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Crypto-Talk With Chris Mentillo

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This week on Crypto-Talk with Chris Mentillo I would like to talk about Accepting crypto payments as a freelancer:

You render your services to clients, and you expect to be paid. And seldom, it is difficult to get paid on time or even get paid at all. So should you pursue adding yet another payment option to your current mix? Especially, one that is less in-the-know and comes with a certain measure of risk? 

The answer isn’t that straightforward. Thus, let’s dig a bit deeper into the matter and take a look at the pros and cons of accepting crypto payments as a freelancer. 

Pro: no currency exchange fees:

The major perk of freelancing is you can tap into the global pool of jobs and do business internationally. You can seek jobs in locales where your expertise is in-demand and where the compensation is higher. However, the cross-border nature of freelancing also comes with certain liabilities. 

There’s the whole process of figuring out how much you should charge in the foreign currency to compensate for the exchange rates and conversion fees. The Economist estimated that the average cost of sending the equivalent of $200 cross-border falls in the 4%-8% range, depending on whether you use a bank or a fin-tech company. And those processing fees add up, as you still have taxes to pay on top. As a result, you may end up with a much lower paycheck than originally anticipated. 

Accepting cryptocurrency instead means there would be no currency exchange fees or hidden payment fees. When you are paid in crypto, you pay a flat transaction fee only. Also, you have a choice to exchange your coins to a fiat currency when the exchange rate is good.

Con: cryptocurrencies are volatile:

Cryptos, by their very nature right now, are fluctuating in worth. What you are paid today may not be worth the same amount tomorrow. Or, on the contrary, double in price overnight. For instance, at the beginning of October, a Bitcoin was worth $8,333. At the end of the month, its price grew to $9,225. 

If you plan to accept cryptocurrencies as a payment option, you’ll need to become better versed in trading and investing. As prices change daily (and even hourly), the easiest way for lingering on top of things is to use a crypto trading bot. Such programs include trading strategies, and they can buy some of your coins and sell when the rate is more favorable.

Pro: you get access to more jobs:

Traditional freelance marketplaces (Upwork, Fiver, PeoplePerHour) are the first destination most freelancers head to when they need a new gig. As a result, the competition there has become fierce, with more talent than jobs available. The fees are also on the steep side (around 20% on average for new contracts), meaning that you can waste a lot of time canoodling clients and competing with others for a fraction of your standard project rate. 

So instead of doing what everyone else does, you can consider entering a more niche marketplace that supports payments in cryptos. Cryptogrind, Ethalance, and Crypto tasks are among the few popular marketplaces, offering a range of cross-domain gigs. As well, there are plenty of niche job boards for blockchain developers and crypto- specialists if that’s your turf. 

Con: payment processing time can belong:

If you are living on a tight budget, as a matter of fact, getting paid on time becomes critical. But blockchains can get jammed and the processing time for receiving your payment can be rather long. The Bitcoin blockchain can only process one megabyte of transactions every 10 minutes. That equals approximately 4.6 transactions per second. For comparison, Visa can handle over 1,700 transactions per second. 

Consequently, when a lot of people try to exchange Bitcoins at the same time, your transaction enters a virtual queue, and you have to wait just like everyone else. 

Pro: additional security:

Blockchain ledgers are not prone to hacks. There is virtually no way of tampering with the transaction, once it enters the decentralized ledger. Therefore, exchanging funds via cryptocurrency is often more secure than doing so via a third-party payment processor (e.g. PayPal). As well, hacking a crypto wallet is much harder than a standard digital one. So your stored funds will remain safer. 

Another major draw is that you can use blockchain to codify your agreement with the client. The two of you can sign a smart contract – a program that will record the terms and conditions you've agreed upon (e.g. due date, payment, etc) and automatically release the payment once all the conditions are met. Some freelance marketplaces are currently experimenting with adding such functionality. 

To sum up, accepting crypto payments may not be for everyone, as they come with a certain learning curve and financial risks. However, those who are ready to study a bit more about blockchains will benefit from access to more jobs (with less competition), more affordable cross-border payments, and a greater level of security; when it comes to getting paid on time.