Cryptocurrency is a digital form of currency that is steadily revolutionizing how different types of payments and business transactions are carried out.
In fact, the thriving gig economy of today is gradually incorporating the use of crypto pay stubs as a flexible option for freelancers to get compensated.
This article will explore cryptocurrency as an alternative form of payment as well as the challenges and advantages of using crypto pay stubs in the gig economy.
The Challenges of the Gig Economy
The gig economy, also called the flexible labor market or the freelance economy, has become a major contributor to providing flexible work arrangements to suit different lifestyles and employment preferences.
While recent statistics show that the flexible labor market has contributed over $204 billion in gross amounts, it continues to face numerous challenges, such as:
Late payments. From a legal perspective, freelancing has fewer safeguards, especially when it comes to receiving timely payments. Some clients don’t take their payment obligations seriously because there are no serious consequences for delayed payments. Even if the client pays the freelancer on time, factors such as different banking hours can extend the time it takes to process payments.
Incompatible payment preferences. In some instances, the freelancer cannot receive the payment via the client’s preferred payment channel, and vice versa. Also, not all types of mobile or e-payments are supported internationally, a harsh truth for contractors based in developing countries.
Risks of fraud. Freelancers are also vulnerable to fraud. Scammers disguised as companies are rampant these days. A contractor who doesn’t know how to identify scam job listings may fall prey to fraudulent projects and end up empty-handed.
Cryptocurrency: Alternative Payment Method
Cryptocurrency payments involve the exchange of digital currency for goods or services. Bitcoin, Ethereum, Litecoin, Dogecoin, and Cardano are some of the most commonly used forms of cryptocurrency.
Unlike a regular banking system, cryptocurrency uses blockchain technology to verify payments and a decentralized peer-to-peer system that enables people to send payments anytime, anywhere. Crypto wallets are an integral mechanism that lets individuals store their crypto earnings and funds.
Industries such as online gaming, digital commerce, and finance are no strangers to using crypto payments to complete transactions and compensate employees. Businesses that use crypto payments find it easier to implement transparency and flexibility in most, if not all, of their transactions.
On the other hand, employees often prefer this type of compensation since fast-changing crypto trends can mean a big jump in value for the currency they are getting paid in, which can sometimes double their income.
The decentralized structure of cryptocurrency payments also makes them less prone to technical disruptions, a recurring problem in bank transfers and mobile transactions. More importantly, it is faster and less costly to transfer cryptocurrencies.
In a nutshell, crypto pay stubs, like their traditional paper counterparts, provide complete information about an employee’s earnings.
Paystubs elaborate on the employee’s gross and net earnings, tax deductions, voluntary and involuntary contributions, and other adjustments to their income. What sets crypto pay stubs apart from physical pay stubs is their versatility and the fact that they can be filled out and sent to employees much more quickly.
The more employees get familiarized with cryptocurrency, the easier it is for employers to use the said digital payment to incentivize their staff.
For instance, employers can grant bonuses in the form of crypto, which is ideal since employees receive their monetary rewards almost instantaneously. Crypto wages are also secure and charge lower transaction fees.
Challenges of Cryptocurrency Pay Stubs
As much as there are advantages to using crypto pay stubs or wages, there are also some challenges, such as:
Non-universal. Not all countries support the use of crypto payments for business transactions and employee compensation. Freelancers based in countries where crypto is deemed illegal will have to reconsider taking on projects that pay using digital currencies.
Volatile prices. Crypto prices are inconsistent. Its value can increase as quickly as it drops. The unpredictability leaves employees with less income and an erratic foundation for additional benefits and incentives.
Inconsistent international regulations. Cryptocurrency is illegal in countries like China, Bangladesh, Morocco, Egypt, and Afghanistan. Given that not all countries trust cryptocurrency, there remains a lack of consistent and internationally accepted laws governing crypto transactions.
Trust and Compliance. Employees who are not well-versed with all things technology and digital payments may not be open to the idea of receiving their income in crypto. Employers must keep in mind the specific tax implications of crypto wages. If they are hiring workers internationally, they must abide by the existing cryptocurrency guidelines where their employee is based.
Realistically speaking, crypto payments still require more solid groundwork to establish themselves as trustworthy fiat counterparts. Not to mention, the trends in crypto prices can either prove advantageous or financially risky for businesses and employees.
If you are a business owner looking to start paying your employees using crypto, it is best to have a thorough and open discussion with your staff first. Lay out all the potential risks and discuss the corresponding benefits.
You must also meet your employees halfway in establishing a clear payment schedule and agreeing on which cryptocurrencies to use to compensate them for their hard work.
More importantly, align the use of cryptocurrency pay stubs and payments with your business structure and finances to avoid compromising your operations and the satisfaction of your employees.
Cassidy Horton is freelance finance base research writer and published hundred of articles on money, banking, loan and more. Her work is published authority finance site on Forbes, Money Under30, NerdWallet and many other finance brands. Further she is considered financial expert by MSN, LegalZoom & Consolidated Credit.