What You Should Know before Accepting a Salary in Bitcoin

Nowadays, you can’t turn on a news website, watch television, or use social media without hearing about cryptocurrency. Bitcoin, as the most popular and well-known cryptocurrency, is dominating much of this discussion. Some businesses are even starting to pay employees in bitcoin. So, what should you do if you are offered a salary in Bitcoin? Here’s what you need to know.

Bitcoin Is Worth Less than It Was a Few Months Ago — A Lot Less

If you signed a contract to be paid in bitcoin in October 2021, you were probably feeling pretty great about yourself. For about a month, bitcoin hit a record high valuation of approximately $69,000 in November 2021. However, by mid-June 2022, bitcoin had lost a staggering 70% of that value. The overall market capitalization of crypto assets has fallen to less than $1 trillion from its November 2021 peak of $3 trillion.

This is perhaps the greatest argument against accepting a salary in bitcoin: it’s just too volatile. Since its implementation in 2009, bitcoin has simply never demonstrated widespread utility. It was marketed as a decentralized currency capable of democratizing global capital, but it has proven to be little more than an investment vehicle. People buy bitcoin not to spend it, but rather in the hope that its value will rise. Some people have become very rich doing this, but it appears that others may no longer have that option.

There Are Ameliorating Factors

Just because bitcoin is decentralized doesn’t mean it exists in a vacuum. The global economy has taken a big hit in the same period during bitcoin’s plummeting value. The value of bonds is sliding and we are now in a “bear” market. Even so, the devaluation of cryptocurrency has been vastly greater than other currencies and commodities.

Most people recognized, though, that bitcoin could not sustain the high valuations of late 2021. And while a 70% decrease is not what anybody involved wanted, this might be the kind of regression to the mean that’s required for bitcoin to be a practical currency. And it’s important to note that while bitcoin and other cryptocurrencies might be in trouble, this doesn’t mean there are no practical uses for blockchain, which can provide several benefits for e-commerce.

Bitcoin Is a Gamble

To accept bitcoin as your main form of income is probably unwise. However, if you have other ways of supporting yourself, such as other revenue streams or you’re independently wealthy, maybe it’s worth the gamble for you. But be forewarned, it is a gamble.

El Salvador was the first country to recognize bitcoin as an official currency, followed by the Central African Republic. This gamble has not paid off for El Salvador’s increasingly authoritarian president Nayib Bukele. From September 2021 to May 2022, the cash-strapped nation lost $40 million due to its investment in bitcoin.

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