Disclaimer: Cryptocurrencies are risk assets and investing in them is highly speculative. This article is not a recommendation by LibertyLancer or the writer to invest in cryptocurrencies or other cryptoassets, nor does it constitute financial advice.
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Freelancers and digital nomads are two overlapping groups who can benefit greatly from cryptocurrency and the decentralized finance (DeFi) tools it offers. Traditional finance companies like banks or payment providers charge high fees, are often slow, and can block access to their tools (and your own money) at a moment’s notice.
On the other hand, cryptocurrency provides numerous features that can benefit those who travel frequently, manage their own business finances, and want to make the most of their funds – all without any intermediaries or interruption. Find out below exactly how crypto can make your money go further.
5 Ways to Benefit From Crypto and DeFi
Earn (Higher) Interest
It’s no secret that bank interest rates have dramatically deteriorated over the years. So-called “savings” accounts are advertising annual rates of 0.05% (APY) – nowhere near enough to even keep up with inflation. This essentially means you’re losing money by keeping your savings in an account like this.
With crypto, and specifically centralized finance (CeFi) and decentralized finance (DeFi) platforms, you can access far better interest rates. This way you not only match inflation, but even earn on top of it.
Keep in mind that neither of these options are risk-free, with DeFi having added risk over CeFi (but even higher rewards). However, some CeFi platforms have added safeguards – for instance, Voyager is FDIC insured for up to $250k, while BlockFi is backed by Gemini exchange, which simply has deep pockets. However, remember that these platforms are not risk-free. For instance, in June 2022, Celsius had to pause customer withdrawals due to apparent overleveraging and mismanagement of funds.
At the time of writing, the CeFi platforms below offer the following annual rates to keep your money with them. If you prefer to avoid the volatility of the cryptomarkets, I recommend using a stablecoin (I use USDC) to do so – these are cryptocurrencies that are pegged 1-1 to the US dollar.
When you want to cash out you can simply sell the stablecoin back into your fiat currency of choice and withdraw.
Due to the rapid change and added risk of DeFi versus CeFi, I won’t make any official DeFi recommendations here. However, The Crypto-Conundrum has a good introductory DeFi section, and Route 2 FI on Twitter frequently posts new DeFi strategies to take advantage of.
Get Paid in Cryptocurrency
High fees, slow transfers, and account restrictions, are just a few of the downsides to traditional payment providers.
On the other hand, getting paid in crypto has some benefits you might not be aware of:
- Instant payment – Getting paid with crypto is a matter of seconds or minutes, rather than the days you might experience with traditional payment providers or banks.
- Low (or zero) transaction fees – Depending on the network, you (or your client) can make/receive a payment for extremely low or even zero fees.
- Available to “unbanked” individuals – There are zero barriers to getting your own crypto wallet to accept payments, unlike traditional payment providers or banks.
How To Get Paid in Cryptocurrency
- Choose a cryptocurrency and network to get paid with.
I recommend using USDC (a $1-pegged stablecoin) to avoid price volatility, and either the Polygon or Binance Smart Chain networks for speed and low transaction fees.
- Set up your wallet.
You can either choose to self-custody your funds, or receive payments directly to your exchange wallet. Keep in mind that while self-custody gives you full control, it’s also a little more complex. There’s nothing wrong with initially using an exchange before migrating to your own wallet.
- Give the sender your wallet address and network info.
Send your public wallet address (never send your seed phrase or private key to anyone), and the network you’d like to receive the crypto on.
Note that once your client has your wallet address, they’ll be able to see all the transactions that take place on this account (due to the open ledger). For this reason, it’s worth using an individual wallet for each client. You can then send your received payments to an exchange to sell or move them elsewhere so you break the observable flow of your funds to your clients.
Recommended Cryptocurrency Wallets
Hardware wallets are far more secure than software wallets since an attacker needs physical access to the device and your associated password to access the stored funds.
The following are my 3 top choices in hardware wallets – be sure to check the website of each provider before buying to confirm they support the cryptocurrency you use.
Here are some recommended software wallets and their supported crypto networks. Keep in mind that transaction fees and network speeds differ per network – stay away from the main Ethereum network if you want to avoid high fees.
|Wallet Provider||Supported Networks|
|MetaMask||Ethereum, Arbitrum, Avalanche, Fantom, Harmony, Polygon (Matic), Binance Smart Chain, and several more|
|Coinbase Wallet||Ethereum, Bitcoin, Arbitrum, Avalance, Polygon (Matic), Dogecoin, Litecoin, Stellar Lumens, and Ripple|
|Liquality||Bitcoin, Ethereum, Rootstock, NEAR, and Polygon|
I highly recommend using a hardware wallet to store your crypto – they pay for themselves extremely quickly and are invaluable in keeping your funds secure.
Store Your Income in USD ($)
If you get paid in a national currency that’s already weak or in the process of devaluation (Venezuela comes to mind), you can say goodbye to a whole lot of your money’s value in a short amount of time. One way of avoiding this is by converting your income into USD – arguably the strongest store of value of any global fiat currency. However, depending on where you live, getting access to a US dollar account can be a challenge.
A way around this is to convert some of your income to a USD-pegged stablecoin which you can sell back into your desired currency as and when you need. I use USDC, since multiple audits have proven it to be backed 1-1 by dollar-denominated assets. It’s also founded by two heavyweights in the crypto industry – Coinbase and Circle – granting it further legitimacy.
Click here to see my list of recommended exchanges below to buy into and sell out of USD stablecoins. Once you’re in a stablecoin, you can also look into earning interest on your crypto holdings to further compound your earnings and beat inflation.
Of course, the main reason for the popularity of cryptocurrencies is their extreme price volatility. These are assets that can appreciate several hundred or even thousands of percent in a single year. This makes them considerable asymmetrical bets – a small amount invested can become a significant amount in the right project. Of course, this volatility exists to the downside as well as the upside, making cryptoassets risky picks compared to your traditional investments.
Due to this risk, I don’t recommend you go all-in, but it can’t hurt to hold a small percentage of your investments in crypto. If you’re not familiar with any crypto exchanges, below are some good picks. They each have a good selection of altcoins, various supported networks, and a pleasant user experience so buying your first cryptocurrency is as simple as possible.
Even if you don’t want to invest, the following are all good picks to sell your crypto payments back into fiat. Just ensure you use a strong password when signing up and set up two-factor authentication (2FA) as soon as possible.
|Binance||Cayman Islands||• Huge altcoin selection|
• Low fees
• Ability to stake your crypto for interest
• Limited selection for US users
|Coinbase||US||• User-friendly interface|
• Headquartered and regulated in the US
• Ability to earn free crypto
• Higher than average fees
|Kucoin||Singapore||• Wide selection of altcoins|
• Low fees
• KYC not necessary until you reach high withdrawal limits
• Not licensed in the US
|LocalBitcoins||Finland||• Peer-to-peer crypto exchange|
• Escrow system
• Fees only for advertisers (a.k.a. makers)
If you want to learn more about cryptocurrencies overall and how to invest in them, Josh Weintraub at The Crypto-Conundrum put together a well-rounded beginner guide on how to invest in crypto and a whole lot more.
FAQ – Crypto and DeFi for Freelancers
Cryptocurrency can be converted to cash in multiple ways. The easiest way is to sign up for one of the recommended cryptocurrency exchanges above and simply sell and withdraw your crypto there. You can also buy items with crypto directly on certain websites, or even sign up for a crypto debit card to withdraw from ATMs or pay in stores.
Getting paid in crypto has several benefits, primarily the extremely low fees, near-instant transaction speeds, and the ability to be your own bank. You also don’t need to worry about price volatility since you can be paid in a USD-pegged stablecoin that doesn’t fluctuate in value.
You should agree with your client on which both of your preferred cryptocurrency and network is. To avoid volatility, I recommend using a USD-pegged stablecoin like USDC. Polygon and Binance Smart Chain are also two networks that support USDC while offering extremely low fees and fast transaction speeds.