The cryptocurrency boom has reached new heights by affecting salaries in some countries. The millennial generation preferred to receive payments in crypto. It's fair to say that cryptocurrencies are part of the new financial model, and crypto salaries are part of these advances.
Among the politicians trying to bridge the gap between crypto and fiat payments are Francis Suarez, the mayor of Miami, and Eric Adams, the mayor of New York City. On the other hand, the athletes planned / did the same.
Now, several individuals have shown interest in getting a cryptocurrency salary. However, price volatility - as well as tax complications - can steal some luster from the trend.
At the time of writing, Bitcoin has cut around 11% of its price in a week (here quotation in real time). Although the main currency has recovered somewhat at press time. It was trading just above the $ 37 mark with a 3% surge in 24 hours. However, with this price drop, your entire salary could drop by that amount as well.
Bloomberg's recent report highlighted these concerns. Crypto could certainly fall, they say, but also "catapult to higher levels than would be expected from any annual increase in a fiat-denominated salary."
One of the biggest attractions of getting paid in a major cryptocurrency is, of course, the growth potential. Over the past decade, the price of a single Bitcoin has skyrocketed from a few dollars to more than $ 64.000. Many have even speculated that the coin could hit the $ 100 mark. But one of the main rules of investing is that "past performance is not indicative of future results". This is true regardless of everything.
What if there is a large price change between the last day of the pay period and the day you receive your paycheck?
"You could come out as a bandit," said Mati Greenspan, founder and CEO of Quantum Economics. But if prices retreat, "you might as well shoot yourself in the foot."
Moving forward, tax compilation has been another concern for most BTC holders, not to mention being fully compensated with the flagship currency. Complicated tax calculations are one of the reasons cryptocurrency paychecks can be a headache for both employers and employees.
Shehan Chandrasekera, head of tax strategy for CoinTracker opined:
"There is always a difference between how much the employer has paid for that coin versus the market value when they are distributing it as a salary because the price changes."
“At that point the employee is on the hook to figure out the date you received the coin and the market value of when you received the coin,” he said.
Here is an example that sums it up perfectly. NFL star Odell Beckham Jr's (OBJ) decision to take his $ 750.000 salary in Bitcoin appears to have cost him dearly due to the market crash after signing the deal. OBJ is estimated to have earned 61% less than if he had taken his salary in fiat, given the aforementioned obstacles.