Bitcoin: Would you want to get paid in cryptocurrency?

Bitcoin: Would you want to get paid in cryptocurrency?
From BBC - December 26, 2017

Bitcoin. Lots of people are talking about, but very few own it.

So how would you feel about getting paid in the high profile cryptocurrency?

From early next year, staff at Japanese internet firm GMO Group will be among the latest to find out how that feels.

More than 4,000 employees are being given the option to receive a portion of their salary in Bitcoin.

Critics say it is a marketing stunt, announced at a time when global interest in the financial technology has never been higher.

It also carries risks: the volatile currency slumped last week but has since rebounded by more than 50%.

But what will it really mean for employer and employee?

How does it work?

Bitcoin salaries are usually paid according to the digital currency's value at an agreed date and time.

To keep the numbers simple, if the Bitcoin price was $10,000 and an employee opted to have $1,000 in the digital currency, they would receive 0.1 Bitcoin.

Employees who choose to sell right away would receive the same in cash as they would have been paid (so long as they had arranged for the sale to happen in advance).

But holding onto the cryptocurrency, be it for a day, a week or a year, would see its value go up or go down. That $1,000 may end up being worth $5,000. Or potentially next to nothing.

And so some argue that paying wages in Bitcoin effectively encourages people to gamble.

"If an employee is receiving their salary in Bitcoin, they might as well be receiving lottery tickets", said Massimo Massa, professor of finance at INSEAD.

"They are just participating in a game."

Staff must be made aware that "there's no guarantee that its price will rise and there's no intrinsic value because there's nothing to back it up", he said, adding such schemes could never be compulsory.

So are employees keen?

Despite repeated warnings from renowned economists and analysts that a Bitcoin crash is looming, it seems more of us are willing to take a punt.

Bitwage, a platform set up to convert salaries into cryptocurrency, gained thousands of new users this year as people got swept up in some rapid price rises.

"These days a lot of people are looking to get part, and sometimes all of their salary paid in Bitcoin", said Bitwage founder Jonathan Chester.

The company has this year processed $30m in wages for 20,000 users in the US, Europe, Latin America and Asia including staff from Google, Facebook, GE, Philips, the United Nations and the US Navy. Many of these workers had signed up for the service on their own.

Mr Chester said he converts 15% of his own monthly salary and believes it is "a way of accumulating Bitcoin or cryptocurrencies without worrying about whether you are buying at the right time".

And what about tax?

What is in it for employers?

Is Bitcoin the only option?


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