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Global Payment and Compliance
Considering offering your employees the option to receive partial payment in Bitcoin (BTC)? Our blog breaks down the pros and cons, from potential financial gains and enhanced employee retention to regulatory and volatility risks, so you can make an informed decision for your business.
Since cryptocurrencies are so popular that even Elon Musk is talking about them, it is vital for CEOs to know if it's a good idea to pay salaries in BTC. The prior knowledge of sectors where crypto is successfully adapted and then deriving pros and cons of making salaries partially in BTC can be very useful for any company's financial department. In today’s article, we will analyze exactly these pros and cons and link important sources and research that support each of our arguments.
Before we can get to the pros and cons of using BTC and other cryptos for salaries, let’s check which sectors are adopting digital currencies the fastest. Cryptos are getting more and more popular every day and there are several industries that embrace cryptos the most, making it very convenient for employers in these industries to offer their employees salaries in cryptocurrencies.
The first and most renowned industry where cryptos are changing and reshaping the world is the finance industry. Cryptos are competitors of banks and other financial middlemen as they offer transactions without intermediaries and are trust free as the code becomes the law. Bitcoin, Ethereum, Lite coin, and others have quickly established themselves as popular alternatives to centralized financial institutions. Cryptos are the future of modern financial systems, but they will need more scaling to replace currently available international payment systems like Visa and Mastercard.
Because the cryptos offer a quick, secure, and anonymous method of making payments and withdrawals, online gaming and gambling companies have also welcomed them. Bitcoin and other cryptocurrencies are now accepted by many gaming sites, and some of them have even created their own tokens. The best way to analyze the crypto gaming industry is to check the websites that review and collect information about various crypto betting and online gaming websites. One such website, crypto betting shows that users can even bet on matches of the most popular games using cryptos. These games include CS: GO, Dota 2, Smite, and others. The most popular cryptos used in the online gaming and gambling industry include Bitcoin, Ethereum, Tether (USDT), etc. This is crucial information and shows how much potential cryptos have got.
E-commerce has sold more than 6 trillion dollars worth of products to retail clients in 2021worldwide. This is a huge number, and the sector accounts for 20% of global retail sales. Many companies from the e-commerce sector are starting to accept crypto payments, and this could be the dawn of the crypto age. Companies like Shopify, WooCommerce, Overstock.com, Newegg, and even Microsoft have started to welcome new digital cash.
Apart from the above mentioned sectors, several others are joining the crypto wagon, including charities, real estate, and travel industries. It is very comfortable to just use crypto anywhere in the world rather than withdrawing cash, exchanging it for local currency, and then doing the same back when leaving the country. Travel is much more comfortable when you can use the same digital cash everywhere. Although it is hard to deploy cryptos in real estate it is still growing slowly and for charities, it is a very convenient and cheap way of donating money quickly and anonymously.
This is especially true when the employer is an international company and has to pay its employees in different countries. Bitcoin not only reduces the costs of transactions, but it also lowers currency rate risks, which is a big challenge for companies operating in different countries simultaneously.
When operating in a tech industry, offering BTC as a form of payment can be indicative of a company’s adaptability to cutting-edge technologies and can as a result attract tech-savvy personnel who can provide the company with valuable expertise and skills.
Posing itself as an innovative and forward-thinking company is a very good approach for any company to increase its reputation and brand awareness. This can affect reputation positively.
Cryptos are known for their inability to process massive amounts of transactions per second. For this reason, there is a need for more development to be able to serve millions of people worldwide simultaneously. Scalability has been an enormous challenge for almost all cryptos, and Bitcoin has had this problem since day one.
The fact that Bitcoin can jump from 15k to 23 in several days makes it very unstable for employees as a salary payment method. These spikes and high volatility make it hard for both employees and employers to use cryptocurrencies for salaries. As we can see on the volatility chart below, Bitcoin now is more volatile than the200-day average, meaning it is risky to not only pay salaries in cryptos but to even trade or invest in it.
Lacking a regulatory framework makes it difficult for companies to use BTC as a salary since they have to adhere to their government regulations about taxes. This is a serious challenge for both crypto and governments and needs serious developments not to damage the crypto sector and to tax crypto salaries sensibly. A recent European crypto bill aims to supervise cryptos by defining rules when dealing with the digital cash asset class. With this bill, the EU will bring crypto-assets, crypto-asset issuers, and crypto services providers under a regulatory framework, establishing the precedent for other countries in the world to follow them.
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