In 2017, Bitcoin's overwhelming volatility caused retail sites such as Steam to stop accepting Bitcoin as a payment option. This is partly affected how Bitcoin was perceived as an asset, such as stocks or gold, and not as money. Who can benefit from the transition to mutual settlements in Bitcoins and how to make employers pay their employees in cryptocurrencies will be explored in our article.
Economic Tool vs. Cryptocurrencies
Many crypto enthusiasts see Bitcoin as an investment tool or stock. The early supporters of cryptocurrencies formed the opinion that Bitcoin should become money. But there is an alternative point of view. According to SEC Chairman Jay Clayton, Bitcoin is not safe, like many other cryptocurrencies, since it can actually be used as a currency.
Moreover, those who are immersed in the industry, like miners, traders, and developers are often ready to accept salaries in Bitcoins. Some of them even use Bitcoin as payment for goods and services.
One of the mechanisms contributing to the adoption of Bitcoin as a means of salary payments may be a higher level of income paid in Bitcoin.
Nevertheless, Bitcoin still has problems with volatility and the volume of transactions that its blockchain can handle. This affects the capabilities of retailers, although payment platforms are now trying to make transfers of fiat to Bitcoin faster and more convenient. But the constant payment of salaries to employees in Bitcoin creates additional costs for tax payments, which, in accordance with the laws of different countries, must be calculated, recorded and paid in fiat.
But some are still trying to use Bitcoin as a payment method. For example, Uber, Expedia, Overstock, Microsoft, and many Shopify stores accept Bitcoin. If we talk about less innovative companies, then one of the first to start accepting Bitcoin was an auto shop in Houston.
Meanwhile, the presence of sites that accept Bitcoin for payment is still not fundamental to the decision of people to buy certain goods or services. Financially literate people try to stick to the concept: “To spend in the currency in which they earn.” “There is a standard recommendation to keep money in the currency in which you spend, and take a loan in the one in which you earn. Everything else is already an attempt at speculation, which even professional investors do not really succeed in now, not like ordinary citizens, as the rate is one of the most difficult predictable indicators. Therefore, those who live and spend money here should keep their money in rubles, for those who prefer, for example, active shopping in Europe, then they need euros. If you have planned spending in foreign currency, now is the moment when it is better to buy it gradually, breaking the amount into lots. This way you will protect yourself a little from rate hikes. I would not recommend experimenting with other currencies, for example, Swiss francs or yen. We remember how in 2006, it was fashionable to take a mortgage in francs because the rate was even lower than in dollars. Such experiments usually do not end well,” said Mikhail Khromov, director of the Center for Structural Research at the Gaidar Institute.
Now Is the Time to Do It
For contractors and freelancers, the explosion of the digital economy has created tremendous opportunities. Now, being at one point of the world, it is possible to work for a company in a completely different country. Nevertheless, there are pitfalls here too.
Most contractors/freelancers are likely to prefer payment in their “home” currency, but some accept foreign currencies. But in this case, the slightest exchange rate fluctuations will significantly influence their salary level. “In the last two months,” says Adam Jordan from foreign exchange specialist Moneycorp, “sterling has moved on a five percent range against the euro, meaning an effective five percent wage reduction for any contractor who is tied into a euro-paying contract.”
Some people like to see currency movements, of course, because their value can drift both in their favor and against it, and many freelancers and contractors may gladly take a chance, but others want some certainty and control. “Banks may charge you a fixed fee for each transfer as well as charging the payer (your client). The problem is there is often a lack of transparency, particularly around the exchange rate charges being made. “Rates of exchange also differ hugely. For example, on June 1, 2015, £10,000 would buy €13,177 from Barclays, or €13,740 from Moneycorp—a difference of €563,” adds Adam Jordan. Problems can also work in the reverse order if the contractor or freelancer pays bills in foreign currency.
Thus, Bitcoin or another cryptocurrency could become a unified means of payment, which is used by people all over the world. The main question is only what kind of cryptocurrency people will prefer to use and how soon business owners will understand that such a system of mutual settlement is not only profitable but also convenient for all parties.