When Satoshi Nakamoto founded cryptocurrencies 15 years ago, they merely presented a method to digitalise assets and payments, allowing people to store virtual money instead of bank-issued currencies.
Today, this innovation is present in almost every aspect of business and everywhere money is involved, including paying employees in cryptocurrency.
In fact, professionals in different fields search for jobs that pay in Bitcoin, utilising the globality and accessibility of blockchain technology. Here’s how you can adopt a Bitcoin payroll to elevate your business.
Understanding Crypto Payments
Cryptocurrencies are digital means to transfer money and send payments around the world, replacing the traditional fiat currencies issued by banks and managed by centralised authorities.
Besides being used as a trading instrument, Bitcoin has grown to be a popular choice in e-commerce, online shopping, digital services, and crypto payroll in multiple organisations.
The growth of remote employment and virtual offices contributed to the increase of cryptocurrency workers, as employees receive salaries in Bitcoin, Ethereum, or other coins and tokens.
Stablecoins have also developed as a reliable crypto compensation method, which is characterised by minimum value fluctuations and is close to the conventional salary systems.
How to Pay in Crypto?
Generally, cryptocurrency transactions are done using a wallet and an address. The sender selects the amount they want to send from their wallet and the type or scan the recipient’s address details.
The receiver’s address must be denoted in the same cryptocurrencies. For example, if A wants to send 1 ETH to B, they must send it to the Ethereum address of user B. Otherwise, the transaction will not be successful, or the funds will be lost forever.
Contractors and independent workers increasingly prefer getting paid in crypto, allowing them to enjoy financial freedom across different countries without currency restrictions or hefty exchange rates.
Paying Employees in Cryptocurrency
Businesses that are directly involved in blockchain and DeFi development are more likely to pay salaries in virtual currencies. Yet, technology, finance, media, and payment providers are not falling behind in adopting crypto payouts.
This practice not only copes with growing FinTech trends but also allows companies to locate talents around the world with minimum considerations to local economy and currency restrictions.
A Company can directly send an employee’s cryptocurrency salary by transferring the agreed amount to the recipient’s wallet. Likewise, additional benefits, like sign-on bonuses and performance and annual bonuses, can be transferred as virtual currencies.
Companies That Pay Salaries in Cryptocurrency
Initially, DeFi and Web 3.0 development companies were the first to pay employees in cryptocurrency. However, other businesses integrated these options, such as:
- SC5: A Finnish IT company that provides software, tech evaluation and app development services. In 2013, the company announced that employees can choose to get paid in crypto or fiat money.
- OpenWeb: A decentralised social network where brands and publishers engage in healthy conversations. OpenWeb employees receive their monthly paycheck in BTC to their digital wallets.
- GMO Group: A global provider of internet and FinTech infrastructure and online media and advertising. The company added a crypto payroll to its Japan HQ, paying wages in Bitcoin.
- Fairlay: A sportsbook betting platform which was among the first movers to crypto betting and prediction marketplaces. Not long after it was founded, the platform pays its employees in crypto.
- Bitwage: An international provider of invoicing, settlement, and payroll services to online companies that has started offering a crypto salary system to their employees.
What is The Most Secure Method for an Employer to Pay Employees?
Paying employees in cryptocurrency is instant and more convenient, as most Bitcoin transactions take a few minutes. Moreover, employers pay their remotely dispersed staff with crypto money to avoid significant exchange rates and bank fees imposed on cash payments.
According to a 2023 survey, Bitcoin remains the preferred virtual currency, chosen by 45% of the provider’s withdrawals. The other options were USDC 26%, ETH 18%, SOL 9% and DASH 2%.
So, if you are considering crypto salary payroll for your business, here are your top options.
- Bitcoin: The #1 cryptocurrency with the most secure blockchain, given its longevity and global utility. Additionally, it is easier to find a payment gateway to facilitate BTC transactions to your employees.
- USDC: One of the most growing stablecoins, issued in partnership with Coinbase. This USD-fixed coin provides secure and fast transactions with minimum divergence from the $1 value.
- DASH: DASH has developed as a cost-effective way to transfer digital assets. It is characterised as one of the fastest payment systems with a plethora of facilitators and merchants.
- ETH: The second-best cryptocurrency after BTC. The Ethereum adoption rate has tripled compared to 2022 numbers, which is attributed to the security and development upgrades the company has issued.
Crypto Salary Systems - Benefits & Challenges
Paying with cryptocurrency seems like the ideal solution for companies, especially when dealing with remote and offshore teams. However, there are several challenges that come with this trend. Let’s review the pros and cons of crypto salaries.
Advantages
- Quick transactions that are settled in a few minutes, in most cases.
- Crypto payments do not rely on centralised financial institutions, like banks and exchanges, which makes them cheaper and decentralised.
- More flexible than conventional payment methods, giving the employees a choice between fiat and crypto, including tens of coins and tokens.
- Hiring talents regardless of their local economic restrictions and geographical location.
Disadvantages
- Cryptos are highly volatile, and employees’ earnings can change minute by minute. Stablecoins, like USDC, are an exception because they are pegged to fiat like USD or EURO.
- Some countries impose severe restrictions on dealing and transacting in cryptocurrencies.
- Changing global laws and regulations on crypto adoption.
The Best Way to Pay Employees in Crypto: Step-by-Step Guide
Introducing a crypto compensation system could be the best idea to elevate your business and reputation. However, it all depends on several internal and external factors, like ensuring fair market opportunities and taxable income.
Therefore, before you start paying employees in cryptocurrency, here’s what you need to do.
- Check the local law regarding cryptocurrencies: consult with the local revenue authorities about the capital gains tax implications, for example, whether USDC is taxable and ensure compliance with the Fair Labor Standards Act.
- Consider a safe and/or stable cryptocurrency: Bitcoin provides the safest transaction environment, while stablecoins, like USDC and USDT, have minimum fluctuations and are easier to handle.
- Find a crypto payment gateway: payroll software and processors are required to channel the virtual funds from the corporate account to each employee’s crypto wallet.
- Utilise a reliable crypto wallet: not all employees are tech-savvy and digitally literate. Therefore, consider offering wallet solutions and instructions to your staff.
Conclusion
Paying employees in cryptocurrencies is one of the fastest-growing trends in Web 3.0 and FinTech companies, allowing staff to receive salaries in Bitcoin, USDT, USDC, and other digital currencies.
Getting paid in crypto helps employees get around the hefty exchange rates, especially for online and remote workers. However, companies must consider changes to pay capital gains tax and compliance with minimum wage requirements.Therefore, transitioning into a crypto-friendly organisation not only positions your business as a sophisticated company in the market but also allows you to onboard talents from all over the world without worrying about payment restrictions.
