Should Your Salary be Paid in Bitcoin? was written by 21Cryptos Team, and it’s included in issue #22 of 21Cryptos Magazine. To read more articles like this subscribe today. To read other free articles check out our Magazine category. Follow us on Instagram, Facebook and LinkedIn.
This article is from an earlier date and as such can contain figures that were actual at time of writing.
One of the hottest topics in cryptocurrency is the potential use-case for digital currency to be used by companies and organisations all over the world to pay employee salaries. That is the ultimate aim, after all, isn’t it? We can all envision a world where fiat currencies are ancient history, and where digital cash rules supreme. We see it as a world of financial freedom, where people can take back ownership of and responsibility for their money. This was one of the original goals of cryptocurrency – to help the world transition into a better way of being – where citizens were free from the economic controls of their governments.
However, none of us know how this will play out in reality. With a completely new paradigm the world’s entering into, how the practicalities of this almost inevitable global adoption will work, remain a mystery.
Leading the way is one individual named Zakk Lakin. Zakk is a 24 year old employee of the Coin centre exchange, and he was given the opportunity by his employer to take his salary either in part, or in full, in cryptocurrency. Being the absolute legend that he is, Zakk decided to accept his payment in 100% bitcoin, taking a bold step towards his own financial freedom, and being one of the trailblazers that will inspire others to do the same.
We now live in a world where you can buy almost anything in cryptocurrency – there are methods to shop at Amazon using bitcoin. This is a future that was unimaginable just a few years ago, but now the option is there as part of our everyday lives. The only thing that needs to catch up is people’s knowledge of how to do it, and of course – the knowledge that this option exists.
Now we’ve entered an era where we can use digital currency to buy anything we want, and even accept it as payment from an employer – the important question – and one which may put up the backs of some die-hard bitcoiners, is – should we?
Yes, on the surface it looks like it’s a solid plan. Get paid in bitcoin, support the growing industry, and help the world move into a financially digital age. But there are a few things that get in the way of this utopian (and likely-to-happen) ideal.
The first is that every single cryptocurrency out there, including bitcoin, but with the exception of stablecoins – is extremely volatile. Trading cryptocurrency with spare funds is one thing, but when we move into effectively trading crypto with all your funds – it’s an entirely more dangerous matter. Sure, it can be done – but it’s not without its risks. If someone has been paid at the peak of the bull market, and they placed those funds in a metaphorical ‘savings account’, then and needed to use those funds a year later – a $3000 paycheck would only be worth $450.
This isn’t even taking into account the weekly and monthly volatility of bitcoin. Lets say you have a holiday that needs to be paid for coming up. You have just enough money to pay for it, and decide to do so a week after your paycheck. Unfortunately bitcoin experienced a dip of 10% this week, and your $3000 is now worth $2700, just short of making your holiday budget. So you wait another week for it to go up again – and unfortunately the market drops once more, and you’ve lost 30% of your living wage.
The danger comes in when you associate your salary with a token that can be gambled. Sure, most people won’t fall into the trap of gambling with their wages, but when a small dip happens like this – or even a small rise in price – it encourages the gambling mindset, which will be especially prevalent if your funds dip and make you just short of your fun trip away that month. This can only spell disaster whether you win or lose money, as a damaging mindset will have been taught into you without you even realising it.
The other option is that you exchange your bitcoin immediately for fiat, and then your funds are safe, whatever happens to the market. But then – what’s the point in even being paid in bitcoin in the first place? Sure, it helps along the industry and encourages mass adoption – but ultimately – what’s the point of mass adoption as it currently stands if it’s just a system that increases the chances of developing a gambling mindset?
Payment in cryptocurrency is essential for the future of humanity – that’s a certainty. People want freedom from oppression by governments and corporate institutions that store their money. But people aren’t ready for the paradigm shift neccesary to replace fiat currency.
One advantage of cryptocurrency is that it can easily be used in smart-contracts and without much hassle can be paid on completion of certain tasks, or expiry of certain time. The monthly income was designed to make it easy for businesses to pay people, instead of doing 30 transactions each month you could do only 12 per year.
But what if technology and software grows so powerful that on completion you can get paid based on time spent or on jobs completed. It could even reserve currency for sick days or holidays.
An every day payout would mean that you have a Dollar Cost Averaging technique for bitcoin salaries and a technological benefit to using crypto. Maybe these kind of changes in how we are paid are even more important than what we are paid in, and that that’s the paradigm shift everyone is waiting for.