Crypto crash shows why getting bitcoin paychecks can be a bad idea

Bitcoin prices fell to a six-month low on Monday. This is bad news for anyone investing in cryptocurrency, including a mixed group of politicians, celebrities, and athletes who recently announced that they will accept their salaries in cryptocurrency.

New York City Mayor Eric Adams, basketball player Clay Thompson and NFL quarterback Aaron Rodgers face massive cuts after bitcoin plunged below $33,000 this week. According to a MarketWatch analysis, a large-scale NFL recipient may be Odell Beckham Jr. Bitcoin prices have rebounded somewhat since then, but have not fully recovered by early Tuesday night and are still largely unpredictable.

These famous people are interested in why it is a good idea to convert your cash salary into a highly volatile and highly disorganized digital code.

Currently, crypto salaries are in the gray area. US labor law generally requires companies to pay employees at a minimum wage, so employers may offer you some extra perks, but with cryptocurrencies alone, you’re less likely to pay for them. What companies can do is convert US dollar-based salaries into certain digital currencies such as Bitcoin and Ethereum. With this approach, the number of coins an employee receives depends on the value (dollars) of the currency at the time the employee is paid.

For example, if you convert your annual salary of $68,000 into bitcoin in November, you will earn about 1 bitcoin. If you transfer the same salary earlier this week, you will earn about 2 bitcoins.

Converting your salary to cryptocurrency may require several steps. If your payroll system offers cryptocurrency payment options, you first need to select the payroll amount you want to transfer and the coins you want to receive. There are a variety of cryptocurrencies available, but the most notable are Bitcoin, which is currently valued at around $38,420, and Ethereum, which is currently valued at around $2,630.

On payday, your employer sends this portion of your salary to the crypto exchange instead of depositing it into your bank account. The platform converts dollars received from the business owner into selected coins and deposits those coins into a digital wallet designed specifically for cryptocurrencies. This also needs to be set. The business owner may pay a cryptocurrency exchange to provide this service.

Even if your employer does not offer this option, you can still get paid in cryptocurrency. Some cryptocurrency platforms allow you to sign up for deposits directly. You can use it to schedule cryptocurrency purchases every time you receive a payment.

These bitcoin salaries are part of a broader move to make cryptocurrencies a larger part of our everyday finances. Today, mobile payment services such as Venmo and PayPal allow people to buy, send and receive cryptocurrency. More and more credit cards are offering cryptocurrency as part of their rewards program. And even if you do not want to own the cryptocurrency directly, you can invest in the cryptocurrency economy through the stock market. In the stock market, you can buy shares in publicly traded cryptocurrency companies or exchange-traded funds linked to Bitcoin. A basket of stock in the usual old US dollars.

However, there is still a lot that you can do with this cryptocurrency. Most sellers continue to claim US dollars as their primary payment method, and typically cannot use cryptocurrencies to pay basic daily expenses such as rent, mortgage payments, meals, and medical expenses. At the moment, receiving your salary in cryptocurrency is like investing your entire salary in the stock market – although much riskier.

“Most people do not have the additional income to invest directly in volatile investment vehicles such as cryptocurrencies,” said the University of Pennsylvania Wharton School of Business, founding economist at Prysm Group, a blockchain-powered consultancy. Digital Asset Program. “When we talk about people like celebrities, we’re talking about people who have incredible incomes.”

In short, these official examples of people choosing to pay cryptocurrency salaries remind us that the rich and powerful can take financial risks that most of us cannot. They also have other incentives to promote cryptocurrencies. A growing number of US mayors, including Miami Mayor Francis Suarez and Jackson, Tennessee Mayor Scott Conger, are mobilizing the fast-growing crypto industry in their cities. I think I want to do. Likewise, employers want to attract young, high-demand technicians with perks that may sound great. Celebrities and athletes continue to receive rewards for promoting many products and ideas that don’t make sense to the average person.

So, even if you don’t need cryptocurrency salaries, you will likely keep asking about it. But if the idea of ​​paying in cryptocurrency sounds appealing, be prepared for salary fluctuations and tight tax paperwork.

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