JP Richardson, the CEO of Exodus, a crypto wallet platform, gets paid in bitcoin. He also pays his roughly 270 employees the same way. They aren’t the only ones. Football stars Aaron Rodgers and Odell Beckham Jr. have taken at least a portion of their salaries in bitcoin. Then there are the mayors: Miami Mayor Francis Suarez said he’d take his entire $97,000 salary in bitcoin with the controversial hope of attracting crypto investors to the Magic City. Not to be outdone, New York City Mayor Eric Adams took his first three paychecks in a mix of bitcoin and ethereum. With such big names backing bitcoin paychecks, they’re officially a trend. It’s no surprise, then, that according to a recent survey, more than one-third of millennials and half of Gen Z respondents said they’d prefer to get parts of their salaries in bitcoin.

“Employees want more flexibility, and they want autonomy in all aspects of their work life. Being paid in cryptocurrency is an extension of this shift,” Phillip Bauknight, chair of the Fisher Phillips Cryptocurrency and Blockchain Taskforce, said. Bitcoin payments allow workers to be paid instantly, without an intermediary financial institution. The cryptocurrency has also proven to be a sound long-term investment: Bitcoin is the best performing asset of the past decade, appreciating over 31,000%. Members of the tech-savvy generations who believe bitcoin is the future are vying to ride this momentum.

But taking a salary in bitcoin has its drawbacks. Among them: volatility. While taking a paycheck in bitcoin might sound cool, it requires some knowledge of this risky asset and careful budgeting for anyone who isn’t a mayor, CEO, or future Hall of Famer.

When Richardson got his biweekly paycheck on December 1, 2021, he was sure the price of bitcoin would go up. Bitcoin had notched a new record high over $68,000 in November and then dipped. So he didn’t cash any of his crypto paycheck. “All December, it just went down, just down,” Richardson said. Bitcoin closed out December with a 19% drop, its largest monthly loss since May 2021. As the value of crypto fell, so did Richardson’s paycheck. It ended up losing almost 20% of its value. Adams also lost money during the crypto market crash. According to a New York Post analysis, he lost more than $1,000 of his first paycheck (he takes home about $5,900 for biweekly paychecks, based on average tax withholdings).

To get technical, Adams, Suarez, and Richardson aren’t actually being paid in bitcoin or ethereum. Rather, they’re having their paychecks immediately converted into crypto. Richardson said Exodus holds approximately 1,300 bitcoins, which accounts for almost half of his company’s balance sheet. On payday, the crypto software company, which requires all the employees to be paid in bitcoin, exchanges an employee’s wage from US dollars to bitcoin and sends it to the employee’s crypto wallet.

Unlike Exodus, the New York City government doesn’t own any bitcoins and it isn’t allowed to pay workers in cryptocurrency. Adams had to get creative and convert his salary into bitcoin and ethereum by using Coinbase. And Suarez has said he uses Strike to convert his salary into bitcoin. Basically, they’re using their salaries to buy a few coins. David McCarville, a trusts and estates attorney at Fennemore, compared being paid in crypto to setting up recurring buys of a stock for the purpose of long-term investment. “You’re not timing the market and for entry points,” McCarville said. “I think a lot of investors believe that type of investment strategy…is better than attempting to time the market.”

Getting paid in bitcoin isn’t for everyone. Richardson said his loss “sucks” but added, “I can afford to do that.” Adams doesn’t appear to be upset either. “When you are a long-term investor, you don’t keep your eyes on your portfolio,” he told CNN.

But Richardson and Adams aren’t living paycheck to paycheck: They operate on the higher end of the risk spectrum and don’t need to liquidate their crypto checks immediately to buy groceries or pay rent. But for average people, that loss can be a lot harder to absorb.

Take Richardson’s employees at Exodus. They live across the globe, so when payroll happens, they’re often asleep. By the time they wake up, there could have already been a fast and unexpected downward swing, instantly cutting the employee’s salary. Exodus provides a 3–5% buffer to account for volatility of bitcoin price and exchange fees, but it’s common for bitcoin to increase or decrease in price by 5% or even 10% on any given day. Richardson encourages his employees to sell most of their bitcoin upon receiving it to cover daily expenses.

Exodus employee Allysa Howell chooses to convert 90% of her bitcoin paycheck to dollars within 24 hours of payday. “I take 10% right now of my monthly pay…and play with it within my wallet,” Howell said. “That’s my risk tolerance.” “Living within your means and carefully budgeting” should be prerequisites for anyone interested in accepting a crypto salary, McCarville said through a spokesperson.

Crypto’s volatility could present other challenges beyond loss. Fisher Phillips’s Bauknight warns that paying employees in bitcoin is a gray area. “​​Cryptocurrency doesn’t fit neatly into the boxes of existing statutes and regulations,” he said. The Federal Fair Labor Standards Act requires employers to pay a minimum wage. If an employee is paid right after a market pullback and the crypto loses a substantial portion of value, a disgruntled employee could argue the employer violated minimum wage laws. Tax implications are another hurdle an employee needs to navigate: The ups and downs of cryptocurrencies mean employees risk getting taxed based on payments that have subsequently dropped in value. If one makes a profit selling the coins, it is also subject to capital gains tax. The Internal Revenue Service doesn’t care that Adams lost $1,000; he’ll still be taxed on the $5,900 paycheck.

Despite all the headlines about celebrities taking their pay in cryptocurrencies, there isn’t much one can do with the crypto check. Trying to live on bitcoin is unrealistic for most people. Howell, who lives in Colorado, has the option to pay for her mortgage in bitcoin after she closes on her house purchase. But she still can’t walk into a Starbucks and pay for her coffee with bitcoin.

“Personally I think it is more of a marketing gimmick,” said Alex Taub, founder of Upstream, a platform where anyone can start and run a decentralized autonomous organization (DAO). Upstream currently doesn’t pay employees in crypto. “So far no one has asked,” Taub said, but he conceded that, as crypto becomes commonly accepted for necessities like rent and gas, “then maybe it might make more sense.”

But the digital infrastructure still needs to catch up so Adams can use his crypto to pay for the subway or Suarez can pay for cafecito. Until that happens, a bitcoin paycheck isn’t the most practical option.