Bitcoin and other cryptocurrencies have taken the world by storm in recent years. The popularity of digital assets has led to their use in a variety of different applications. Besides their use in cryptocurrency payroll systems, digital assets are also used for peer-to-peer payments, hedging against inflation, and decentralized financial services.
While the concept of cryptocurrency payroll has many benefits, it also has its share of drawbacks. In this blog post, we will take a look at the good, the bad, and the ugly of cryptocurrency payroll.
3 Benefits of Using Cryptocurrency Payroll
1. Lower transaction fees
Perhaps the most obvious benefit is that it can save employers money on transaction fees. Cryptocurrency transactions are generally much cheaper than traditional banks, since they are verified by a network of decentralized validators, and don’t have the same overheads compared to banks and other financial institutions.
2. Attract top talent
As an industry, blockchain has exploded over the last decade, and as a high-value, high-stakes niche within the finance space with lots of money to spare, some of the world’s most skilled and qualified professionals are looking at Web3 to build their careers. Providing a cryptocurrency payroll option can help attract and retain top talent.
With the increasing popularity of cryptocurrencies, more and more people are becoming interested in getting paid in digital assets, and offering cryptocurrency payroll can help you stand out from other employers, attracting the best candidates.
3. Marketing advantage
Offering cryptocurrency payroll can also be a great marketing tool. It can help to raise awareness of your company and generate positive publicity. The blockchain community is always looking for examples of businesses adopting their favorite technology, and if you offer cryptocurrency payroll, it’s almost guaranteed to generate interest and media attention.
3 Disadvantages Of Using Cryptocurrency Payroll
1. Getting set up
One of the biggest challenges with cryptocurrency payroll is getting set up. In order to pay employees in cryptocurrency, you need to set up a digital wallet and purchase the appropriate amount of currency. This can be a complex and time-consuming process, particularly if you are not familiar with cryptocurrencies.
Another challenge with cryptocurrency payroll is volatility. Cryptocurrencies are highly volatile, which means their value can fluctuate wildly from one day to the next. This can make it difficult to budget and predict costs. For example, if you paid someone $100 worth of Bitcoin last month, and the value of Bitcoin has since halved, you would have to pay double the amount of Bitcoin this month.
However, this is easily mitigated by using stablecoins, which are cryptocurrencies that are pegged to the value of fiat currencies like the U.S. dollar.
3. Lack of regulation
Another drawback of cryptocurrency payroll is that there are no clear legal guidelines. Every country has different rules and regulations surrounding cryptocurrencies, which can make it difficult to comply with the law. This is particularly an issue for international businesses that need to pay employees in multiple countries.
While these might seem discouraging, there are simple solutions to these problems, and by signing up for Binamite, you can solve them all in one go!
Binamite allows businesses to use their payment method of choice, while managing all the conversions and wallet addresses behind the scenes, ensuring employees get their preferred split of both fiat and crypto. What’s more, contractors have the option of changing their preferred ratio of fiat and crypto on a per-invoice basis, and the globally compliant platform also provides tax guidance.
3 major things you should know before adding cryptocurrency to your payroll
Currently, there are no clear guidelines on how to tax cryptocurrency earnings. This can create a major headache for both employers and employees. For example, if an employee is paid $100 worth of Bitcoin, they may be subject to different tax rates depending on when they sell the Bitcoin and how much its value has increased or decreased. To learn more about tax regulations for different countries check out our blogs –
There is no protection to your cryptocurrency once it is hacked. Once it is hacked you have no way of getting your money back. This puts both the employer and employee at risk, as hackers could target either party in order to steal funds.
Unfortunately, because cryptocurrency is still a relatively new and unregulated industry, there are many scams and fraudsters. For example, employees may be tempted to accept payments from an unknown source in exchange for goods or services. If the payment turns out to be fake or fraudulent, the employee will not only lose their money but also any goods or services they provided. Employers also need to be careful of scams, as they could end up paying employees with fake or counterfeit currency.
Should you adopt cryptocurrency based payroll?
Staying ahead of the curve is important for any business. But with new technology comes new risks. So, is cryptocurrency-based payroll right for your business?
It depends. If you are willing to take on the challenges and risks associated with cryptocurrency payroll, it could be a great way to stay ahead of the competition and attract top talent. However, if you are not prepared to deal with the volatility and complexity, it may be best to wait until the industry matures.
3 Best Crypto Withdrawal Options In 2022
There are many ways to withdraw your cryptocurrencies, but not all are created equal.
1. Cryptocurrency exchanges
The most popular way to withdraw cryptocurrencies is through a cryptocurrency exchange. Cryptocurrency exchanges are online platforms that allow you to buy, sell, or trade cryptocurrencies. Some exchanges also allow you to withdraw your cryptocurrencies to a personal wallet.
2. Peer-to-peer platforms
Peer-to-peer (P2P) platforms are online platforms that connect buyers and sellers of cryptocurrencies. They allow you to trade directly with another person, without the need for a middleman. P2P platforms also usually have an escrow service to protect both parties from fraud.
Cryptocurrency ATM machines are becoming more popular as the industry matures. They work like regular ATMs, but instead of withdrawing cash, you can withdraw cryptocurrencies. Cryptocurrency ATMs usually have a high transaction fee, so they are not the best option for large withdrawals.
So how can you add cryptocurrency to your payroll?
Cryptocurrency payroll has both its advantages and disadvantages. While it can save employers money and attract top talent, it can also be complex to set up and is subject to volatility. Binamite is one such platform that can help with setting up cryptocurrency payroll. With Binamite, you can quickly and easily convert fiat currency to cryptocurrency, and pay employees all over the world. So if you’re thinking of adding cryptocurrency to your payroll, be sure to check out Binamite today!
What are your thoughts on cryptocurrency payroll? Let us know in the comments below!
Frequently Asked Questions
Is crypto wage legal?
While there are no specific laws in the US (or anywhere else) that state cryptocurrency payroll is illegal, there are a few potential issues that could arise. There could also be tax implications depending on how the government of each country views cryptocurrency payroll.
Why pay employees in cryptocurrency?
There are a few reasons why someone might want to pay their employees in cryptocurrency like convenience, lower transaction costs, and avoiding local currency value fluctuations.
Can you get payback in Bitcoin?
If you are paid in cryptocurrency, you will likely be able to get payback in Bitcoin. However, there could be some issues if the company you work for does not have a lot of experience with cryptocurrency payroll. You may want to consult with a financial advisor to see if this is the right option for you.