At a Glance
- Cryptocurrency is a virtual currency secured in a way that makes it nearly impossible to counterfeit or double-spend.
- Blockchain technology makes cryptocurrency a very secure way to receive payments.
- Local and international payments made with cryptocurrency can be processed almost instantly.
- Liquidating cryptocurrency is easy: just exchange it for another cryptocurrency or fiat money.
- Because cryptocurrency is still relatively new, its value is very volatile and prone to extreme short-term fluctuations.
- The long-term outlook for cryptocurrency is positive.
- The U.S. government is considering introducing new laws and regulations for cryptocurrency, so beware of upcoming changes locally and federally.
With the rapid embrace of cryptocurrency as an alternate investment, you may be wondering whether cryptocurrency is a viable form of payment for your services as a freelancer. Our research has found essential information for determining if accepting payment via cryptocurrency is right for you.
The Basics of Cryptocurrency
What was once a marketing buzzword, cryptocurrency (or crypto) has transformed from an abstract concept into a lucrative digital currency.
Cryptocurrency is a virtual currency known for its unique form of security that makes it nearly impossible to counterfeit or double-spend.
Security is Paramount
Cryptocurrency is praised for its ultra-secure nature. This security stems from the blockchain, which is an electronic time-stamped database that companies use to secure and decentralize sensitive data—in this case, cryptocurrency transactions.
There are three main differences between blockchain and traditional databases:
- Structure. A traditional database structures data into tables, whereas a blockchain database structures data into blocks that have been strung together to form a chain.
- Storage of historical data. Unlike a traditional database, a blockchain database contains timestamps for each string of transaction data in a block. All historical data of transactions is permanently recorded and cannot be changed.
- Data decentralization. In a blockchain database, data is decentralized, meaning no one person has executive control over it. Instead, this data is spread out across multiple servers at different locations and is controlled by multiple people. Decentralization provides an added layer of security to crypto trading and mining by making it impossible to erase or overwrite a block of spent currency.
How to Start Accepting Payments & Store Your Cryptocurrency
A popular avenue for accepting cryptocurrency payments is PayPal, but you can also use Coinbase or BitPay. You can either receive the virtual currency for fiat money or trade it for another cryptocurrency.
Once you’ve received a cryptocurrency payment, you have a few options for storing and accessing your money.
The most common method is using a cryptocurrency wallet, which is a cross between a virtual wallet and a password protector. It provides you with a user interface to access your currency and stores the passkeys you use to verify your crypto transactions.
What’s All the Hype About? Unveiling the Popularity of Cryptocurrency
The popularity of cryptocurrency is mainly rooted in the currency’s accessibility to investors, security measures, and rapid transaction processing.
When it was first made available to the public, you could only buy and trade cryptocurrency on select platforms. Now, however, a rising number of brokers are offering crypto trading, including Interactive Brokers, Robinhood, Paybis, and Webull, to name a few. Furthermore, many of them have been adding cryptocurrencies as options for company investment policies like 401(k) plans. With new cryptocurrencies entering the market, it’s getting much easier for consumers to start using crypto.
Many businesses are now accepting cryptocurrency as a payment option. El Salvador now accepts Bitcoin as legal tender, and world governments are considering following suit. You can even use bitcoin to invest in real estate, which is just one of the many things to know about real estate and cryptocurrency. It’s safe to say that cryptocurrency is here to stay.
Why Should I Accept Cryptocurrency as Payment?
For freelancers, the advantages of cryptocurrency (like its security, quick processing, and ease of transfer or liquidity) are particularly attractive.
A survey conducted by HumansNetwork in November 2018 showed that out of 1,110 freelancers, 29% said they would like to receive all or part of their income from cryptocurrency. According to the researchers behind the study, the top three reasons for this desire are cryptocurrency’s ease of international payments, lack of middlemen, and security.
A more recent study by SoFi published in March 2022 revealed that 36% of workers want to have the option to receive all or part of their wages in the form of cryptocurrency.
However, because cryptocurrency hasn’t been around for long, accepting it as payment inevitably carries some risk. On one hand, it’s a unique opportunity that allows you to join a pioneering workforce. On the other hand, because the value of cryptocurrency is still very volatile, you risk losing value on your hard-earned wages.
With any investment (but especially in cryptocurrency), it’s important to remember that the main value of an asset is its potential for long-term growth. Short-term highs and lows are to be expected and shouldn’t derail your entire portfolio.
That said, you should only invest as much as you’re willing to lose. If your chosen cryptocurrency suddenly becomes worthless overnight, will you be able to handle the financial blow of losing the money you invested?
Here’s a closer look at the advantages and disadvantages of receiving cryptocurrency as payment for your freelance writing.
There are several reasons why more and more freelancers are considering accepting cryptocurrency as a payment option:
- Local and international payments alike are processed almost instantly.
- Liquating cryptocurrency is easy: you can exchange it for another type of cryptocurrency or fiat.
- Most cryptocurrencies offer anonymous payments and have a high level of data security for protecting your banking and identity information.
- Companies are looking for freelancers that accept crypto as payment.
Cryptocurrency also has some disadvantages you should know about:
- The value of cryptocurrency is volatile: it can fluctuate drastically in the short term.
- If you lose your wallet key, you won’t be able to access your cryptocurrency, resulting in lost money.
- Cryptocurrency isn’t insured by the Federal Deposit Insurance Corporation (FDIC) or regulated by the Financial Conduct Authority (FCA), so if something happens to your funds, the government doesn’t have to help you get your money back.
- The cryptocurrency marketplace is fraught with scams and cyber attacks. When data has been leaked or stolen in the past, hackers have been able to access multiple accounts at several companies. Although this is a rare occurrence due to the hyper-secure nature of blockchain technology, no fortress is completely impenetrable.
To minimize your risk of cyber attacks, follow all the general rules of internet security when dealing with financial information. Use strong passwords for all accounts containing personal data; change your passwords every 60–90 days; regularly clear your browser’s cache, cookies, and history on all devices; and utilize firewalls and security software.
Top 6 Platforms That Pay Cryptocurrency for Written Content
- Publish0x. This platform allows both authors and readers to earn cryptocurrency through a free tipping system provided by the platform through their rewards pool. When you read an article, you can choose to give an entire crypto tip to the writer or keep a percentage for yourself. When you post an article, you earn cryptocurrency through the tips readers leave on your articles.
- Bitcoin Bounty Hunter. Let your vigilante dreams come true with this platform. Created by Bitcoin, the Bounty Hunter program aims to catch alleged cyber- and crypto-criminals. The bounty is funded by users in the community who complete specific tasks to help catch the criminal. You can earn substantial amounts of Bitcoin Cash by completing tasks. If you want to use your writing skills for good, this platform is worth checking out.
- Steemit. This is a social media network where you’re paid with STEEM tokens to share your voice through posts, comments, and upvotes within engagement contests.
- Read Cash. This blog-style social media platform allows you to contribute long-form articles and video content and get paid in Bitcoin Cash through tips from your viewers.
- Noise Cash. This microblogging platform (and sister to Read Cash) is often compared to Twitter. Noise Cash allows you to contribute micro-posts and get paid with Bitcoin Cash through tips from readers.
- Lunyr. This platform is a collaborative knowledge bank that aims to be, in short, a cryptocurrency-specific version of Wikipedia. Lunyr rewards users with cryptocurrency for peer-reviewing and contributing quality articles.
You can learn more about these platforms here.
Get Started with These Top 4 Coins
Many cryptocurrencies have been developed, and new ones are added to the market each week. We’ve done the research, and these are the best options for getting started using crypto as a form of payment:
- Bitcoin (BTC). Perhaps the most well-known cryptocurrency, this is an excellent option for beginners. Bitcoin offers immediate payment processing, no banking fees, and no inflation risk.
- Ethereum (ETH). This cryptocurrency has many of the same benefits of Bitcoin but with two additional perks: the capability for complex transactions and a low risk of fraud due to the lack of personal account information required.
- Tether (USDT). Unlike Bitcoin and Ethereum, Tether is a stable coin, which means that its value remains stable even during times of volatility. Plus, it offers 1-for-1 matching to your chosen currency, has fantastic liquidity, and is fully backed by Tether’s reserves.
- USD Coin (USDC). Last on our list of recommendations is USD Coin, a stable coin that is directly tied to the United States Dollar (a Euro equivalent is also available). It has a very similar concept to Tether, but the founding company is also registered with the U.S. Department of the Treasury as a money services business, which means that many compliance regulations are in place to protect your money.
Legal & Tax Implications to Consider
Before diving into the world of cryptocurrency, it’s important to understand all the potential implications it can have for your finances and how your crypto funds will be regarded by the U.S. government.
Taxes Can Be a Headache
It’s important to remember that any time you buy, trade, or accept cryptocurrency as payment, you will have to report these transactions to the IRS on your taxes. The IRS considers cryptocurrency to be property, like stocks or gold, rather than legal tender.
You aren’t required to liquidate earned cryptocurrency into cash, but it may be a good idea. If you leave it to accumulate interest, you may have to pay capital gains taxes on top of income tax.
We recommend keeping a detailed log of your cryptocurrency transactions. Include information such as the date received, currency description, value in USD, fees paid, fair market value when used, total transaction cost, and services or goods received.
Keep in mind how accepting cryptocurrency payments will affect how you organize your finances. For example, think about how you’ll get these transactions to your accountant when it’s time to file your taxes. Alternatively, if you use accounting software, consider what tools you’ll need.
A rising concern is that this new form of currency poses a new way for criminal organizations to launder money and commit fraud, among other financial crimes. On the off-chance that you happen to be a victim of a cyber-attack, a scam, or fraud, it can be challenging to get your money back.
The ultra-secure nature of blockchain technology is great for keeping your money safe, but it can also make it harder to locate your money (and the criminals). Moreover, the fact that payments can originate from anywhere in the world further complicates the process of determining the relevant jurisdiction and taking legal action.
On March 9, 2022, Joe Biden signed an executive order for ensuring the responsible development of digital assets, which has gotten the ball rolling on the government’s development of cryptocurrency policies and laid the groundwork for new regulations.
This executive order acknowledges the benefits of crypto, promotes technological advancements, and seeks to protect consumers, businesses, and investors with new legislation. Most importantly, it has kickstarted initial research into the establishment of a U.S. Central Bank Digital Currency (CBDC) to safeguard digital currency.
Efforts have already begun at the federal level to explore the ideas outlined in the executive order passed in March. On April 7, 2022, the FDIC requested notification from all FDIC-supervised institutions that intend to engage in, or are currently engaged in, any activities involving or related to crypto assets. Aside from the request for notification, the letter expressed concern for consumer and institutional safety surrounding cryptocurrency assets and stated that the institutions would be provided with advisory feedback as soon as possible.
Because cryptocurrency’s regulatory landscape is expected to undergo rapid change over the coming months, it’s essential to keep an eye on new laws and regulations surrounding crypto, both locally and nationally.
Accepting cryptocurrency as a form of payment has numerous benefits and risks, but only you know what’s best for your business. Because of crypto’s volatility and lack of regulation, we recommend keeping your main form of payment as is and simply adding cryptocurrency as a secondary form of payment, especially if you have international clients.