Fiat currencies, by design, lose value over time.
As money gets printed, it becomes worth less and less. This is why, over time, you need to earn more and more money to buy the same goods or services.
In contrast, cryptocurrenices like Bitcoin cannot be printed, and they actually get harder to mine over time. This makes them more scarce, and therefore more valuable.
If you're getting paid in crypto, you're future-proofing your earnings. That said, whether you're a sole proprietor or a large corporation, you need to know how crypto accounting works.
How does crypto accounting work?
Traditional accounting relies on the double-entry bookkeeping system. This means that for every transaction, there must be two entries: a debit and a credit.
With crypto accounting, there's a third entry: A cryptographic hash. A cryptographic hash is a digital fingerprint that can be used to verify the authenticity of a transaction.
As the blockchain is a shared digital ledger, it can be used to track who owns what, and where the money is going. This makes crypto accounting more transparent and harder to manipulate.
Bulla Network is a Web3 accounting platform that automates the bookkeeping process for you. With Bulla, all you need to do is connect your wallet, and create a payable or receivable.
When a transaction is made, it becomes an immutable record that can be exported at any time.
How do crypto taxes work?
Crypto accounting isn't just about tracking transactions, it's also about paying taxes.
In the United States, the IRS treats crypto as property, not currency. This means that capital gains tax applies when you sell or trade crypto.
The good news is that Bulla can help you calculate your taxes owed. By being able to export your transaction history, you can easily see how much you've received or spent in a given year.
This information can be used to complete your tax return, and to make sure you're paying the correct amount of tax.
What is REA accounting?
Crypto accounting actually has roots going back well before the origins of the first cryptocurrencies. REA accounting is an alternative system that was created in the early days of the internet.
REA stands for Resource-Event-Agent. The resource is the thing that's being exchanged. The event is the act of exchanging it. The agent is the person or institution that's facilitating the exchange. REA accounting was a precursor for decentralized technologies like the blockchain. With REA, there is atomic transaction recording, and the system extends beyond accounting.
How to get paid in crypto
Whether you're looking to protect your earnings from inflation, simply believe in the future of crypto, or want to acquire assets at discounted prices, there are a few ways you can get paid in cryptocurrency.
First you need to set up a non-custodial crypto wallet through a provider like MetaMask. All you will need after that is the wallet address of your employer, then you can connect your wallet and start sending invoices through a Web3 native payments app like Bulla Network. Bulla accepts any ERC-2o token across more than 11 networks, including ETH Mainnet, Polygon, Avalanche, Arbitrum, celo, Ceramic and Harmony, among others.
Most blockchain businesses already have a system in place to pay their employees and contractors in crypto. If your employer isn't on board yet, you can try convincing them with the benefits of crypto payroll.
The likes of DAOs, DeFi protocols, NFT projects, metaverse companies, and many others are all paying their employees in crypto. So, if you're looking to get paid in crypto, there are plenty of options available.
Takeaways
A volatile macroeconomic environment, combined with sky-high inflation rates, has led many people to seek alternative ways to store their wealth.
Cryptocurrency is one such alternative. Thanks to its decentralized nature, crypto can't be printed or manipulated like fiat money. This makes it a more stable store of value.
If you're getting paid in cryptocurrency, you need to know how crypto accounting works. This involves tracking your transactions on the blockchain, and paying taxes on your gains.
Bulla Network is a Web3 accounting platform that automates the bookkeeping process for you. With Bulla, all you need to do is connect your wallet, and create a payable or receivable. Join our Discord to learn more.
