2022 will be the year where employees will be paid with cryptocurrencies

By Jack Kelly

Last year companies were forced to struggle to find employees. After years of taking people for granted, the pandemic upset the labor market. There were about 11 million jobs available and a shortage of people willing to take them.

In their quest to attract and hire talent, companies had to make fundamental changes. They offered higher salaries, enrollment bonuses, remote, hybrid and flexible forms of work, individual guidance and free college tuition. Even with these facilities, the seats remained vacant.

There is another lure that some businesses are looking at to entice people to join their businesses, paying in Bitcoin and cryptocurrencies. In 2021 we saw digital assets show a parabolic course. The number of new cryptocurrency projects and the incredible rise in the value of this category of assets has caught the attention of America and the world.

For some people, buying digital assets has been seen as a hedge against the US dollar, which is undervalued due to rising inflation and the controversial policies of the federal government and the Federal Reserve. Other groups, especially young people, saw cryptocurrencies as a “YOLO transaction” (you only live once) that could make them rich fast.

Burdened with heavy college tuition, exorbitant apartment and house prices, combined with worrying rising prices for all commodities, digital assets seemed like the only way to make ends meet.

If you are paid in US dollars, as inflation increases, the value of your check decreases. Recent data from the Bureau of Labor Statistics in the US show this increase in costs.

The consumer price index in September jumped 5.4% higher in 2021. The increase was so rapid and rampant that the US government called for a nearly 6% increase in social security benefits. This is the largest increase in the last four decades.

The sad reality is that if you do not receive a strong increase in 2021 and inflation stays the same or continues to rage higher, you will actually see a reduction in your salary. This does not mean that your company pays less, but that the purchasing power of your salary does not have the same value as it once did. It’s like a road race in which you stand still and everyone runs next to you. Every dollar you have is devalued and you need more money to buy the same products than about a year ago.

We see signs of change in payments. Miami Mayor Francis Suarez has said he would receive a “100% Bitcoin” salary and offer cryptocurrencies to civil servants. Eric Adams, the new mayor of New York, also announced that he is considering paying people in Bitcoin and other digital assets, and will accept his first three payments in Bitcoin. Sports stars Russell Okung, Odell Beckham Jr. and Aaron Rodgers said they would “at least partially be paid in cryptocurrencies,” according to Bloomberg.

With the prevalence of distance working, companies are turning to outside partners to help them deal with payments, taxes and compliance with local specificities. Alex Bouaziz, co-founder and CEO of Deel, a company that manages such issues, offers to pay employees and contractors with cryptocurrencies. Deel can deliver payments directly to bank accounts, digital wallets, including PayPal, Payoneer and Revolv, or directly to the employee.

If you are receiving a cryptocurrency salary, you must have a “strong stomach” and feel comfortable seeing strong profits along with scary dips in their value. Cryptocurrency payments are not without risk. There is great instability in this area.

In 2021 the price of Bitcoin reached $ 67,000 and then fell below $ 30,000 and then bounced again. Ethereum saw a record high of around $ 4,800 on December 1 and then traded lower around $ 3,600 to $ 3,900. If you were paid in Bitcoin, Ethereum or other cryptocurrencies when they had a higher value and then the price collapsed, you would owe taxes based on the higher value you paid.

For people who firmly believe in the future of cryptocurrencies, are open to volatility and risk, and have a long-term horizon, paying in Bitcoin can be an exciting new way to boost their wealth.