February 07, 2022 - 10 min read
Mentions of cryptocurrency no longer conjure up images of hooded hackers, their shadowy faces shielded from view. On the contrary, images of VC cowboys with flashy outfits rubbing elbows with fresh-faced college students, computer scientists, gamers, and other creatives in the flourishing Web3 industry come to mind instead.
Another pattern seems to have emerged recently of famous or otherwise notable individuals announcing plans to take crypto assets as part or all of their salaries. Headline after headline seems to bring news of another familiar singer, dancer, sports star, and even politicians taking some form of crypto as payment for their work.
Additionally, thousands of laser-eyed youth in the global workforce are asking questions of their own employers as to how they can take their own salaries in crypto or stablecoins. Freelance professionals, gig workers and other nimble companies might grow their businesses and expand their networks by embracing crypto salary payments in one form or another.
Despite efforts from firms like BitWage, which offers Bitcoin Lightning Network payroll services, traditional bank transfers are still the most commonly used option for millions of workers globally. Indeed, traditional financial institutions have an advantage over digital assets in that most people still prefer to take their salary in fiat currencies.
Nevertheless, individuals as well as companies which participate in some form of crypto payment infrastructure will have several advantages. Notably, fees are much cheaper, transactions are executed more quickly, and the crypto assets have the opportunity to appreciate in value — compared to fiat currencies, which currently face major inflationary issues.
Since 2020, the number of crypto-related jobs has absolutely exploded, with LinkedIn reporting more than a 650% increase in job openings. Thousands of positions have been filled by banking and tech institutions like IBM, Amazon, Meta (Facebook), and much more.
Even central banks are joining the party, with the Federal Reserve Bank of Boston announcing their search for a head of project management for its central bank digital currency (CBDC) pilot program. In addition to job openings, employers on Wall Street are also offering higher pay and larger bonuses, with some firms offering 50% compensation bumps to lure crypto talent.
Furthermore, millennials and younger generations are spending larger portions of their life on the internet and mobile devices. Aside from traditional forms of remote work, these individuals engage with their favorite content creators on social media platforms, and have formed communities and bespoke economies around their favorite creators by supporting them monetarily.
It is no surprise, then, that influencer marketing has been so impactful in its deployment thus far. These virtual communities, and their respective economies, are likely to continue the same trend in the near future as the metaverse comes into existence, and more people find themselves earning a living from the digital realm, in a digital currency.
The metaverse may be uniquely positioned in that its infrastructure gives creators new ways of interacting with their fans, creating new opportunities for collaboration and connection. For example, creators can host virtual reality meetings with their fans, with unique non-fungible tokens (NFTs) serving as entrance tickets. Holders of these NFTs may continue to hold certain privileges or be granted special access to their favorite creators.
They could also receive small percentages of royalties from the creators they support, making their financial relationships more symbiotic in that monetary energy will flow back and forth instead of unilaterally as it had before. The question, then, is not if , but when the use of crypto and other digital financial instruments become ubiquitous.
Many familiar faces have already openly declared themselves to be crypto holders, with some of them taking part of their salaries in crypto or stablecoins. For instance, Argentinian football star Lionel Messi received cryptocurrency as part of his $30 million welcome package from French football club Paris Saint-Germain.
Moreover, superstar Cristiano Ronaldo received JUV fan tokens prior to a matchup between Juventus and Benevento, making him the first footballer to be officially remunerated with crypto. JUV is the official Juventus fan token which grants voting rights on certain club decisions, as well as access to various perks and prizes.
In the U.S., Los Angeles women’s Angel City FC became the first women’s sports club to partner with a crypto platform, Crypto.com. While this partnership did not include direct payments of salary, the firm minted 5,000 NFTs by fractionalizing the team’s emblem, selling the assets to devoted fans.
Hip-hop star 50 Cent actually accepted Bitcoin as payment for his album Animal Ambition back in 2014, back when BTC was selling for $600. The rapper managed to collect about 700 Bitcoins, meaning if he HODLed all of it, his initial $460,000 of BTC sales would be worth nearly $31 million USD (at a BTC price of $44,000).
Moreover, several American football players have recently dipped their toes into the waters of taking crypto payments as well. The Green Bay Packers’ quarterback Aaron Rodgers has partnered with Cash App payments to accept part of his salary in Bitcoin. Rodgers is set to earn $33.5 million next year, but did not disclose how much of his salary would be converted to BTC. He also donated $1M of BTC to his fans through a Twitter announcement and marketing campaign with Cash App.
High-profile NFL quarterback Tom Brady took some of his 2021 salary in crypto as well. Though he did not take crypto directly from the NFL, he did become a brand ambassador for FTX Exchange after taking an equity stake in the firm. He also launched his own NFT platform called Autograph, attracting iconic brands and names in sports and entertainment.
Displaying an even stronger conviction for crypto, Carolina Panthers’ Russell Okung opted to receive half of his 2021 salary in Bitcoin, at which point BTC traded at roughly $27,000. Though the NFL team did not pay Okung in BTC directly, half of Okung’s $13 million salary was converted to BTC through Lightning network payments app Strike.
Politicians are not letting athletes and entertainers have all of the fun with regards to crypto. For instance, four U.S. politicians have publicly stated they would convert a part of their salaries into Bitcoin. Miami Mayor Francis Suarez, New York City Mayor Eric Adams, Tampa Mayor Jane Castor, and Jackson, Tennessee Mayor Scott Conger said they would take their paychecks and convert part or all of them to BTC as state law would not permit direct crypto payments yet.
Mayor Suarez, who won re-election in Miami in Q4 2021, plans to make the high-flying Florida city a blockchain and Web3 hub. In addition to converting 100% of his salary into Bitcoin, Mayor Suarez is also working on a plan to offer employees options to take municipal salaries in cryptocurrency.
Miami already operates its own MiamiCoin cryptocurrency, created in partnership with the group CityCoin. The city will soon give out a Bitcoin yield from staking MiamiCoin as well, providing a sort of dividend to city residents, with the mayor stating that in the long run, the need for city residents to pay taxes may be reduced or eliminated entirely.
There are several potential setbacks to using crypto, many of them with regards to lack of regulatory clarity. If a company decides to offer crypto as part of its payroll program, they can pay directly in crypto or have employees convert salaries into crypto right away. However, this could pose problems if the salary were paid in a currency like Bitcoin for several reasons.
First, the price volatility of cryptocurrencies would effectively make one’s salary one that is highly variable and dependent on market conditions and sentiment. For instance, a $5,000 per month salary paid in Bitcoin would result in a different amount of Bitcoin if the price per BTC were $50K compared to $25K.
It would hardly make sense to try and plan one’s life around a budget if one’s income couldn’t be relied upon to remain stable over time. As such, payment in fiat-pegged stablecoins or simply allocating a small portion of one’s remunerations towards more volatile crypto assets would be prudent, with the choice of asset and ratio to allocate being left for individuals to decide for themselves.
Furthermore, selling one’s Bitcoin too soon after receiving a salary could incur hefty capital gains taxes, potentially defeating the purpose of holding an appreciating asset like BTC. Of course, this problem is location-specific, but will nevertheless apply in many jurisdictions. Likewise, payments in stablecoins may not be withheld by the government for taxation or funding of other social services, meaning that the income could not be reported on a W2 form in the United States, for example.
This points to another potential difficulty, which is obtaining a mortgage loan if one’s wealth is tied up in crypto or stablecoins. For instance, in the U.S. W2 workers may easily obtain low interest home loans with lower down payments in comparison to someone employed by a crypto firm, accepting their salary in any other format aside from the W2 form. Such workers would be scrutinized more strictly, having their access to capital restricted or outright denied since the lender is unfamiliar with crypto or imagines it too volatile to consider of any value.
Difficulty obtaining a home loan is frustrating for individuals holding significant portions of their wealth in crypto, and therefore must be addressed as crypto gains mainstream adoption. What’s more, selling crypto to purchase real estate incurs taxable events, which may be avoided altogether by using a cryptocurrency like Bitcoin or Ethereum as collateral. Fortunately, crypto-focused mortgage firms like Milo have begun offering U.S. home loans to cryptocurrency holders without reference to FICO credit scores or U.S. tax returns.
It should not be expected that cryptocurrency salaries will suddenly become commonplace, but it seems inevitable that such a threshold will be reached eventually. First, nimble startups in the tech and creative fields will offer cryptocurrency options to their workforce, perhaps even for aesthetic purposes. As mentioned, the infrastructure and regulatory framework may not yet be favorable to do so.
Nevertheless, this is where the process of adoption begins. As the economy continues its march towards digitization, financial institutions will adopt and integrate digital assets into their operations, offering services first to retail users followed shortly by their workforce in the form of remuneration.
As more employees take cryptocurrencies as payment, especially Bitcoin, a different mindset is likely to emerge in the zeitgeist of the workforce. That is, a future-oriented, savings mindset should be expected to take over the consumption orientation incentivized by ever-inflating fiat currencies. With the option to swap coins to tokens to NFTs with the tap of a button, paydays are set to become a lot more interesting in the coming decade.
In fact, they may even come to be known as significant trading events to watch in financial markets if monthly salaries can be easily moved onto exchanges and traded after receiving funds. There is so much to look forward to as we find new ways to connect and interact, creating exciting opportunities at the digital frontiers of finance.
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