New York's New Mayor Wants First Three Paychecks in Bitcoin

Eric Adams confirms he'll get his wages in crypto. Should you follow suit?

Not only does New York mayor Eric Adams want his first three paychecks in Bitcoin (BTC), he's also telling people to buy the dips. Bitcoin fell to its lowest point since late September yesterday, according to CoinMarketCap data. Speaking to CNBC, Adams said: "Sometimes the best time to buy is when things go down, so when they go back up you make a big profit."

The newly elected mayor wants to make New York a more attractive crypto destination. But he may have his work cut out.

For a start, getting paid in Bitcoin is not as simple as it may seem. New York isn't set up to pay its employees or officials in anything other than U.S. dollars. Apparently, Adams -- who hasn't yet received his first paycheck -- will need to use a crypto exchange to convert his pay.

Plus, New York has some of the strictest crypto regulation in the U.S. Cryptocurrency exchanges need a BitLicense to operate in New York, which can be very hard to get. And the New York Attorney General's office has taken a hard line in crypto enforcement, promising to crack down hard on bad actors.

Adams is not the only mayor who wants to get paid in crypto. Miami's mayor Francis Suarez has made similar comments as part of his mission to make Miami a crypto capital.

Should you ask to get paid in Bitcoin?

Several prominent sports personalities have joined Suarez and Adams in asking for crypto salaries. However, it isn't something to enter into lightly -- especially for city and state salaries. Indeed, it isn't clear whether the cities' payrolls can pay either mayor in Bitcoin.

Legalities aside, accepting a Bitcoin salary means being prepared for volatility. Your salary could be worth 20% less this month than it was last month. Since you probably don't pay for rent, groceries, or other day-to-day costs in crypto, this could be problematic.

Then there's taxes. The IRS treats crypto as property, which is taxed differently from a currency. You'll have to track each crypto transaction and potentially pay capital gains tax when you sell or spend your assets. Let's say you take your salary in Bitcoin, and then use some of that BTC to buy a meal. That would be a taxable event.

You also need to factor in the risk. We don't know what will happen to the cryptocurrency industry in the coming years. It may go from strength to strength and produce incredible returns. But it may not. You need to consider what proportion of your salary you want to put into a high risk asset class.

What about buying the dip -- is it a good idea?

With a volatile investment like cryptocurrency, buying the dip can make sense. We all want to buy low and sell high, but it is often easier said than done.

One challenge is timing the dip and knowing how deep it might go -- or conversely, predicting the highs. For example, if you'd bought Bitcoin yesterday, there are no guarantees the price won't fall further (as indeed it has). Or you may end up always waiting for a low that never comes and not investing at all.

Some people use a dollar cost averaging investment strategy to mitigate these risks. This means buying a small amount at regular intervals -- for example, you might buy $100 worth of Bitcoin at the start of every month. This is a way to handle crypto's volatility without spending all your energy trying to time the market. The crypto market is very new, so we don't have much data to work with, but it's an approach that has worked well for new investors in the stock market.

The other danger is that you spend money you weren't planning on investing. It's a bit like going to the grocery store and buying things you didn't need simply because they're on sale. People can be blinded by the idea of buying crypto on discount and subsequently rush into investment decisions.

On the other hand, if you're an old hand at crypto investing who has confidence in Bitcoin long term, these dips can be a great opportunity to add to your portfolio. Especially if you've already done your research and know which cryptos you want to buy. You may have a watchlist of cryptos and some cash you've been holding in reserve, so you're ready to pounce when prices fall.

If you're considering buying the dip, make sure you buy cryptos you've researched and already planned to buy and hold for the long term. Don't be tempted to spend money you need for other financial goals, especially not money you need short term. If the price continues to fall, or stays low for a long period of time, you don't want to be forced to sell at a loss.

As with any investment, there are no guaranteed returns. Take your time, understand the risks, and make sure it is the right decision for your financial situation.