Most of the internet available material on the utility of cryptocurrency seems to lean towards how to get rich as a speculator, or how to 'bring down the system' and become Cypherpunk Libertarian. What if you're neither an extremist or opportunist? If you're just a regular person running a business or earning wages where to do turn to for crypto information?
Well first you should confirm that you've chosen the right 'crypto class' for your endeavors.
Libertarian Barbarian
The Libertarian Barbarian aka Cypherpunk Libertarian is usually using crypto to 'overthrowing the system', not pay taxes, be untraceable etc. through the use of no-KYC bitcoin and privacy coins. This is a 'high risk' personal lifestyle use of cryptocurrency. To engage in this crypto philosophy involves breaking a number of laws and hoping you can outrun their enforcement. Like the classic fantasy barbarian, this class excels in apocalyptic environments but is somewhat out of place in average society. I don't provide advice for this class as it’s not even a tax complaint lifestyle to begin with.
Rogue Trader
Looking to make a fast dollar by 100x leveraging the latest copy paste fork, the Rogue Trader skulks in the darkest discords and telegram channels trying not to get robbed via rugs and exploits before dumping their coins for dollars. Like the classic fantasy Rogue (formerly known as Thief) the Rogue Trader isn't necessarily a criminal themselves but gets a bad reputation for being associated with notorious actual criminals and scammers. Unlike the Libertarian Barbarian, whose nemesis is the government, the Rogue Trader's enemy tends to be other traders, especially new ones. There is tons of material out there for traders, as that is who exchanges market to. I don't provide advice for this class either, there are way better traders than me out there.
Earner Fighter aka Crypto Earner
The Earner Fighter aka the Crypto Earner is "everyone else". They are people who just generally dislike using banks, paying 3% credit card processing fees, slow transaction times and having no privacy. Regular people who just don't want to be audited by the tax man versus joining the digital whiskey rebellion. Crypto Earners are boring, just like the fantasy class of Fighter. They are just "there", grinding out battles, neither in the spotlight or on the casualty list but make it to the end of campaign regardless. It's not glamorous, but being boring is a great plan for anyone with a time horizon of more than 3 months. This is my favorite class, and who I prefer to advise.
What about HODL'ers?
Holders (HODL is not a word) don't get a class. They are Crypto NPCs. Holders largest dilemma is not losing their keys and so they don't really need advice.
Being a Crypto Earner
The basics of being a Crypto Earner involves using crypto as actual money. Using it as money involves using it to pay for goods and services, or be paid for producing those goods and services.
Being a Crypto Earner in a part of the world where bureaucracies either don't exist or are ineffective is actually easy. It is only a technical hurdle of setting up wallets and payment integrations. There are no tax, or banking, or regulatory barriers to climb because they don't exist or no one complies with them. This is why you can see quick adoption in south america, or africa or parts of the carribean.
Being a Crypto Earner in the USA, which I'm going to focus on, is more challenging. The barriers to adoption are high because the compliance burdens are high. Being an effective Crypto Earner requires you to be able to navigate taxes and accounting as a user, along with volatility risk. That risk and challenge varies with each way you act as an earner. Some of the ways to act as a Crypto Earner involve mining, wages as an employee or income from a business.
Earning through Mining
Earning through mining is the most simple route to being a Crypto Earner, but it is unfortunately capital and regulation inefficient. Buying and deploying miners are means deploying savings now and hoping to out earn returns on it later. It is also incredibly tax inefficient under current rules. Mining income is treated as self employment income, which incurs an extra self employment tax, despite it being a passive activity and requiring passive capital as it's main input component. What about staking instead of mining? The treatment of staking rewards is like earning interest on fiat capital but with uncertain tax treatment. It is also just earning more on existing crypto, so is more of an 'investor' strategy than an earning strategy and so I would consider it outside the scope of this article.
Earning through Wages
Earning through wages is the most accessible route currently and it is simple. It doesn't put your existing savings at risk, and forces you to only invest part of your earnings over a longer period of time. You don't need to negotiate part of your salary with crypto like a pro athlete to be paid in crypto, in fact your employer doesn't need to know that you would like to get paid in crypto at all. One of the most publicized methods is using "coinbase direct" or now even something like Robinhood but you still have to manually buy a coin after a deposit. My favorite is Get Hedge, where it will use your paycheck deposit to both buy the coin of your choice and send it to an external wallet that you indicate.
Earning though Business
Running a business that gets paid for goods or services is a third way to be a Crypto Earner. The 'how' of doing that is a multiple article endeavor though, so be on the lookout for further posts. In the meantime, if you have an S or C corporation you can direct your salary through the wage earner route.
Using Earned Crypto
Now that you have crypto, now what? Should you have a boating accident and declare it all lost? No. You are not a Cypherpunk Libertarian, you are a Crypto Earner. Your next job is to track your cost basis. Your cost basis is critical to paying the correct amount of tax on your cryptocurrency. Tracking your basis will ensure you don't overpay on taxes each time you sell your coins. A third party 'coin tax tracking' software option will serve you best for this, and at low cost. The only tax software I would not recommend is Taxbit ( here’s why ) and the one I prefer is Crypto Tax Calculator. As long as you aren't being wild with Defi, this should be a simple endeavor that you can keep up with with each paycheck. If you track your basis, come tax time you can confidently check the 'crypto box' on your tax returns instead of sweating about if you are going to lie on your tax return and go to prison for perjury and tax fraud.
Direct Pay
Direct Pay is finding ways to spend crypto that involves sending coins from your wallet to the vendor's wallet. You can ask if local businesses or tradespeople will accept crypto as well as search for directories and maps for businesses that accept direct payment. Bitpay also has a great directory.
Gift Cards
Gift card spending is a way to convert crypto to fiat that avoids having to KYC yourself. Bitrefill is probably the most famous, but there are many options. The tradeoff is that you are limited to 'big' names, but sometimes there are also promotional deals where you can get bonuses from the vendors. For a brief time in 2022, Bitrefill even had a "bill pay" service that you could use to pay utility bills, local taxes, credit cards, utilities and mortgages. It's been suspended due to 'partner issues' but here's hoping it comes back.
One special Gift card-ish vendor is Pay with Moon. They offer speedy, KYC less creation of prepaid cards using coinbase, BTC on chain or BTC lightning cards…but between the time I drafted and posted this article they have shut down due to banking partner issues.
Card Pay
Card pay is a third option to spend your cryptocurrency. Exchanges like coinbase have debit cards that allow you to spend crypto as fiat, bitpay, litecoin foundation and many others have these options as well. The downside is that it puts you back into the mastercard/visa system but the updside is that you can use it anywhere, and that it makes it easy to withdraw cash from ATMs.
Offramping
Last, offramping, is the most straight forward but slowest and least 'disruptive' option to use your cryptocurrency. This is simply requesting an ACH or wire transfer from a centralized exchange like coinbase or kraken to your 'regular' bank account. This can take 1-5 days, and some people have had banks close their accounts when they interact with cryptocurrency exchanges. Robinhood is my current favorite as it's fast and it's fees are low to none. Converting coins outside of exchanges to USDC stablecoins then to fiat is the least confusing for tax reporting. The USDC offramp method and why it is the lowest hassle for tax reporting would be another good article topic for me to cover another day.
Conclusion
Now that you've earned, tracked and spent your crypto you've completed the 'circular economy' trek, maybe even without having to involve a bank. Congratulations.
This article is an introduction to just being a Crypto Earner, especially a wage earner. I would love to cover more, but it makes sense to split it up into individual topics instead. Look for a future article on being a Crypto Earner with business income.
Expect more articles with more detail and updated links as I produce more detail.
Thanks for reading!