Screenshot of BitcoinAverage.com

If you are paying contractors in Bitcoin then you should take extra care to ensure your contracts are well-drafted. Specifically, you should make sure that you have a clear method of establishing the exchange rate between your national currency and BTC.

Most contracts, even in the digital currency world, are denominated in a national currency (not BTC). This poses a problem for determining the right amount of bitcoins to pay someone because exchange rate fluctuates by the minute (since bitcoins are a globally traded commodity).

Suppose a contract called for paying someone $1337 USD on April 1st, 2015. At what time should the price be determined and, more importantly, which exchange rate should be used? If the contract doesn't specify then you might wind up with a dispute on your hands.

A good choice of exchange rate is one that's a blend of several exchange spot prices or a 24 hour average such as BitcoinAverage. But be wary of writing a specific rate into your contracts because the world of Bitcoin moves fast. Websites come and go so it may be best to specify a secondary source to use if the first isn't available. Another approach is to set a specific exchange rate to be used if the parties disagree on the rate that's applicable at a certain time.

Example language:

“The BTC to USD conversion rate shall be the BitcoinAverage '24h sliding average' (USD) available at https://bitcoinaverage.com/#USD (screenshot shown below).”

“If bitcoinaverage.com is not reachable on the date of payment then the average of the 'Day's Range' shown on https://www.bitstamp.net/ shall be used (screenshot shown below).”

Depending on the size of the transaction more specific language about time of payment and what it means for a site to not be "reachable" might be desirable.