptocurrencies as property and charges capital gains tax on them, so the process of reporting crypto income on your tax return isn’t as simple as reporting how much Bitcoin you received and paying your taxes based on that number like you would with USD income. 

Instead, the IRS requires that you report the value of the coin at the time that you received it as well as the value at the time that you sold it to calculate the capital gains. This all sounds messy, but some apps will keep track of it for you now.

Cryptocurrency Simply Isn’t Simple

You don’t need to be a tech wiz to receive payments in US dollars. And while you don’t need to be a computer genius to deal with crypto either, there are some technical points you’ll need to figure out. 

Mainstream exchanges, like Coinbase, have made buying, selling, and receiving cryptocurrency pretty easy. 

Cryptocurrency Is the Wild West

When it comes to crypto, regulations are scant. Even though regulators have increasingly directed their efforts toward cryptocurrency, there still isn’t any equivalent to the FDIC for crypto, and there are very few protections in place. 

Overall, if you don’t know what you’re doing and you avoid centralized exchanges like Coinbase, you can lose your money. 

Key Takeaways: Should You Get Paid In Cryptocurrency?

While there’s no easy answer to this, if you’re asking this question in the first place, you need to proceed with caution.

Why do we say that? If you’re truly passionate about cryptocurrency and know exactly what you’re getting yourself into, then chances are this isn’t even a question for you — you knew you wanted to accept crypto right from the start. Asking whether or not you should accept cryptocurrency payments indicates that there’s a knowledge gap.

Now, that doesn’t mean that you should or shouldn’t accept cryptocurrency — it just means that you need to make sure you truly understand what crypto is, what its risks are, and how it can fit into your finances before moving forward.

Once you have a strong handle on crypto, accepting payments in digital currencies can be a great way to invest some of your freelance profits. Just one look at the growth of Bitcoin since 2015 should be enough to show how lucrative taking a portion of your payments in crypto and holding onto them can be:

A daily chart showing Bitcoin's price on Coinbase from since 2015. The chart shows how the price increased rapidly from a few hundred dollars to over $60,000 at one point.

To put this into perspective, Bitcoin started trading at prices between $0.0008 and $0.08 per coin in July 2010 (not displayed in the above chart). Now, a single coin is over $60,000. If you had accepted just $100 worth of payments in Bitcoin that year and held onto it (approximately 40,000 coins), you would now have approximately $2.4 billion. If you believe in the future of crypto, accepting a portion of your payments in crypto can be a very good long-term strategy. 

All that said, no matter how you accept payments, you’ll need to have a good invoicing process in place. Blinksale is designed to make professional invoicing a breeze. Plus, Blinksale integrates with Coinbase, so if you want to start accepting crypto payments, we have you covered. Check out how we can help you get paid — crypto or otherwise.

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