Late last year, Japanese internet firm GMO group announced that their workforce of more than 4,000 employees will be given the option to receive a portion of their salary in bitcoin or cryptocurrency. This pronouncement was met with mixed reactions, with some dismissing this move as a mere publicity stunt. The Japanese firm is far from the only company offering cryptocurrency salaries to their employees: as it stands today, large corporations such as Netflix, Airbnb, and Starbucks are beginning to pay their workers through Bitwage.
The most prominent reaction over these moves, however, was uncertainty. Cryptocurrency is known for its volatility: it can generate huge losses or explosive growth in a short span of time. Given these recent developments, how will cryptocurrency affect both employers and employees?
A Look at How cryptocurrency Salaries Work
Simply put, bitcoin salaries are given based on the currency’s value at a particular date and time, though employees have the option to receive the same amount in cash. Should they opt to hold onto their Bitcoin salary, they can either see it grow or lose it in a day, a week, or a year.
As finance experts have already warned, cryptocurrency may encourage people to gamble. After all, there’s no guarantee that people with cryptocurrency will experience exponential growth with their investments.
An Advantage for Freelancers
On the other side of the spectrum, a number of experts have made strong arguments in favor of cryptocurrency payments, especially within the gig economy. Cryptocurrency combines the transparency of blockchain-based technologies and the speed of digital payments, along with the option to circumvent banking intermediaries. Such a proposition is undoubtedly appealing for individuals occupying freelancing positions.
It must be noted, though, that cryptocurrency payments for independent contractors remain taxable. This might prove to be difficult for employers, given that there’s currently no option to enter a cryptocurrency amount on the 1099 IRS form.
A Popular Option
While cryptocurrencies are volatile in nature, it appears that a number of individuals are willing to take the risk. A number of employees all around the world are already opting to convert their own salaries into cryptocurrency. For most of them, having their salaries converted into cryptocurrency reduces the worry of buying at the wrong time and reduces the risks of volatility. Employers, meanwhile, can use this opportunity to expand their business into cryptocurrency trading or crypto mining.
Cryptocurrencies offer both benefits and risks, which both employers and employees must acknowledge. While cryptocurrency salaries might still be far off, there’s a possibility that this might soon become the new reality.