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Risks and Rewards of Crypto Payments for Freelancers in 2022 

A growing number of businesses all around the world are adopting bitcoin and other digital assets for a variety of transactional, operational, and investment needs, undoubtedly, is leading us to a whole new era of digital payments. Like any newcomer, cryptocurrency payments bring a number of advantages and disadvantages for freelancers and business owners to accept or not accept crypto payments. Let’s discuss a few of those pros and cons below.

Like any newcomer, cryptocurrency payments bring a number of advantages and disadvantages for freelancers and business owners to accept or not accept crypto payments. Let’s discuss a best forex course few of those pros and cons below.

What is cryptocurrency?

In case you didn’t have a chance to get into crypto before here is a brief introduction to what is cryptocurrency.

Cryptocurrencies are digital tokens that do not exist in the form of physical tokens such as coins or notes. They are used in blockchain networks for electronic payment transactions.

A blockchain is a digital ledger made up of expanding blocks of data. Blockchains are maintained by “miners” that can be anyone. Within a blockchain’s distributed ledger, records are kept across multiple computers on a network. Each computer is called a node.

New transactions are added as nodes verify and store the data in a “block” of data after transactions are completed. Further, the block is placed in the chain. Thus, the entire ledger is updated as new transactions occur.

Completing of transactions requires payment of appropriate fees in the related cryptocurrency. Cryptocurrencies are stored in digital “wallets”, which are software applications installed on user computers or mobile devices.

Each digital wallet for a cryptocurrency, say a Bitcoin wallet, contains encrypted information in the form of files, called public and private keys, that are used to send and receive Bitcoins. Miners process crypto transactions in blocks by using encryption. The hashing method transforms a unit of data into a random string of numbers and letters. This encryption activity is known as a hash. The use of hashing makes data incredibly secure.

Miners lend their computing power to the network for hashing to complete transactions. They are rewarded with cryptocurrency.

There are two main types of wallets based on their connection to the internet: hot and cold. Hot wallets are connected to the internet and can be accessed via a browser or smartphone.

Software wallets are another name for hot wallets.

Cold wallets aren’t connected to the internet. They are hardware wallets that look similar to USB drives. Cold wallets are usually more expensive than hot wallets, but they are considered more secure. They are less susceptible to hackers since they aren’t linked to the internet. But that also means if a cold wallet with no backup is destroyed, cryptocurrencies stored on it will be lost forever.

Pros and Cons of Accepting Crypto Payments for Freelancers and Business Owners

As cryptocurrencies gain more widespread adoption many businesses decide to accept payments in cryptocurrencies. To be able to collect, store, and use cryptocurrency a business needs to have a crypto wallet.

Establishing a crypto payment gateway is the alternative to keeping a crypto wallet if a business plans to accept crypto payments and transfer these funds from sales into a regular currency (like US dollars or other fiat currency) before depositing them in its business checking account.

There are two main types of wallets: self-custody wallets, and hosted or custodial wallets (also called non-self-custody wallets.)

Self-custody wallets actually store “private keys” (mentioned above) that allow you to securely access your blockchain-based assets such as Bitcoin, Ether, and others. A public key, commonly referred to as the wallet address, correlates to each private key.

The public key acts as an identifier for an account on the blockchain network, like an email address that is shared. Funds are received by providing a counterparty with the wallet address – the public key.

Then the private key is used to sign and approve the transfer of digital assets. The private key is like the password for an email account. The private key is only accessible by the wallet’s owner.

A unique pair of public and private keys are thus used together to transact on blockchains.

And the majority of self-custody wallets produce them by utilizing unique algorithms.

So, in self-custody wallets only you have possession of your digital assets because you control the private key. You then have the responsibility to safeguard access to your private key because it is not stored anywhere else.

Using the self-custody wallet interface a business can check its balance, view transaction history, invest using Decentralized Finance (Defi) applications, and send digital assets to counterparts. It can also link the self-custody wallet to its bank and deposit digital money to a Compound Liquidity Pool. It is just like using a regular investment or payment application with additional security measures.

Based on the way they provide access to your digital assets, self-custody wallets are classified further into several types like mobile wallets, hardware wallets, desktop wallets, smart contract wallets, and paper wallets.

Mobile wallets are apps on iOS or Android phones, with the private key usually generated and stored on the device with backup and recovery options, depending on the app.

Separate, physical wallets called hardware wallets are designed to securely store private keys and authorize transactions. They usually look like a USB drive or thick credit card that can be linked to a computer, a desktop-based app can then be used to transact. Hardware wallets are considered the most secure because private keys are never exposed to the internet.

Desktop wallets are installed on laptops or desktop computers and private and public keys are generated on a desktop device then.

Smart contract wallets are programs deployed to the Ethereum blockchain.

They may be configured in many different ways, have a mobile app or desktop interface, and extra security features like daily spend limitations, additional approval from a reliable source or another wallet if transactions exceed a specific threshold, and sophisticated recovery methods. The browser or a mobile device generates private keys.

Paper wallets are physical paper copies or printouts of public and private keys. The public and private keys can be input using web-based applications.

Hosted or custodial wallets are provided by a third-party “host” who is responsible for protecting and storing your crypto assets. It’s a great entry-level option. The majority of hosted wallets restrict your actions to merely purchasing, storing, trading, and selling cryptocurrency.

Crypto payment gateways, on the other hand, are typically hosted or noncustodial wallets, which store funds from customer purchases made with crypto until you choose to convert those funds into regular money like US dollars and transfer them to a bank account. Since you are paid at the going rate at the moment of the transaction, the extra capability of changing the digital assets into fiat money and transferring the balance is practical. You won’t lose money if the value of the cryptocurrency falls while the transaction is being validated.

After a crypto wallet and/or gateway is set up, crypto payment on a business’ site can be enabled as an option in the checkout process through an Open source API or a Plugin/app depending on the business’ eCommerce platform.


  • Privacy & Security

Crypto assets were developed to provide higher security for private transactions by removing the need to use centrally controlled fiat currencies and by cutting out the intermediary banking layer. Taking these features as inherent privacy and security benefits of decentralized blockchain networks, the use of additional encryption or hashing provides a further enhancement to transaction security.

As was mentioned above, self-custodial wallet solutions are considered more secure since only you have possession of your private key – self-custody wallet providers cannot access your funds even if they make the wallet – the private key is generated on your device.

  • Accessibility

Fast and easy online transactions are also an inherent feature of crypto payments. Enabling crypto payments will also expand the market reach of a business as it simplifies international selling and currency conversion.

  • Irreversibility

Crypto payments are irreversible in the sense that once a crypto payment goes through, it is permanent – it can be refunded only by the party receiving the funds. This feature, on the other hand, means that businesses that accept crypto payments will have to manually pay a customer back each time when someone requires a refund.

  • Inflation protection

Cryptocurrency is considered immune from inflation in the sense that governments can’t manipulate the value of cryptocurrencies the way it can be done by expanding the supply of fiat currencies. The supply of most cryptocurrencies is limited by design. Bitcoin has a maximum supply of 21 million coins and 19,124,681 BTC was in circulation as of August 2022.


  • Volatility

Generally, high crypto volatility is one of the main undesirable features of accepting crypto payments. It is a well-recorded fact that prices of cryptocurrencies display much higher volatility over the same time periods compared with other asset prices. Bitcoin price, for example, more than halved in a three-month period after it hit an all-time high in late November 2021. So, keeping funds in crypto may involve considerable losses. The reasonable decision is then to transfer crypto payments into ordinary money after accepting crypto payments to avoid incurring crypto asset depreciation losses.

  • Tax Implications

The cryptocurrency market is undergoing close scrutiny by regulators in many countries currently. They are not regulated in many countries yet. There are no clear guidelines for crypto tax reporting in many of them. Businesses though need clear and practical rules for reporting on their transactions in crypto for their tax liabilities.

The uncertainty in tax regulation is a challenge when considering payments in crypto. For example, in the USA the Internal Revenue Service (IRS) considers cryptocurrency to be “property” for tax purposes. This means that if a business accepts cryptocurrency, it must report it as gross income based on its fair market value when it was received. This implies that each time a business sells, buys, or uses Bitcoin, it is subject to a capital gains tax.

Another implication is that the business must keep track of the value of each cryptocurrency on the day it was received and the day it was sold. This can quickly get complicated.


Accepting crypto payments as crypto is becoming more widely accessible looks promising for businesses as they may gain additional revenue by accommodating more payment types. It can also help expand market reach across national borders by simplifying international selling and currency conversion.

However, there are cons to consider, not least of which is uncertain regulation, including taxes on crypto. An answer to the question – do you have to pay taxes on crypto – is positive in the US, where crypto receipts are subject to capital gains tax currently.

Higher volatility of crypto valuations is another challenge for accepting crypto as payment. For many business owners, the high level of cryptocurrency unpredictability makes it simply unacceptable as a means of payment.

And of course, including crypto payments as a payment option for a business requires additional technological setup as mentioned above.

Businessmen have to consider the risks and rewards of crypto payments to determine whether they want crypto payments as an option for their businesses.

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