bookmark_borderBitcoin payday? Crypto to revolutionize job wages… or not

Speaking at a Chamber of Digital Commerce panel discussion in late February, City of Miami Mayor Francis Suarez noted that his citys employees, like others, are worried about the potential devaluation of the dollar, so he proposed to the Miami City Commission a resolution to allow our employees to take a percentage of their salaries in Bitcoin if they so desired.

After all, notes Suarez, The highest-paid player in the National Football League Carolina Panthers offensive tackle Russell Okung wont be earning the most because hes the best player in the NFL but because he asked for 50% of his salary in Bitcoin.

The mayors statement may have been a small bit exaggerated Okungs ranking as one of the highest-salaried NFL players at this moment depends on the price of Bitcoin (BTC), as NBC Sports noted in late February. Technically though, Okung gets paid 100% in U.S. dollars, then half is sent to a custody provider that converts it to BTC. But to Suarezs larger point, interest in a crypto wage alternative seems to be growing.

If so, it raises some questions: Why take a salary in Bitcoin when there is almost nothing that you can buy with it? Arent there tax implications that still havent been sorted out? What about ongoing BTC challenges like volatility and scalability? And if Bitcoin drops 60% or 70%, who is going to want crypto wages then?

Meanwhile, one is hard-pressed to find any company outside the cryptoverse that is paying its employees wages in Bitcoin or altcoins. As Thomas Hulme, head of the blockchain and crypto-asset team at law firm Mackrell.Solicitors, tells Cointelegraph Magazine: I have not come across an instance professionally where a company has sought advice to pay employees a salary in whole or in part, in crypto assets.

More employee demand?

Still, as Merrick Theobald, vice president of marketing at BitPay whose BitPay Send platform has a crypto payroll payment option tells Cointelegraph Magazine: We are most definitely seeing greater demand from employees to take at least a portion of their salary in Bitcoin. Its being driven by the recent surge in BTC prices, he continues, in addition to greater global awareness regarding cryptocurrency generally. Bitcoin is quickly becoming more mainstream and employees recognize this and want to be a part of this.

Jack Mallers, CEO of Zap whose Strike application enabled a portion of Russell Okungs salary to be converted into Bitcoin tells Cointelegraph Magazine: We have seen an immense amount of demand. We currently have over 5,000 users on our waitlist to convert a percentage of their direct deposit paychecks into Bitcoin here in the U.S. alone.

But clearly, obstacles need to be overcome before crypto wages become the rule rather than the exception. Henry Kim, an associate professor at York Universitys Schulich School of Business, tells Cointelegraph Magazine that the vast majority of companies dont have cryptocurrency in their corporate treasuries, so the only salaries or compensation to be paid in Bitcoin, say, are likely to be idiosyncratic requests from talent Okung, for instance.

Paul Brody, global blockchain leader at Ernst & Young, when asked if he expects more companies to offer a cryptocurrency salary option soon, opines to Cointelegraph Magazine:

I think it is unlikely. If you think about what makes sense from a risk management standpoint, having liabilities like your taxes and mortgage in fiat currency dollars, for example and getting paid in Bitcoin, for example, is a high risk proposition. A mismatch could lead to big problems, especially if you have a period where cryptocurrencies go down in value relative to fiat currencies.

A more fundamental barrier may simply be corporate convention i.e., the incumbent payment systems that have been built up over generations. Richard Ainsworth, an adjunct instructor at Boston University School of Law and co-author of the paper Payroll Tax Compliance and Blockchain, tells Cointelegraph Magazine that the major payroll companies, like ADP, are still not thinking about this in a business simplification way.

There is nothing inherently problematic about getting paid in crypto, continues Ainsworth. Income will be determined at the moment of receipt. Holding the crypto may give you a tax problem when you cash in though, and the exchange rates from crypto to fiat currency will have to be kept minimal i.e., subsidized by the employer.

It is surely coming

However, Ainsworth expects crypto wages to be commonplace one day, though it might take a while, as is the case with many innovative technologies: It took 38 years to go from ARPANET [a precursor to the Internet] to Skype. It may take as long for payroll in Bitcoin to arrive, but it is surely coming.

When Ainsworth wrote his paper exactly four years ago, he was looking at crypto wages from a global perspective with a focus on companies with operations around the world and employees being transferred from country to country. One scenario he imagines:

If I had a mortgage on a house in NY, but was going to be stationed in Japan, and then in London for indeterminate periods of time […] I might want my mortgage in NY paid out of my salary, along with some other expenses, but while in Japan (if the company was paying for my housing there), I still might want to get a portion of my pay in Japanese yen (or later in English pounds). Getting paid in crypto would ease that difficulty.

That probably isnt the typical workers dilemma, though think of Suarezs Miami city workers. Hulme tells Cointelegraph Magazine that the vast majority of goods and services typically needed by an employee still cannot be purchased in crypto assets, which means that the majority of employees would likely rather be paid in fiat currency.

There might also be tax implications in places like the United States and the United Kingdom, where Hulme is based, as This will likely raise issues from a PAYE perspective referring to the UK system that collects income tax and national insurance payments from employees from a practical point of view and a general tax point of view.

Risks for employees?

People need to diversify their financial holdings, suggests Brody, and right now, the only people likely to demand Bitcoin wages are those already invested in crypto. He adds: Paying people all or most of their pay in a volatile digital asset poses significant risks for employees. The people most likely to take up this offer are also the ones that are most likely to suffer badly if it goes wrong: people working in the crypto-space already.

I am a good example, he further explains: Professionally, I am all in on blockchain and digital assets my job depends entirely on the success of this sector. Throwing in all my other financial assets into the same bucket is very risky, and if things go badly, that would leave me without a backup plan.

Of course, there is no imperative that an employee has to take all their salary in crypto. Okung, for example, will end up having half his NFL salary in Bitcoin, with the other 50% in fiat currency. CoinCorner, a UK-based crypto exchange and wallet provider, has offered its employees a crypto salary option since 2019, and even though all the firms employees participate, Nobody is currently taking 100% of their salary in Bitcoin, CEO Danny Scott tells Cointelegraph Magazine.

Still, this might not be the best way to think about the matter, suggests Mallers: The most healthy mental framework is to consider Bitcoin your savings account money that is intended to be saved and not spent on everyday living. How much can be safely allotted to a crypto savings plan will differ for each individual. Meanwhile, companies need to be prioritizing their ability to recruit and retain talent, Mallers tells Cointelegraph Magazine, adding:

Those that deny their employees ease of use to receive and hold the best performing asset and savings account in human history will have a tough time convincing the most talented people in the world to be employees.

Among the benefits for employees from providing a crypto option, Theobald adds that employees dont need bank accounts, they enjoy advantages like faster access to funding, and they receive the exact amount sent at the applicable exchange rate.

How does it work?

The logistics dont seem to be that difficult. CoinCorner, for instance, has held Bitcoin on its balance sheet for many years, which has made salary payments in Bitcoin fairly straight forward, Scott tells Cointelegraph Magazine. The firms accountant processes everything in British pound sterling from an accounting and tax side, but then the firm converts the required amount of pounds to BTC when making the salary payment. Scott says:

We take the close price for the end of the month and use that to work out the BTC amount. Unfortunately, this part may get more complicated if you do not hold Bitcoin on your balance sheet, as you would need to buy and then use the rate from the time you purchase the Bitcoin.

Nor is Bitcoin the only crypto option offered at CoinCorner: We support Ethereum (ETH) and Litecoin (LTC) too but none of our employees have opted for these as of yet, says Scott.

A company using the BitPay Send platform simply deposits fiat into its BitPay merchant account, and BitPay converts the fiat to crypto immediately before fulfilling an employees crypto payout request. BitPay also adheres to Anti-Money Laundering, Know Your Customer, Office of Foreign Assets Control and other global regulatory and compliance requirements, Theobald adds.

A boon for the gig economy?

If a Bitcoin salary option were to become popular, where might it catch on first? Interest in crypto wages is strong across the globe but we do see higher interest in countries where the local fiat currency is highly volatile, says Theobald. Interest among firms with cross-border payouts is also particularly strong, and this is partly driven by the need to make mass payments to the gig economy and affiliate networks that need to make payouts anywhere in the world, on any day of the week, and at any time.

From a freelancers standpoint, Online jobs that pay in Bitcoin are a fantastic way to source work from anywhere in the world, notes LaborX, a freelance jobs platform, especially with the availability now of fully regulated exchanges and wallet services that store crypto securely.

 

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Brody opines that You will see this primarily offered in countries where local exchange ranges or high inflation makes being paid in the local fiat currency an even higher risk, but barring that, he foresees companies defaulting to the simplest payment method with the fewest complications i.e., fiat currency.

What if BTC price plummets?

Will demand for Bitcoin-paid salaries vanish, though, if the price of BTC falls or even levels off? Kim suggested that employees are asking for BTC wages now mainly because the price of Bitcoin is appreciating but if and when BTC achieves some price stability, employees may no longer be so keen to be paid in the cryptocurrency, he tells Cointelegraph Magazine.

But when asked the same question, Absolutely not, answers Theobald. In fact, we believe the opposite. If and when the price of BTC drops we believe we will see an increase in demand as employees who primarily buy Bitcoin as an investment often allocate more money on the dip. And for the more cautious workers, there are always stablecoins, he adds.

Streaming salaries?

What about the scalability challenges? In response to Suarezs Feb. 11 tweet in which he announced that he was exploring […] paying employees in Bitcoin one Miami resident responded:

 

Dear Mayor Suarez;
Bitcoin can process, at best, 650K transactions per day. Population of MDC 2.7 million
If all of MDC used bitcoin, we’d be limited to one transaction every four days

— Marc Kwiatkowski (@fbmarc) February 12, 2021

 

Strike uses the Lightning Network, a secondary system that can speed up Bitcoin transactions. Will Lightning, or some facsimile thereof, be required if crypto wages are to become a reality at scale?

It all depends upon how a company makes its staff salary payments, says CoinCorners Scott. If an employer uses a [service firm] that offers the tools for salary payments, then they may also offer Bitcoin wallets for the staff at which point there are no on-chain transactions initially, meaning there are no scaling issues.

Of course, if they want to send the transactions on chain to staff, then scaling comes into play and Lightning would help out. Lightning would also offer up an option to stream salaries rather than pay them weekly/monthly etc., says Scott, adding:

You could, in theory, stream your portion of salary to be paid in Bitcoin every 10 seconds for example over your working day, so youre effectively paid in real time, rather than once per month/week.

Looking far ahead

Five years hence, will most global firms offer employees a crypto wage option? It is doubtful in my view, according to Hulme. Ainsworth, for his part, is more optimistic, telling Cointelegraph Magazine: Five years more should bring some changes, and I think there will be MORE, but maybe not MOST global companies.

If BTC settles down enough to be used to pay company salaries, suggests Kim, Then the more likely effect is central bank digital currency development will be accelerated. Brody, for his part, believes that Companies will offer their employees the option to invest in crypto and digital assets as a part of their normal savings and retirement plans.

Scott tells Cointelegraph Magazine: I expect we will see more and more companies offering payments in Bitcoin in the next five years. It is still early in the adoption curve, and current tools are lacking, But they will improve with time. Theobald adds that it will be necessary in the future for employers to allow employees to be paid how and when they want to be paid.

Mallers sees a sort of inevitability to the process: The public is beginning to treat Bitcoin as their savings account, where excess cash is preserved and protected. The natural evolution is getting a percentage of your paycheck in Bitcoin.

bookmark_borderThe Bitcoin boom: The future of the company balance sheet

Adding Bitcoin and other cryptocurrencies to a company’s balance sheet is essential because the future with crypto is already here.

Bitcoin has seen unparalleled growth in early 2021, reaching highs of over $58,000, almost triple its peak of the 2017–2018 boom. We are entering an era where institutions are starting to turn to Bitcoin (BTC), as many countries worldwide have been printing unprecedented amounts of money to service mounting debt. And to make matters worse, they are also facing the risk of unmanageable inflation. This perfect storm of macro conditions means institutions like pension funds, hedge funds, as well as high-net-worth individuals with trillions of dollars in combined value are starting to pay attention and learn about Bitcoin for the first time.

Unlike the 2017 bull run, this current run is driven less by hype and more by Bitcoin being accepted in the traditional financial world as a scarce asset class. Enterprise and institutional adoption of crypto assets has been the driving theme of 2021, with Tesla investing $1.5 billion in Bitcoin, one of the most prominent examples of corporate adoption to date.

Related: Tesla, Bitcoin and the crypto space: The show Musk go on? Experts answer

Additionally, large institutions are recognizing the importance of Bitcoin as a store of value, with many adding millions of dollars of the asset to their balance sheets, including Goldman Sachs, Standard Chartered, Square, BlackRock, Fidelity Investments, MicroStrategy and more.

Related: Will PayPal’s crypto integration bring crypto to the masses? Experts answer

But the crypto landscape needs to change to truly allow Bitcoin to move into the traditional world. Institutions can’t use private keys that can easily be lost, transact with long strings of letters and numbers, or store funds on exchanges with high counterparty risk.

Regulation matters

New crypto regulation in the U.S. is making it easier and more acceptable to hold cryptocurrencies by providing more certainty across jurisdictions. Just last month in the U.S., The Office of the Comptroller of the Currency provided much-needed regulatory certainty regarding crypto activities. Brian Brooks, acting comptroller of the currency, stated that access to blockchains, such as Bitcoin or Ethereum, the holding of coins from these rails directly or on behalf of clients, and the running of nodes for a public blockchain is permitted. In other words, this allows banks to get actively involved — a huge step in the direction of improving the comfort level of institutions interested in holding crypto.

We are also seeing more developments in terms of the custody and management of digital assets, which allows even more institutional and corporate players to enter the space. Goldman Sachs recently issued a request for information to explore the bank’s digital asset custody plans, part of a broader strategy in entering the stablecoin market. While the details aren’t yet firm, these seismic moves by key institutions are fueling the fire.

The next generation for crypto

While these institutions have huge teams to manage and oversee their new crypto holdings, smaller companies have also started to experiment with adding Bitcoin and other cryptocurrencies to their balance sheet. As companies, big and small, start to hold crypto, it is becoming increasingly clear that the next generation of companies will act more like investors holding and balancing funds in multiple asset classes.

This includes companies for which crypto and blockchain is not their core business, reshaping businesses’ very value proposition: Everyone is now a fund whose returns may be decoupled from their core business offering. Small companies that may have only been holding cash are now investors concerned about their liquidity. In the emerging world of decentralized finance, the sky’s the limit to how complex asset management can become; you can buy and sell derivative products, engage in lending and much more.

Related: Where does the future of DeFi belong: Ethereum or Bitcoin? Experts answer

I envision a future where all companies hold crypto on their balance sheet, and every company is an investor, whether that is their core business offering or not. But this future is dependent on both user experience and regulation. Some companies and institutions holding crypto are willing to take risks by figuring out their own operational and financial security measures to manage their crypto, while for others, this is a non-starter. The traditional world will require custody solutions, a traditional UX for transactions, crypto wealth management and more.

For smaller companies starting to dip their toes into holding crypto, my advice is to keep it simple without getting too distracted by all the crypto volatility and noise. The current crypto rally brings great excitement and opportunity for growth, but companies need to do what makes sense for them. Keeping a basic index approach to corporate crypto treasury management — for example, holding 5% of funds in Bitcoin, 95% cash and equivalents and rebalancing when the price increases or decreases — allows you to gain exposure to the market while being smart with cash and runway.

Overall, as institutions start to get serious about Bitcoin and the combination of regulation and user experience helps to make crypto a more accessible and accepted asset class, the traditional world of financial management will evolve.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Arianne Flemming is the chief operating officer of Informal Systems, a research-and-development institution focused on distributed systems and protocols. She has extensive experience in financial organization and operational leadership within the blockchain space, having helped design and execute long-term financial and operational strategies.

bookmark_borderBitcoin price hits $60K after bulls push through a key resistance cluster

Bitcoin price finally pushed through a tough resistance cluster to secure a new all-time high at $60,000.

Bitcoin (BTC) hit $60,000 for the first time on March 13 as the long-awaited continuation of the BTC price bull run got underway.

BTC/USD 1-hour candle chart (Bitstamp). Source: Tradingview

BTC records another landmark price level

Data from Cointelegraph Markets and Tradingview tracked BTC/USD as the pair finally crossed the historic level after several weeks of mild corrections and periods of consolidation.

Bulls had spent a considerable time in limbo as Bitcoin tested prior all-time highs at $58,350 repeatedly, with a significant resistance zone beneath slowing progress.

In the end, however, optimism won out, and the largest cryptocurrency by market capitalization clinched its latest milestone. At press time, price action focused on an area just below $60,000 amid characteristic volatility.

As Bitcoin price inched its way closer to the previous all-time high, analysts at Whalemap observed some interesting on-chain activity taking place. 

Realized cap HODL waves. Source: Whalemap

According to the research team:

“Realized Cap HODL waves show what percentage of realized capitalization belongs to HODLers of different type (1y-3y hodlers, 3y-5y and so on). Usually, macro tops occur when the market over-saturates with FOMO. This can be identified when a large % of realized capitalization belongs to short term hodlers (younger than 6 months). The last macro tops were accompanied by more than 95% of realized cap belonging hodlers of less than 6 months. Currently, we are at 82%.”

The long road to a new price hurdle

Anticipation of $60,000 and even higher had steadily built up over recent days. As Cointelegraph reported, professional analysts as well as traders were poised to announce the end of Bitcoin’s prior sideways price action as indicators pointed in bulls’ favor.

The now-standard narrative of healthy on-chain metrics combined with positive support from institutions served to bolster confidence. Now that Bitcoin price has reached the $60,000 level, many analysts have set their targets on the $72,000 zone, followed by $100,000

The overall cryptocurrency market cap now stands at $1.118 trillion and Bitcoin’s dominance rate is 61.9%.

bookmark_border波卡生态 DeFi 协议 Bifrost 已成功接入 Rococo v1 进行平行链测试

链闻消息,据 Rococo v1 平行链状态显示,波卡生态 DeFi 协议 Bifrost 目前已经成功接入 Rococo v1 并正在进行平行链测试,目前已接入的测试平行链包含 Phala、Bifrost、Acala、Plasm、Crust,根据此前 Gavin Wood 在 Element 频道中的回复,Rococo 会陆续增加到 200 个验证人,来确认网络层运行良好,如果顺利的话,在这之后就会把代码集成到 Kusama 上并进行部署,预计将在几周内完成。

Bifrost 此前已与 Zenlink 完成了本地跨链测试,接下来将与 Acala、Zenlink、Phala 等项目在 Rococo v1 环境中进行跨链测试。

原文链接:波卡生态 DeFi 协议 Bifrost 已成功接入 Rococo v1 进行平行链测试

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