When was the last time you paid for something with cash? The answer is probably a while ago. You almost certainly pay for things in cash less than you did five or ten years ago.
The world is changing fast. So far finance and banking have been slow to keep pace with other industries like journalism which now operates mainly online or the so-called internet of things that pulls together all of our devices into one ecosystem.
But the 2020s are set to be the decade of the financial revolution as cryptocurrency and borderless accounts take over from traditional bank accounts, cash payments and checks in the mail.
But what is cryptocurrency? And should your employees be paid in cryptocurrency? Here’s everything you need to know about paying employees and getting paid in bitcoin.
What Is Cryptocurrency?
Cryptocurrencies are global online currencies that operate without the oversight of a traditional bank or government. They can be traded freely using the internet and the exchange rates are set by the market.
There are numerous cryptocurrencies but the most popular and the first to be created was bitcoin, first released in 2009.
What makes cryptocurrencies different from normal currencies and keeps them reliable is the computer system that underpins them. The blockchain requires a huge amount of computer power.
By solving complex computer program puzzles that require very powerful computers which ultimately ensure that each transaction is genuine and is written into a ledger, a user can receive cryptocurrency as a reward.
A World With No Monetary Barriers
The most revolutionary thing about cryptocurrencies is there ability to be used and traded all around the world. There is no need to convert them to U.S dollars or British pounds they can be spent anywhere in the world that accepts them and they sit in a digital wallet rather than in a bank account.
The benefits of this are that it is easier to avoid tax since the payments are harder to trace back to you, without a bank account. But due to the lack of oversight, many governments are increasingly skeptical about allowing cryptocurrency to become a mainstream alternative to currencies.
Some countries have even banned cryptocurrencies believing them to make fraud, money laundering and paying for other criminal enterprises like terrorism too easy. But others like the U.S are trying to make them easier to use.
A Volatile World
There are different types of cryptocurrencies and there are now some that are relatively volatile whereby the currency remains largely the same value. Bitcoin the most well-known cryptocurrency is currently trading at one bitcoin to $8,480. It’s value, although volatile, is much higher than average currencies. The Great British Pound (GBP), for example, is only worth around $1.30.
Those that are volatile enable crypto traders to speculate and potentially win big whilst the more stable ones enable employees to receive their paychecks and keep their salaries in that currency.
The reason for the volatility is that unlike traditional currencies that are overseen by the government and the national bank to keep inflation under control, cryptocurrencies are entirely at the behest of market forces. It is the hallmark of decentralized cryptocurrencies.
Employees Earn More in Cryptocurrency
Many companies chose to pay their employees more if they are paid in the cryptocurrency of the firm. This is a popular method of payment with cryptocurrency companies that are associated with the blockchain – companies that are developing decentralized social media platforms are a good example.
There are a number of benefits for the company if they pay in their own currency. There are tax benefits as the company is less under the eye of governments and there is no conversion that has to take place into U.S dollars or other currencies which could be costly for the company.
Payment can be made straight into a digital wallet. This is also very handy if the employee happens to work remotely online, as many employees for digital companies now do.
Neither the employee or the company has to pay large conversion fees to the currency of their choice if they live outside of the U.S.
However, despite this many employees still like to have a physical paycheck which they can create using a check stub maker.
Types of Cryptocurrency
Cryptocurrencies come in all different shapes and sizes, all worth different values. Even Facebook has tried and failed to create its own cryptocurrency.
Ethereum is a bitcoin that is created to enable developers to build apps and tokens – which can be used to purchase content automatically on the web.
There are new apps and decentralized social media platforms that allow for more freedom of speech and customization that are being built through the Ethereum cryptocurrency. However, these projects are likely to take years maybe even decades to complete.
Currently, the exchange rate is about 1 Etherum to 162 U.S Dollars.
The Banker’s Coin – Ripple
This coin is known as the banker’s coin because it’s primary purpose is to facilitate faster payments of traditional currency.
The key benefit to this cryptocurrency is that it is designed to work with governments and national banks and to play by the rules. As a result, it is not decentralized and does have an overall company structure and hierarchy to oversee the currency.
Many of the projects that this coin will facilitate are still in the process of coming to fruition so it might not be an option for a number of years yet.
Known by the abbreviation XRP, 1 ripple is currently valued at around $0.23 much lower than most cryptocurrencies and is closer in value to a traditional currency like the Hong Kong Dollar (HKD) or the Mexican Peso.
Paying employees in cryptocurrency is a good way of encouraging employees to invest in the industry rather than spend their money, a big perk since they could stand to earn big.
Trading bitcoin or investing in bitcoin projects as never been easier. Digital banks like Revolut allow premium users to invest from the comfort of their app and to keep currencies in bitcoin while there are other dedicated bitcoin wallets.
The benefits of investing in bitcoin are that it helps boost the crypto world as a whole. The more cryptocurrency that is in the system the more people make money.
But it also boosts the legitimacy of cryptocurrencies which is important for the industry as a whole as they battle against those who argue they are just a way of facilitating illicit or illegal activities – for instance, the infamous Silk Road drugs website on the Dark Web.
Investing in the Future
Investing in bitcoin is not just about investing for financial gain it is also a great way of investing in projects for the development of technology that could change and challenge the world.
The Blockchain is a powerful technology that will eventually revolutionize professions from the medical industry and government filing systems to security systems to the way we conduct business.
The blockchain relies on the continued trading and adoption of cryptocurrencies.
Cryptocurrency is a lot more secure than paying in traditional currency since all the transactions are noted down in the cryptocurrency ledger that is verified through the mining process.
This ensures every transaction is accounted for. It is also much more difficult to hack into a cryptocurrency wallet than it is to hack a traditional bank account.
Be Sure to Get Paid in Cryptocurrency, It’s the Future
There are many advantages that come with being paid in cryptocurrency. As technology improves through the new decade cryptocurrencies will become more and more common.
They are a lot more secure than traditional currencies due to the ledger methodology of the blockchain and the fact it is very hard for anyone other than the owner of a digital wallet to access it.
Paying employees in cryptocurrency also offers them more freedom over their tax affairs and how they spend it.
But it also makes life easier for the employer, particularly if they are working with remote workers. Rather than having to pay workers in U.S dollars into their bank accounts or use long-distance payment services like Paypal to pay employees in a currency of their choice, cryptocurrencies can be transferred to any currency.
Cryptocurrencies can also be invested in groundbreaking projects involving the blockchain which may well end up transforming society for the better such as decentralized social media platforms.
The sheer variety of cryptocurrencies on the market, from Etherum to Bitcoin and their different values also makes them ripe for trading. There is a cryptocurrency to suit every employee’s needs.
If you are interested in reading more about jobs that pay in bitcoin or paying in employees be sure to check out the rest of our site.