Is It Wise for Gig Workers to Accept Payment in Cryptocurrencies?
The world of cryptocurrencies is reshaping at a rapid pace. It is hardly conceivable that cryptocurrencies will disappear. Not completely, at least. They may transform, change their form radically, but ultimately, the idea of having a currency that can freely transition from person to person, without any security risk and without the government sticking their noses in it would be feasible on some occasion, albeit some regulatory framework will have to exist in order for a cryptocurrency to kick off in full.
People who are part of the economy of sharing and have been apps developer have rather different lives from what their counterparts in the traditional workforce have come to know as the 9-to-5 drudgery.
With this in mind, gig workers may opt for a rather more exciting way to get paid – through cryptocurrencies.
A growing bevy of companies is now designing their own unique payment options, which will have their internal value, scalable with that of a FIAT currency, naturally. The economy of sharing could make such an initiative quite feasible.
Of course, not owning your own FIAT currency spread across banks is always risky and you will need to account for the fact that these chunks of money are only valuable as long as your company is alive and breathing. Go bankrupt and you may regret the day you have pinned all your hopes on a single platform, rather short-sightedly.
Indeed, companies have to proof their resilience to exterior forces and an ability to guarantee livelihoods of their employees who are quite changeable and like to move all over the place at a whim.
How are cryptocurrencies dangerous this way?
Cryptocurrencies are volatile, and their prices are whimsical as are the habits of the new breed of freelancers who cannot see themselves tied down to a job or a place for too long. Even though, in theory, people can trade cryptocurrencies for goods, you will quickly note that the majority of merchants and selling points do not take bitcoin. You could buy groceries with bitcoin, indeed, but you have a rather narrow variety.
In addition, cryptocurrencies are now openly discussed for taxation. With the Internal Revenue Service (IRS) now looking into cryptocurrencies, it is quite understandable that people will also have to ask themselves – is my crypto income taxable? Overall, there is no reason to assume otherwise. The government would not let anyone get away with substantial sums of money that have not gone through taxation.
Now, taxation can also be tricky and elusive and no clear guidance may be put in place unless common framework is put forth. Overall, a fair way to tax the rather volatile cryptocurrencies is by ensuring that they have a stable value. With this in mind, we may renounce the idea altogether.
However, if taxes are measured in US dollars as of the date the cryptocurrency was received, then this seems a fair assumption that people would be able to pay their due to the government, state, and everyone else.
Taxation, Any Complications?
Yes, there is always the risk that greed and negligence may take over conscientious consideration. For the most part, people are unlikely to salt away the money they will need to pay in taxes, but would rather keep their bitcoin or cryptocurrency in their crypto wallets.
The main downside with this is the changeable nature of Bitcoin, naturally. If Bitcoin cost $20,000 and then the value plummeted to $4,000 and it is time to pay your taxes, but you did not take a chunk out of your earnings when the price was it its peak, you may be in serious hot water with the regulation.
Still, even if that is true, regulators are not quite clear. What happens if a Bitcoin value fluctuates before the time you have had time to cash out earnings. In order for a reliable system to be established, governments, employers, and private exchanges will have to agree on one main thing: taxation money should count from the moment you have cashed them out.
In other words, exchanges should allow you to earmark a partial sum of your latest earnings that you can sell and mark as ‘taxation.’ Abuses would be possible in this way, but if regulation was to intervene and link people with their bank accounts, that would be more secure.
It will also create more paperwork for everyone, and Bitcoin and similar cryptocurrencies objective is to dispense with the need of having people intervene in transactions.
However, when livelihoods of people are on the line, many of us are thankful that Uncle Sam and his counterparts around the world remain vigilant and want to secure the financial underpinnings of the entire economy. Until such a time, we recommend that the gig workers wait a while before they take up their pay checks in cryptocurrencies.