Beyond the headlines: The real adoption of Bitcoin salaries
Bitcoin wages are becoming more common globally, particularly among “borderless” remote workers and in certain regions like Latin America.
Are cryptocurrency wages an idea whose time has come? Maybe not. It’s one thing, after all, to dabble in Bitcoin (BTC) with one’s excess cash and quite another to take a significant portion of one’s salary in BTC.
Moreover, there are often tax and custody questions about crypto, as well as concerns about price volatility. There’s the matter, too, that few actual items and services can be purchased at present with cryptocurrencies.
It’s not surprising, then, that aside from some celebrity athletes like Tom Brady and Aaron Rodgers and some high-profile big-city United States mayors, relatively few people outside the cryptoverse appear to have embraced this next step in crypto adoption.
It’s in that context that one has to evaluate NYDIG’s recent announcement of a “partnership” with the New York Yankees baseball team that will allow players and other employees “to convert a portion of their paycheck to bitcoin via the NYDIG platform.” Is this the start of something new, given that it comes on the heels of a harsh crypto winter? Or is it just another public relations stunt, jumping on the bandwagon already established by professional U.S. football and basketball players?
Interestingly enough, NYDIG offered some hints that Bitcoin salaries could actually become a secular trend above and beyond recent headline cases, especially among younger workers. According to its press release:
“NYDIG research shows that 36% of employees under 30 said they would be interested in allocating a portion of their pay to bitcoin. Nearly 1 in 3 of those employees said that when choosing between two identical jobs at different employers, they would choose an employer that helped them get paid in Bitcoin.”
NYDIG isn’t alone in identifying Millennials and especially Gen Zers as prime candidates to take crypto salaries to the next level. Indeed, one global hiring firm’s recent analysis of 100,000-plus employee contracts suggested that crypto wages appear to be on the rise, particularly among “borderless” remote workers, and especially residents of certain high-inflation regions or those with shaky banking systems, such as Latin America.
Others have suggested, too, that employee demand for a portion of one’s regular wage in cryptocurrencies or stablecoins may be impervious to market fluctuations in the price of Bitcoin and other cryptocurrencies, though that sometimes seems hard to believe.
Younger generations are still keen
To this last point: In November, a deVere Group survey reported that a third of millennials and half of Generation Zers would be happy to receive 50% of their salary in Bitcoin and/or other cryptocurrencies. This survey was conducted when crypto market prices were soaring, however. Does the financial advisory group believe that younger generations are still eager to receive their salaries in cryptocurrencies following a 50%-plus drawdown in crypto prices since that time?
“Younger generations are still keen to receive their salaries in cryptocurrencies as they have grown up on technology. They are ‘digital natives,’” Nigel Green, CEO of the deVere Group, told Cointelegraph, and more comfortable using cryptocurrencies than older generations. Moreover, “they know the future lies in tech and appreciate the inherent value of borderless, digital, global, censorship-resistant and non confiscatable currencies.”
“From our company, 90%+ [of employees] still stack Bitcoin regularly on a monthly basis,” Danny Scott, CEO and co-founder at the United Kingdom’s CoinCorner LTD, which has held Bitcoin on its balance sheet for some years and offers employees a BTC salary option, told Cointelegraph. “If anything, we have received more enquiries over the last few months from companies looking to pay their staff in Bitcoin.”
In June, an Ascent survey reported that “44% of Americans would consider receiving part of their salary in cryptocurrency, and 36% said they would consider receiving all of their salary in cryptocurrency.” Still, that survey of 2,000 American adults was conducted on May 6, 2021 and May 25, 2022, when BTC was still close to $30,000. The price stood at ~$23,000 on Aug. 1 in comparison.
Adam Poulton, CEO at Get Paid In Bitcoin — a Bitcoin payroll solutions platform based in Australia — challenged the notion that the #PaidinBitcoin phenomenon was wholly resistant to market price influences. “Our business, while designed to take away the speculative nature of Bitcoin, still does suffer from the emotional rollercoaster of price rises and crashes,” he told Cointelegraph, further explaining:
“Our service does see an influx of new customers during bull markets and a drop away in transactions during bear markets. It’s an issue that we are still actively trying to address as over the longer term.”
People that stop and start the process of accumulating Bitcoin are actually worse off by trying to time the market, Poulton added, “rather than just doing the raw dollar-cost averaging strategy that our platform enables.”
Trending higher in 2022
Deel, a global payroll platform, regularly examines 100,000-plus cross-border hiring contracts in 150 countries to uncover trends. The firm reports that more and more employees are taking crypto as part of their salary.
In the six-month period from January 1 to June 30, ~5% of all payments from the Deel platform monthly were taken in crypto, up from only ~2% in the previous six-month period. Dan Westgarth, chief operating officer at Deel, told Cointelegraph that he expects this growth to continue, with 8% in the 2nd half of 2022 a real possibility. Moreover, this trend is mostly “market agnostic,” i.e., not correlated with the market price of crypto.
There is considerable variation by geographic region, however. Sixty-seven percent of Deel’s crypto salary withdrawals in the first half of 2022 were from Latin American (LATAM) countries, and another 24% from Europe, the Middle East and Africa (EMEA). By comparison, North America accounted for only 7% of crypto salary withdrawals and the Asia Pacific region just 2%.
How to explain these differences? Three different groups are driving this trend, in Westgarth’s view. First are investment types, looking for a good longer-term investment. The second group is remote workers who reside in countries with aging banking systems. And, the third group is remote workers in high inflation countries, like Turkey or Argentina.
Many of the banking systems in the LATAM region are old, and the cost of payment transfers to these countries is time-consuming and costly, explained Westgarth. Crypto transfers, in comparison, are fast and cheap, so workers take part of all of their salary in crypto and often convert it right away into local currency. Employees in places like Argentina might fall into all three groups, such as investors living in high inflation areas with old banking systems.
When employees opt to take all or part of their salary in crypto, it isn’t always in Bitcoin either, according to Deel. Less than half (47%) in the most recent Deel survey received some payment in BTC, though this was still the leading option, followed by USD Coin (USDC) (29%), Ether (ETH) (14%), Solana (SOL) (8%) and Dash (DASH) (2%).
Asked about the surprisingly high USDC component, which was more popular than Ether, Westgarth suggested that the stablecoin might be the first choice in some high inflation countries where trust in government is low and exchange rates aren’t always transparent. Those workers don’t want to take the investment risk of BTC or ETH, however, so a stablecoin like USDC represents a sort of middle ground, he suggested. In any event, “We let the workers choose how they want to get paid — local currency, crypto or USDC.”
Green sees sustained growth in crypto wages over the next five years as Bitcoin becomes more widely distributed generally. As this happens, “liquidity will continue to soar, and volatility will continue to ease.” It is all part of continuing a decade-long trend, and Green expects that “most major corporations will offer workers a crypto payment option within five years.”
Taking custody of one’s own BTC
There are many other questions about crypto as salary, including custody. To this last point, if people are going to take crypto for wages, then they need a place to store it safely. NYDIG, for its part, isn’t actually paying New York Yankee baseball players in Bitcoin but in a BTC-denominated portfolio asset. Not all agree that is the best way to go.
“Our platform is directed toward people taking custody of their own Bitcoin,” Poulton told Cointelegraph. “From our point of view, the actual asset and delivery of Bitcoin is extremely important as it cuts out the counter-party risk of having to rely on other parties for the safe delivery of your value into the future.”
Others ask why employees would want to take a salary in Bitcoin when there is almost nothing that you can buy with it. “I understand that ‘bricks and mortar’ adoption of Bitcoin acceptance is still very low,” answered Poulton, though Bitcoin-enabled credit cards have been proliferating. Nonetheless:
“By simply receiving a bit of your wages in Bitcoin and holding it in a secure wallet, one is saving for the future and preparing one’s family for a potential future inflationary environment.”
Another interesting aspect of the “crypto as salary” movement is gender participation. The proportion of female Bitcoin wage recipients has been growing, according to Poulton. “Our female representation was in the order of 7–8%,” but with the firm’s new business-to-business platform, “it’s now more like 38-40%.”
Macrotrends favor growth
Other employment trends favor crypto salaries too. In many industries, there is a “high demand for talent and a shortage of available candidates,” according to Deel’s hiring report, so “more companies are looking outside of higher-cost countries to find quality talent.” Demand for product and design roles, for example, is shifting from the U.S. to countries such as Argentina and India.
Deel’s most recent survey saw a dramatic uptick in worker contracts in places like Georgia, Armenia and Belarus in the EMEA region, Kyrgyzstan, Azerbaijan and Thailand in Asia-Pacific (APAC), and Trinidad and Tobago in LATAM, noted Westgarth. It is often much easier, cheaper and faster to pay remote workers in relatively “exotic” locations in cryptocurrencies than through traditional bank channels like the SWIFT system.
Overall, mass cryptocurrency adoption — along with crypto salaries — is probably inevitable over time, according to Green. “But there are still obstacles to be overcome, including a lack of understanding among older senior executives, scalability and regulatory concerns.”