There’s no denying that cryptocurrency has become increasingly popular lately. There are many different forms of cryptocurrency, including Bitcoin, Ethereum, Dogecoin and many others. So while you may hear the terms cryptocurrency and Bitcoin used interchangeably, they are actually different things. Bitcoin is just one form of cryptocurrency, and there exist other types of cryptocurrencies.
Taking your pay in cryptocurrency
You may have seen news about celebrities and other famous people taking their pay in cryptocurrency. Incoming New York city mayor Eric Adams announced that he would take his first paycheck in cryptocurrency. NFL stars Aaron Rodgers and Odell Beckham Jr. also took some of their salary in the form of cryptocurrency.
If you’re thinking about getting paid in cryptocurrency, there are a few things that you’ll want to keep in mind. The first is that often, your employer will still pay you a salary based on US Dollars (or the local currency where you live). You’ll just immediately convert those dollars into cryptocurrency. That means while you do get the reward if your cryptocurrency goes up, you also bear all the risk if the value of the cryptocurrency drops. NFL star Beckham may have found that out when his $750,000 salary was estimated by some analysts to have dropped nearly 40% due to the fall in the price of Bitcoin.
The other thing to realize is that when you read about celebrities taking their pay in Bitcoin or other cryptocurrency, it may be that they are being sponsored by a crypto company. So Aaron Rodgers or Odell Beckham very well may have a sponsorship deal where they earn extra money by promoting a particular form of cryptocurrency, something the everyday person will not have access to.
Investing in cryptocurrency via your 401(k)
Another way that getting paid in cryptocurrency is becoming more popular is in terms of it becoming available as an investment option in your 401(k). Many 401(k) administrators offer a variety of different investment options, and there are an increasing number of plans that now offer cryptocurrency as one option.
Keep in mind though that cryptocurrency has historically been a very volatile investment, with wild swings both up and down. Depending on your risk profile, you may not want to put all of your retirement account into cryptocurrency. A better strategy might be to invest a portion of your 401(k) or IRA into cryptocurrency and keep the balance invested in traditional asset classes like stocks or bonds.
Using cryptocurrency in Mint
Mint supports tracking cryptocurrency as part of our investment tracking service. If you have crypto investments, you can easily track various forms of cryptocurrency within Mint. That will allow you to see how the changes in the value of cryptocurrency affect your overall portfolio and net worth.
The Bottom Line
Cryptocurrency has become increasingly popular over the past few years, and more and more employers are supporting employees getting paid in cryptocurrency. This includes both the option to take some or all of your salary in cryptocurrency or allowing cryptocurrency as an investment option in the company 401(k) plan. Before investing your money in cryptocurrency, make sure that you understand the risks and rewards and how it fits with your risk profile. As always, you can track your spending, investments and net worth with Mint.