Basenode — The journey to crypto salaries — From the wallet to the transaction
by Valentin Kalinov on Aug 18, 2022 1:01:00 PM
When I first started getting familiar with crypto I was shocked about the number of new terms and concepts I had to memorize and understand. A lot of questions came up to my mind and it was difficult to differentiate between priority information and just the tons of content I could acquire with a bit more time. In this article, I will walk you through the essential theoretical points that will allow you to start with crypto salaries or become a crypto freelancer.
Author: Carmen Rodriguez
Introduction to wallets
What is a wallet?
It can be a software program or a physical device. In any case, it will enable you to store your crypto and send/receive transactions. A wallet comprises your addresses and two key pairs: public and private keys.
It is like the password to your online bank. A private key must not be shared with other people because by doing that you give them full access to initiate transactions.
It is like your bank account number. You will give this to your employer when you want to receive money from him.
It is a group of numbers and letters randomly generated that derivate from the public key. You can create as many addresses as you need. For example, the first Bitcoin address ever looks like this: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa.
Once you have your wallet you will be ready to do two things:
- Receive money: In order to send crypto or other tokens to another user, you will need their public key or their address. These can often come in the form of a QR code.
- Send money: If you want to receive money you can just share your public key with the issuer.
Types of crypto wallets
You can classify your wallets regarding their connectivity in hot and cold. Hot wallets are connected to the internet and therefore less secure, but they are usually more user-friendly. An example of a hot wallet is Metamask. A cold wallet, on the contrary, is offline. This characteristic provides the wallet with more security and it is perfect for bigger amounts or long-term holdings. An example of a cold wallet is Ledger nano x. If you are looking for something you can set up fast and use for your daily transaction, it is more convenient to use hot wallets.
Another way to classify wallets is based on the location of the storage:
- Hardware wallets: These are devices that can look similar to a USB-stick and individually handle your address and keys. It doesn’t have a battery in itself so you will need a computer to access it. Its price goes from 70 to 200 euros.
- Paper wallets: It is a printed QR code. It is impossible to hack but it has other flaws such as having to generate a private key, the characters can fade over time, or not being able to send partial funds.
- Desktop wallets: It consists of software you can download to your computer to keep your cryptos. They are connected to the internet so you will need an antivirus and they are considered hot wallets as you can see in Figure 1. An example of this wallet is Exodus.
- Mobile wallets: A really convenient option is mobile wallets since you can always have them accessible on your smartphone. They are practical for daily operations but also riskier since you have them on you all day.
- Web wallets: You can access this type of wallet via your internet browser. These are considered custodial wallets since you are trusting a third party holds your private key and funds. The most common custodian wallets are web-based exchange wallets. They are less secure.
Now that we have an overview, let’s jump into paying your first crypto salary. You can start with a pilot program. Ask your company how many people would be interested in getting paid partially or fully in crypto. Talk with your employees about the payment conditions and reflect them in the contract. What type of cryptocurrency do they want to receive? Bitcoin, Ether, or stablecoins that are less volatile? Another important point is making your employees aware of the tax implications of receiving their salary in crypto.
Send the agreed crypto — Case Study
Charly is the CEO of Computers 3000 GmbH and wants to pay his employee Max in crypto. The quantity agreed is 1500€ in bitcoin.
- Charly opens his mobile wallet and checks it contains the necessary funds. At the moment the exchange rate is 0.000040 so he needs 0,0653 BTC.
- In his wallet, he has other tokens such as ETH, ADA, and SOL. He selects bitcoin and presses “send”.
- Now he scans the public address of Max which he got in a QR code.
- He types the desired amount and double-checks the address since the transfer is irreversible.
- He clicks “send”.
This procedure is the same for all cryptocurrencies so once you learn it you can apply it for different payments. Even when you want to transfer money between your wallets it is the same modus operandi. If this is your first time doing this type of transaction it can be useful to do testing with a small amount of money.
Each country has different legislation regarding blockchain accounting and it is important that you check the situation at the end of the year. For example, in Germany, if you are a fixed-salary employee you can only receive around 10% of your salary in crypto but if you are a freelancer is easier. With basenode.io you can have access to transaction reports and balance reports among others which will simplify this process.
The concepts we reviewed today are some of the tools that will guide you in the journey of being in control of your assets. Once you create your first wallet, you can easily connect it to basenode.io. Crypto salaries are growing in popularity and the amount of talent you can attract to your company will be connected to salary conditions.
The classification of BTC according to the ITC:
Economic Purpose (EEP): BTC is listed as a Unpegged Payment Token(EEP21UP) similar to the other payment tokens in the industry.
Industry Type (EIN): The issuer of BTC is active in the field of Payment Services and Infrastructure(EIN06PS).
Technological Setup (TTS): BTC is a Blockchain-Native Token(TTS41BC).
Legal Clam (LLC): The BTC token does not entitle its holder to any legal claim or rights against the issuing organization, therefore it is listed as a No-Claim Token(LLC31).
Issuer Type (LIT): The dimension “Issuer Type” provides information on the nature of the issuer of the token. The Bitcoin infrastructure is built by a community of developers which are not represented by a company, therefore BTC as listed as a Distributed Ledger Protocol(LIT62DL).
Regulatory Framework (EU) (REU): The dimension “Regulatory Status EU” provides information on the potential classification of a token according to the European Commission’s proposal for a Regulation on Markets in Crypto Assets (MiCA, Regulation Proposal COM/2020/593 final). The BTC token qualifies as a Other In-Scope Crypto Asset(REU51ZZ) according to the definition provided in Article 3 (5) of Regulation Proposal COM/2020/593 final.
The International Token Standardization Association (ITSA) e.V.
The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.
- The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
- The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to the market capitalization of classified tokens.
- ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.
If you like this article, we would be happy if you forward it to your colleagues or share it on social networks. More information about the International Token Standardization Association can be found on the Internet, on Twitter, or on LinkedIn.
At basenode.io, our mission is to eliminate the gap between traditional accounting and blockchain-based accounting. basenode.io is the easy-to-use accounting solution for digital assets that offers seamless crypto invoicing and portfolio tracking. We provide a self-explanatory user interface with a clean and modern look, that naturally supports your workflow. We support the most popular networks like Bitcoin, Bitcoin Lightning, Ethereum, Binance Smart Chain, Polygon, Ronin Chain and more.
Carmen Rodriguez is the executive assistant at basenode.io and community manager. Before, she worked in educational entrepreneurship for one year. Besides her degree in business administration, she holds a master’s in social innovation. You can contact her via LinkedIn.
This article was originally posted at: basenodeio.medium.com