Best Practices For Freelancers Getting Paid In Crypto
Afraid to get paid in crypto? Here are the best practices to protect yourself and your assets as a freelancer.
Last year, we saw major players like VISA, Worldpay, Checkout.com and Stripe add the ability to settle USDC transactions. And, JPMorgan completed its first live cross-border transaction on Polygon in November.
As more companies adopt crypto payment options for cheaper, faster, and secure transactions, it’s clear that crypto payments are going mainstream.
If you’re a freelancer looking to stay ahead of the game and offer your clients more payment options, it’s a good time to consider accepting payment in crypto.
Here are some of the best practices to protect yourself and your assets, and you’ll be well on your way to get paid in a safe and secure manner in the world of crypto payments.
1. Avoid Using On/Off Ramps To Hold Most Assets
As a freelancer, it’s important to minimize your risk when getting paid in crypto. One way to do this is to practice holding and managing most of your crypto in a self-custodied wallet.
Custodial financial institutions have been a constant source of fragility in financial markets. We saw how over $400 billion in terms of market capitalization was wiped out by the Terra crash, bankrupting many investors including Hodlnaut, Celsius, and FTX.
On/off ramp wallets, especially third-party custodial ones, should never be abused as treasury wallets. When you entrust your assets to a third-party custodian such as a centralized exchange, you are effectively giving up control of your private keys. This can put your assets at risk of being lost, stolen, or seized in the event of a hack, security breach, or other issue.
By using a self-custody wallet and holding your own private keys, you can ensure that your assets are safe and secure, and that you have full control over them. This helps to minimize your exposure to counterparty risk from custodians.
It’s worth noting that you should always backup your private key in multiple secure locations to ensure that you can always access your assets.
To further protect your private key from hacking or theft, it’s recommended to store it offline on a hardware wallet. This will prevent it from being accessed remotely.
Get Paid In Stablecoins
If you’re a freelancer who isn’t familiar with the crypto world, you can consider getting paid in stablecoins for a start.
Stablecoins, as their name suggests, are designed to maintain a stable value and are typically pegged to a fiat currency or other stable asset, such as gold. This makes them less volatile than other types of crypto like Bitcoin or Ethereum, which fluctuates in price.
In today’s economic climate, more businesses are turning to stablecoins to protect their assets from the effects of inflation. This shift towards stablecoins makes stablecoins an increasingly widely accepted form of payment.
At Request Finance, USD-denominated stablecoins account for over 60% of the crypto payments being paid by enterprises.
Stablecoins are resilient to price volatility yet cheaper and faster than traditional fiat payments. They are especially handy if you work with clients from different countries who want to pay you quickly and affordably.
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3. Protect Your Personal Information
Scams are a prevalent issue in the crypto space, and freelancers are not immune to them. Clients have carted away with the funds of unsuspecting freelancers through phony job offers and advance fee scams. These scams often involve a client requesting the freelancer to complete a job, but the client requires the freelancer to pay an advance fee before the work begins.
Recently, freelancer Arewa Lanre detailed how he nearly got scammed by a fake crypto exchange in his Youtube video, where the platform demanded that he verify his account by depositing $7500 in Bitcoin for activation.
To protect yourself from these types of scams, it’s important to be cautious when accepting job offers, particularly if they are unsolicited or seem too good to be true. Verify the identity and their contract details before sharing personal information, such as their wallet address or private keys, with clients or third parties.
4. Use An Escrow Smart Contract
An escrow smart contract can be a great way to avoid non-payment scams and outline the terms of payment and work. Think of it like a neutral third party that holds onto the payment until the work is completed and both parties are satisfied.
As a freelancer, you can use an escrow smart contract to ensure that you are properly compensated for your work. Upon agreeing to the terms of the project and payment amount, the client would deposit the payment in the escrow smart contract. Once the work is completed and both parties confirm it, the payment would be automatically released to you.
By using an escrow smart contract, it provides a level of security for you. They are transparent and recorded on the blockchain, so both parties can see that the funds are being held in escrow and that the terms of the contract are being met.
Plus, it eliminates the possibility of human error or bias, making it more cost-effective and faster than traditional legal contracts.
Using Request Finance, you can invoice your clients in crypto with built-in escrow functions.
5. Monitor Your Wallet Balance Regularly
Finally, it’s important to stay on top of your crypto transactions and protect your assets.
Regular monitoring of your wallet balance ensures that you have an accurate record of all transactions and that you’ve received the correct amount of crypto for your work. This is especially important if you’re working with multiple clients or projects.
By keeping an eye on your balance, you’ll also be more likely to notice any unauthorized transactions or movement of funds. It can help protect you against hacking or theft.
By following these best practices, freelancers can be protected from the unique challenges and risks associated with crypto payments. As the use of crypto continues to grow, it’s crucial for freelancers to stay informed and adapt to this evolving technology in order to stay competitive.
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