More avenues than ever exist to pay remote employees & contractors. Should you add cryptocurrencies to the list?
That’s what this post will discuss. We all saw the meteoric rise of Bitcoin in late 2017, blowing past everyone’s expectations in a sudden rush to the $20,000 mark. It’s now dropped back down around $4,000 and waffles every day.
Personally, I think of Bitcoin itself as a bubble. But it served a valued purpose—moving the blockchain (its core) from a small Web-only curiosity, to a globally-recognized technology. Thousands of blockchain-development companies now exist, seeking to capitalize on the tech everywhere from identity to security to business operations.
Including, of course, payments using cryptocurrencies. Which any business can do already, in one of several available currencies. If you prepare a little bit.
Prerequisites for Using Cryptocurrency
Cryptocurrencies (or “Cryptos” as I’ll reference them in this post) are still in early stages. It is possible to use them for remote worker payments. But some preparatory steps are required.
Any business wanting to use cryptos as a payment method must have staff (or a consultant) who knows the crypto space. They must have:
- Technical acumen (for knowing/learning the process)
- Forward-thinking mindset (to see the value in using crypto)
- Familiarity with current payment options (so you’re not bleeding money on every transaction!)
To assist, here are some resources which will help you familiarize:
What is Cryptocurrency: Everything You Need To Know [Ultimate Guide] – BlockGeeks.com
Reddit – Cryptocurrency
What is the best way for a beginner to learn about the cryptocurrency market? – Quora
When to Use Crypto for Payments
Cryptocurrency as a payment method is viable. It actually has been for a few years, but recent interest compels a more serious look. If your business finds itself in the following circumstances, maybe it’s time to consider a crypto payment:
- Other payment methods are not available.
- Fees for invoices (or an invoicing software) are too high
- Your payroll system doesn’t handle international payments well, or it’s slow.
- Overdependence on one payment option, like PayPal.
- Workers request it. Yes, this does happen! Witness Ethlance.com, a freelance jobs website like Upwork…only it pays workers in the Ethereum crypto.
Sounds intriguing, right? But even if you’re interested in doing this, it may not make sense for your particular business (or industry). In such cases, we should take a moment & determine if you should embark down the cryptocurrency road.
Should You Pay Remote Workers in Cryptocurrency? How to Tell
The old rule goes, just because you CAN do something doesn’t mean you SHOULD. It still applies to cryptos. Let’s say your business wants to explore using cryptocurrencies. Which businesses would benefit from doing so?
Yours would, if the business meets these criteria:
- Some of your remote employees are international. Or they might live in high-tax states (e.g. California), where you’re based in a low-tax state.
- Your remote workers are tech-savvy. For instance, software engineers. This makes them more likely to know the crypto space. They might even hold some cryptocurrencies already.
- You can handle volatility. Cryptos change value like other currencies…but they do so a little more ‘vigorously.’ At least for now.
- Your business is flexible enough to switch from one cryptocurrency to another. This is important; it means you can switch to a crypto which works better for your industry. The technology for this is still developing.
- You have in-house talent capable of managing crypto for you NOW. You’ll have to poll workers to find this out. More than likely if someone knows the technology, it’s due to personal testing. They may not want to share that knowledge publicly (people have ridiculed cryptos in the past).
Finally, one caveat. Do not hire someone just to manage cryptocurrency payments! Unless you plan to switch the entire business over to crypto payments, it should not have full-time focus.
Think of it this way. Your bookkeeper doesn’t spend all day, every day, paying staff. They’re also managing the books, collecting from customers, handling tax preparation, etc. The most efficiency method of adopting cryptocurrency is to fold it into the existing payroll structure as much as possible.
How to Select a Cryptocurrency & Pay Remote Workers With It
So you’ve determined that you want to add a cryptocurrency to your employee payment options. Which one? And how do you work it into payroll?
Here’s how. There’s a few steps…but most of these are the same steps you’d take to add any other payment method.
- If you haven’t yet, survey your remote workers. Do they want the option to receive payments in cryptocurrency? If so, which crypto would they prefer?
- Choose a crypto based on feedback. I recommend starting with only one. You can add more later if desired.
- See the next section for recommendations on cryptos to use.
- Set up accounts to buy the crypto. This is where you need the crypto-familiar employees or an expert consultant. Lifehacker.com did a piece on how to buy cryptocurrency which can help guide you. So can a recent Bankrate.com guide, “How to Responsibly Invest in Bitcoin.”
- Coinbase is the most popular method of buying cryptocurrency. I recommend starting here, as they take pains to make it easy for everyone. But you have many other options. Search for “Buy [Your Chosen Cryptocurrency]” for more help.
- Familiarize Accounting with the buying process. At least two people should know how to exchange regular currency (referred to as ‘fiat’ in the crypto space) into the desired crypto.
- If you’re not sure where & how to buy crypto, use CryptoRadar. They show you several exchanges (and their current exchange rates) depending on which cryptocurrency you want to use.
- Set up an interval to buy & hold the crypto. One hallmark of cryptocurrency is its fast transfer speeds. It’s easy to buy all the crypto you’d need for a while, and just leave it in your wallet (the storage medium for crypto, like a bank account) for when you need to pay out.
- I recommend a 1-month interval to start.
- Pay out to each worker on your normal payment schedule. Like initiating transfers to remote workers’ account numbers, you would initiate crypto transfer to your remote worker’s crypto wallet.
- Do a live comparison of the crypto’s CURRENT value to your regular currency first. Use a site like CryptoCompare; it will always tell you what 1 of any listed crypto is worth in US Dollars. That way you’re not overpaying unintentionally.
- Each remote worker must provide you their wallet’s “public key” to do this. Treat these like a bank account number.
- Record the amounts in existing books. You can use the crypto’s Currency Code instead of marking them in dollars. (Some examples of Currency Codes included below.) If you want to record the corresponding US Dollar amount alongside it, go ahead. This may help you come tax time.
Speaking of taxes! Don’t neglect tax planning. Cryptos aren’t yet considered ‘legal tender’ by the U.S. Government. But they already have regulations in place to tax it. The Simple Dollar posted a starter guide to cryptocurrency and taxes that will help you work crypto into the tax plan.
Six Cryptocurrency Choices
When you ask your remote workers, you may hear a bunch of names you don’t recognize. “What’s an Ethereum?” you may wonder.
Let me offer a few explanations beforehand. Many cryptos are popular now…mostly because they can make people money. But for business, you’d want to concentrate on value and fair cost. With that in mind, here are few cryptocurrencies I think are either good for business use, or ones you should avoid:
- Bitcoin (BTC) – It’s big, it’s well-known…and it’s crazy volatile. Not recommended.
- Monero (XMR) – This is a privacy-focused crypto. It’s good, and better priced than Bitcoin. But as of early 2018, cybercriminals are flooding into Monero use. They like receiving ransomware payments in it. Which may cause volatile price swings and/or unwanted attention. Not recommended (at least for now).
- Litecoin (LTC) – The “silver” to Bitcoin’s gold. It’s a longtime crypto, and stable enough to use.
- Ethereum (ETH) – A versatile crypto, with many subprojects. Usable.
- Ripple (XRP) – Made for international banking, so it’s quite usable. For now, very cheap too.
- Industry-specific crypto – Many industries already have one or more cryptocurrencies specializing in their needs. For example, we have Atlant (Real Estate), Ambrosus (Food & Medicine), Stellar (Banking), and many more. Just search for “crypto [Your Industry]”.
I recommend: Litecoin, Ethereum, Ripple, and Industry-Specific. In that order.
- Stability. Each is stable enough in terms of pricing.
- Purpose. Each has a defined purpose and a team backing it.
- Familiarity. These are recognized by other crypto-friendly businesses.
- Lower Cost. Even the most expensive of these, Ethereum, isn’t nearly as expensive as Bitcoin. As of this post’s publication, 1 ETH is worth $205.18 USD.
Cryptocurrency Payments are Here. Will You Put Them on Payroll?
While I am familiar with the crypto space, I am NOT a Cryptocurrency expert. Please do some research before making your crypto selection.
Disclosure: I hold some of the following cryptos – Ripple (XRP), Stellar (XLM), Ambrosus (AMB), and the Basic Attention Token (BAT). If a business wanted to pay me in cryptocurrency for my labor? I would accept payment in Stellar, Litecoin, or Ripple.
I agree with those who’ve said that cryptocurrencies are at the tail end of the “Wild West” stage. I’m writing this post now because I see a lot of value in blockchain technology in general (of which cryptocurrencies are a big part). I also want to give fellow remote workers a resource to which they can point, if they want to accept crypto.
Remote Workers, would you accept payments in cryptocurrencies? Which ones? Sound off!
Thanks so much.