Luis Carchi Follow May 25
· 4 min read
Imagine a world where you’re getting paid by the minute and you need to wait two more minutes to afford your next meal.On a $4,000 salary, your “drip rate” would be $11.90 / minute.Every minute that goes by, you earn a little bit more of that salary.You no longer have to wait two weeks to get your money.You can travel and spend your salary globally — you simply just sell some crypto for local fiat.
At Ancient Warriors NFT , we’ve developed crypto payroll tech to automate salaries and we are currently thinking about the future of payroll amidst the crypto revolution.
Every day, more and more people are telling their employers: “pay me in crypto!” Tom Brady, Odell Beckham, and Klay Thompson are athletes demanding cypto salaries.
The trend is similar for everyday American workers.EY covers a survey of American adults where “ over 40% would consider [crypto] for part of their salary and 31% for their entire salary.
” Although we are in the midst of a bear market, the demand for payroll on the blockchain is clear.It will disrupt the payroll industry when the most pressing risks are mitigated.
New technologies inherently bring more risk.To move payroll to the blockchain, proper infrastructure and safeguards are needed.
Volatility is the first barrier to overcome.Having a volatile asset like Bitcoin or Ethereum on the balance sheet could create payroll liquidity risks for companies.But, if the price of bitcoin drops, the employee’s crypto is now worth less.Some crypto fans might bring up the stable coin (a crypto currency fixed to the $USD price 1:1), which would take care of the volatility solution… right? This was not the case for UST — a stable coin that went to 0 recently due to the Lunar Stellar crisis .Volatility may scare away some, but people still are insisting to get paid in crypto.
And it will be entrepreneurs that build a sound workaround to solve the volatility issue.
Is it even legal? In America — the laws surrounding getting paid in crypto are murky but there do exist workarounds.The U.S.
Department of Labor requires employees to be paid “in cash or negotiable instruments paid at par.” Crypto does not currently count as a negotiable instrument paid at par and some states even require payment in US dollars.
Also, the IRS considers crypto to be real estate and not a currency, implicating tax differences for employers and employees.Bloomberg Law reports on a clever solution where companies use “converters” to pay employees in crypto.
The fiat salary is paid and then converted to crypto before it is sent to the employee.It seems like creativity has half-solved the legal issue, but policymakers will ultimately determine the guidelines to be imposed.
While paying salaries in crypto presents its risks, the benefits are still alluring.
And I cannot stop imagining a future where it is the norm.
Companies could potentially benefit from paying their employees in crypto by seeing lower costs.Below is a cost comparison provided by EY , which shows how using crypto could lower payroll costs by 68.9% to 80% for international workers due to wire fees.
Also, more savings could be seen in cheaper crypto alternatives to current payroll companies or the reduction of money wire services like Western Union.
Employees would also see benefits: they would get their money quicker, if they are international workers they can hedge against local inflation by using a stable coin , and with reduced wire fees — they would also experience the benefit of reduced costs.
Additionally, innovation could change how often employees get paid.If fees are low enough, employees could get paid in perpetuity — streaming their money by the hour, minute, or even seconds.It doesn’t make sense for employees to hold salaries for 2 weeks at a time.
As crypto adoption grows, I bet that more and more people will want to be paid in crypto.At the same time, adequate infrastructure will have to be built.
You can be part of the future and schedule your employee crypto salaries with AutomatePay! Schedule a free demo here .
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