There’s no denying that with the Great Retirement, workers have more opportunities to seek what they want from their jobs.
Flexibility and better benefits aside, a new workplace perk is gaining popularity – the option to be paid in digital currency.
According to a global survey by financial consultancy deVere Group, cryptocurrencies could become more common in salary negotiations with younger workers.
More than a third of Millennials (aged 26 to 42) and half of Generation Z (aged 25 and under) would be happy to receive half their salary in Bitcoin or other forms of cryptocurrency, the study found.
A cryptocurrency is a digital asset that uses computer code and blockchain technology to make something work on its own without a central party having to manage the system.
Another survey of 800 US employees by SoFi and Workplace Intelligence showed that 42% of them would like to receive non-fungible tokens as a performance reward.
Non-fungible tokens, or NFTs, are unique assets that are verified and stored using blockchain technology – a digital ledger similar to the networks underlying cryptocurrencies.
Getting paid in digital currency is undoubtedly “trendy,” said Tony Jarvis, director of enterprise security for Asia Pacific and Japan at cybersecurity startup Darktrace.
“Offering to pay your employees with bitcoin can be a way to attract what we might call ‘future-thinking workers,’ especially if you’re in certain industries like FinTech,” he added.
In fact, SharpRank is one of the companies offering to pay in cryptocurrency to attract younger workers. It is an independent rating agency that works with college students who trade as a brand ambassador.
Chris Adam, its founder and CEO, compared the appeal of a crypto salary to young people to “when Starbucks first became popular, it was important to be seen with a Starbucks trophy.”
“It’s very similar in terms of the possibility of having some kind of cryptocurrency because all of their friends are talking about it.”
We’ve found that the younger demographic, who may have higher risk appetites, tend to view the risk/reward tradeoff differently than someone who’s really only ever been paid in cash.
While offering cryptocurrency as a salary has allowed companies to attract young talent, it comes with both rewards and risks for employees. CNBC Make It takes a look at both.
1. Fast Payments
Forget waiting times, exchange fees and additional costs associated with traditional banking transactions — Receiving payments in cryptocurrency can be very quick, and that gives employees some level of security, Jarvis said.
“When your employer makes a payment to you [digital currency], as soon as your employer makes this payment, it will be in your account in the next second. You don’t have to wait until the next day.”
Receiving cryptocurrency payments can be very fast, and that gives employees a level of security, said Darktrace’s Tony Jarvis.
Luis Alvarez | digital vision | Getty Images
With younger investors’ growing interest in cryptocurrencies, it’s “no surprise” that they would prefer to get paid this way, said Sumit Gupta, CEO and co-founder of CoinDCX, a cryptocurrency exchange platform.
“They would have instant access to crypto and hold it in their portfolios without having to exchange from fiat, which entails an additional transaction fee.” Fiat money refers to physical money backed by a government.
2. Avoid taxes – or not
When it comes to cryptocurrency tax laws, the country you work in matters. Some countries are “very lenient” in this regard, Jarvis said.
For example, Portugal is known as a crypto tax haven because of its 0% tax on Bitcoin.
“Given how much these assets grow over time, they’re significant gains to make by saving on this tax side of the equation,” Jarvis added.
However, more countries may tighten their reins on digital assets in the near future “to boost consumer confidence and security,” Gupta said.
Later this month, starting April 18, individuals in the United States will be required to report cryptocurrency transactions to the Internal Revenue Service.
Gupta added that similar measures have been implemented in India, where a 30% tax is levied on cryptocurrency income.
“It’s important for employees who are paid in crypto to be aware of how such changes will affect their ownership and use of crypto assets… Being constantly aware of policy changes allows users to quickly spot developments respond,” he said.
3. Volatility: a double-edged sword
It’s no secret that the crypto market is volatile.
Even Bitcoin, one of the most popular cryptocurrencies, is not immune to wild price fluctuations — It has fallen sharply since November, falling more than 40% from a record high of around $69,000.
However, the growth in Bitcoin’s value over the past decade cannot be overlooked, as its value started with “a few dollars,” Jarvis said.
“If you get your paychecks weekly or monthly, that comes in as a certain dollar value today and automatically grows over time…there are some serious returns.”
The crypto market can be volatile, but it still attracts young people with “higher risk appetites,” said SharpRank’s Chris Adam.
Insta_Photos | Istock | Getty Images
As for SharpRank’s Adam, navigating the ups and downs of the digital currency “can be a very positive experience.”
“We see a number of kids going through cycles like this … say, overnight I wake up and [cryptocurrency] has depreciated by 500%. The first thing I’m going to do is ask why, and then I’ll find ways to make sure that doesn’t happen again,” Adam added.
“I think that’s an applicable skill in asset allocation and investing.”
Even so, owning or paying in cryptocurrency may not be for the faint of heart.
“We found that the younger demographic, who may have higher risk appetites, are more likely to see risk-reward through a different lens than someone who has really only ever been paid in cash,” Adam said.
4. Cybersecurity threats persist
Though cybersecurity threats aren’t unique to cryptocurrencies, industry expert CNBC Make It said breaches “will persist as long as crypto remains popular.”
“Many scammers and attackers target crypto wallets — They use social engineering just like we get phishing emails,” Jarvis said.
“And unless you’re a security expert, it can be very, very difficult to know exactly how to secure these assets. They’re storing assets on a third-party platform, so there’s a risk there.”