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Russell Okung, an offensive lineman for the Carolina Panthers, made headlines in late 2020 when it was revealed that half of his $13 million deal with the panthers will be paid in bitcoin. This was around the time bitcoin began its huge price rally in 2020, and Oung fueled the narrative by liking a number of tweets referencing the story and updating his Twitter bio to "life, liberty, and #bitcoin." While it was later stated that he would be converting a percentage of his income to bitcoin rather than getting paid directly in the currency, the incident sparked debate. This is not the first time that work-related remuneration and cryptocurrencies have been linked. Sequoia Holdings, a Virginia-based software development business, has given its workers the choice of receiving a part of their wages in either ether or bitcoin. “Many of our employees are enthusiastic supporters of cryptocurrency, and we're happy to help them gain exposure to this trillion-dollar asset class. [...] Cryptocurrency has emerged as an important alternative to traditional investments like stocks and bonds,” said Sequoia Holdings’ co-founder and CEO, T. Richard Stroup Jr. The funds in question will be managed by a third-party firm and are deducted after tax.
Why Would Someone Want to be Compensated in Cryptocurrency?
At first glance, it's challenging to understand why someone would want to be paid in cryptocurrency. It is a largely uncontrolled and decentralized currency that is constantly chastised by both corporate executives and policymakers. Why would someone prefer crypto over more widely accepted fiat currency? The straightforward explanation is that cryptocurrency is valuable. In Okung's example, if half of his $13 million contract had been paid in bitcoin in 2010, it would be worth billions of dollars today. The last bull run, in particular, has helped people realize how significant bitcoin, which was previously disregarded, is. Bitcoin has eclipsed gold as the best-performing asset over the previous decade, and more individuals are realizing the benefits of staking a portion of their income in cryptocurrencies.
Is Cryptocurrency Compensation Reliable?
With all of this in mind, it is not unreasonable to expect that remuneration in cryptocurrency will become increasingly widespread over time. Is it, however, sustainable? Probably not. There have been speculations about token scarcity since the significant surge of institutional support for the crypto sector over the past years. As a result, using cryptocurrency as compensation on a global scale would place enormous strain on the sector. Furthermore, dealing with the complexity of crypto-related tax would be difficult for businesses, particularly when it comes to how cryptocurrency transactions are classified in their unique jurisdiction. For example, India is still unclear about how a typical crypto transaction might be taxed. As such, paying salaries in cryptocurrencies can get complicated for both employers and employees.
Should People Get Paid in Cryptocurrency?
Ultimately, the question remains as to whether or not people should get paid in cryptocurrency. Their intentions play a major role in this. If a person wishes to spend all of their money on domestic items such as rent, utilities, food, and entertainment, then receiving payment in cryptocurrency is not particularly beneficial because the majority of the merchants they would have to pay will not accept cryptocurrency. Instead, customers would have to swap their tokens for fiat currency, incurring exchange service costs and maybe even tax fees depending on where they reside. If their intent is to HODL their tokens and benefit from them, having a portion of their salary paid in crypto might be profitable, given they have contingency plans for future bear runs and a source of income for their day-to-day requirements. Finally, what we have now is the ideal possible situation, with individuals investing a percentage of their salary in crypto while using fiat cash for daily use. Due to the fact that cryptocurrency is still a relatively new phenomenon, it is best for people to hedge their bets and not get paid only in crypto. However, that could soon change.