Why Freelancers Are Choosing Crypto Over Traditional Payment Methods?

Apr 17, 2020
13:04
2 min reading

Choise.com team

Being your own boss, controlling your time, avoiding water cooler talks, working from your comfy couch, a hipster coffee shop, or a paradisiac beach in Thailand. No doubt there are plenty of reasons to become a freelancer, but working from any location is probably the best of them. Yes, it sounds amazing until, of course, it’s time to receive your well-deserved payment.

Whether you want to go full-time or use it as a side gig, freelancing opens you the doors to a world of opportunities. The labor market has leveraged new technologies to tier down office walls and allow people to work remotely from anywhere in the world. Payment systems haven’t been so innovative. While most of the available options out there will get the job “done”, in most cases, there are big disadvantages behind them: high fees for employers, long waits for workers.

Nowadays, there are basically three options for companies to pay freelancers: bank wire transfers, remittance platforms (e.g. Western Union, MoneyGram) and web-based services (e.g. Paypal, Skrill, Transferwise, etc.) While some of these players have been able to make minimal reductions to transaction costs, the vast majority of them rely on the same old SWIFT mdash; which keeps costs relatively high and blocks their ability to speed up the process.

High cost, but fast

Let’s take Paypal as an example. If you’re an employer sending 500 USD from the US to a freelancer in Spain, it would cost you a fixed $4.99 fee + 2.9% of the transaction amount. That’s 19.49 USD in fees. Oh, and don’t forget the nasty exchange rates.

High cost and slow…

Western Union would cost you 11 cents more. The remittance company charges 20 USD under similar conditions. In this case, your freelancer would get funds in 3 business days. Fast, eh?

Low cost, but still slow

TransferWise is certainly ahead when it comes to other payment methods for freelancers. Following the example above, they would charge ~$7 USD in fees and get the money from A to B in about 2 business days.

Yes, there is a low-cost AND fast alternative. It’s called digital currencies.

Work Digitally, Earn Digitally

According to a recent survey conducted by the jobs platform Humans.net, nearly 40% of American freelancers have used cryptocurrencies at least once. The same study also revealed that 1 in 3 freelancers would prefer to receive their payments in digital currencies rather than through the banking system.

Digital currencies are quickly gaining traction as they allow both employers and freelancers to save money and time. Most of the time, the cost of transferring and converting crypto is considerably less than the fees charged by all the alternatives mentioned above.

Over the past two years, Binance has transferred more than 200,000 BTC (~$12 billion) to cold storage. Can you guess how much they paid in fees? $5 for one transaction. Yes, SEVEN U.S. DOLLARS. Because, unlike traditional payment methods, fees for blockchain-based transactions aren’t linked to the amount sent but instead the amount of computer resources need to store the data. As for processing speed, sending this amount took only 8 minutes.

Time to get started? Crypterium is a one-stop solution for freelancers and employers using digital currencies. Payments are commission-free and they are all processed in seconds. If you are receiving payment in crypto (BTC, ETH, LTC,…), you can spend them directly from the app, paying bills, taxes, topping up your mobile. Need cash? Top up your global Crypterium Card, send it to any MasterCard out there or a bank account. The decision is yours.

The advantages of paying with crypto include greater simplicity in placing the transaction, user anonymity, no interruptions from intermediaries, and very low transaction fees.

Need An Invoice? No Problemo

At some point, both businesses and freelancers need to prepare invoices. Hopefully, a number of platforms now offer services that meet the accounting needs of those using cryptocurrencies as a payment method. From invoice creation to sending recurring invoices or tracking payments, these platforms make the entire invoicing process smooth and fast:

Blockonomics is the simplest way to create a peer-to-peer crypto invoice. You don’t even need an account to do it. Just go to the website, paste your wallet address, enter the amount and click “Create Invoice”. That’s it! Encryption technology prevents third parties from accessing accounting information.

Gilded is one of the most popular choices for businesses and freelancers handling crypto invoicing. The reason is simple: this platform offers a comprehensive approach to crypto accounting, enabling users to create invoices, request payments, keep contacts, process ETH and ERC-20 payments. It even allows you to convert funds to DAI stablecoin to keep you safe from price volatility.

CD Pay allows you to create invoices and select among numerous fiat currencies, including EUR, USD, GBP, CAD, AUD and JPY. You can also add an expiration date for the invoice. Once you’re done with it, you can save it in .PDF format and send it via email. The system generates QR codes for payments in bitcoin, litecoin, zcash, and monero.

Taxation: It Depends…

If you are seriously considering using cryptocurrencies for professional payments, make sure to check the official website of your local tax authority to understand the regulations in place. While some jurisdictions do not require you to report your personal cryptocurrency earnings, other nations keep a close eye on crypto holders.

Under U.S. tax law, bitcoin and other cryptocurrencies are classified as property and subject to capital gains taxes. But you only owe taxes when those gains are realized. … Similar to trading stocks, you only need to list gains you earn from bitcoin as income when you decide to sell.

Freelancing Is Here To Stay, Crypto Too

In Latin America alone, the freelance work mode is increasing at a surprising 180% annual rate as thousands of organizations are embracing this trend as a chance to reduce costs and provide additional support to their in-house work teams.

Freelancing has changed the way companies and workers interact with each other. This remote modality has given businesses the opportunity to hire qualified professionals from all over the world at competitive rates and give workers a chance to develop themselves in exciting and profitable ways without the need to show up to an office every day. The use of low-cost and fast payment methods such as digital currencies could only make it better.

Standard wire transfers and foreign purchases typically involve fees and exchange costs. Since cryptocurrency transactions have no intermediary institutions or government involvement, the costs of transacting are kept very low. This can be a major advantage for freelancers. Additionally, any transfer in crypto happens very quickly, eliminating the inconvenience of typical authorization requirements and wait periods.