Bitcoin has lost roughly 11% of its value in the last week, as of the time of this writing.
In certain nations, the bitcoin explosion has reached unprecedented heights by affecting incomes. Payments in cryptocurrencies were favoured by the millennial generation. Cryptos are, without a doubt, a component of the new financial model, and crypto wages are part of it.
Francis Suarez, the mayor of Miami, and Eric Adams, the mayor of New York City, are among the politicians who want to bridge the gap between crypto and fiat payments. Athletes, on the other hand, planned and performed the same.
There are conflicting indications
Several people have expressed interest in receiving a cryptocurrency paycheck. However, price volatility, as well as tax issues, may detract from the trend’s luster.
Bitcoin has lost roughly 11% of its value in the last week, as of this writing. Although, by the time of publication, the king coin had recovered a little. With a 3 percent gain in 24 hours, it was trading slightly above $37,000. However, because of the price decline, the total paycheck may be reduced by the same amount.
These issues were raised in a recent Bloomberg piece. Crypto might fall, but it could also “catapult to heights higher than you’d ever expect from any yearly increase in a fiat-denominated income,” they argue.
One of the most appealing aspects of getting paid in a well-known cryptocurrency is, of course, its potential for development. The price of a single Bitcoin has risen from a few dollars to more than $64k in the last decade. Many people predicted that the king coin will hit the $100,000 threshold. However, one of the most important investment guidelines is that “past success does not guarantee future outcomes.” That is unaffected by anything.
“To be sure, most people receive their salaries in smaller disbursements over the course of the year. This can mitigate some of the severe drops of a crypto paycheck by spreading out potential gains and losses over time,” Bloomberg added.
But what if there was a significant price change between the final day of the pay period and the day the payment was received?
“You might be making it out like a bandit,” said Mati Greenspan, founder and CEO of Quantum Economics. But if prices retreat, “you might also be shooting yourself in the foot.”
Moving on, most BTC holders were concerned about tax filings, let alone being completely rewarded with the flagship coin. Crypto paychecks may be a problem for both companies and employees due to complicated taxes computations.
Shehan Chandrasekera, CoinTracker’s head of tax strategy, stated:
“There’s always a difference between how much the employer paid for that coin versus the market value at the time they’re dispensing it as 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’s an example that properly encapsulates the situation. Due to the market drop, after he signed the contract, NFL star Odell Beckham Jr’s (OBJ) choice to take his $750,000 salary in Bitcoin appears to have cost him dearly. Given the aforementioned restrictions, OBJ was predicted to have profited 61% less than if he had taken his compensation in fiat.
Darren Rovell, a sports business expert and senior executive producer for The Action Network, had similar concerns.
The amount of people applauding players changing their salary into Bitcoin as if they were heroes has been comical. Rams WR Odell Beckham Jr., at least in the moment, provides a cautionary tale. — Darren Rovell (@darrenrovell) January 23, 2022
However, Bitcoin enthusiast Joe Pompilano (brother of influencer ‘Pomp’) was quick to counter this narrative. But it didn’t stand that way for long.
1. The deal was done on the 12th. 2. The aggregate payment has been completed. It doesn’t matter when he got paid. 3. There’s no accepting of any responsibility here. Like you calling everyone a “legend” for doing anything in Bitcoin.— Darren Rovell (@darrenrovell) January 23, 2022