Crypto is increasingly used to pay salaries in developing countries

Crypto is increasingly used to pay salaries in developing countries

people who live in countries who experience hyperinflation or have a prehistory of financial instability are increasingly accepting cryptocurrencies as their main source of income.

In countries such as Argentina, Brazil, Turkey and parts of Africa, people turn cryptocurrencies because inflation is running hot, Philipp Sandner, founder of the Frankfurt School Blockchain Center, told Blockworks.

companies use blockchain technology to find talents worldwide and to pay their employees in cryptocurrencies such as Bitcoin, ether and the US dollar as an inexpensive alternative to conventional international money transfers.

"The true advantage of blockchain technology lies in the movement of cryptoassets," said Sandner.

people who are employed by companies based in other countries find digital assets particularly useful.

Joel Oshliegbu, a Nigerian who is employed at the Basenode.io, based in Berlin, is currently paid by his employer in Tether (USDT), "because it is the most popular stable coin to find a buyer and is less susceptible to a bankrupt

As soon as Oshiegbu receives his salary check, he sends the money to a stock exchange and sells his fortune.

"I will receive the money in my local account within a maximum of 10 minutes," he said.

nigeria banned bank trade in cryptocurrencies in February 2021 and introduced its own digital currency, the Enaira in October, but the ban did not prevent the Nigerian crypto community from participating in peer-to-peer trade.

a current chainanalysis report "Landes viewed with the greatest acceptance of cryptocurrencies through normal people" Nigeria worldwide in sixth place in the introduction of cryptocurrencies and in 18th place in the peer-to-peer exchange volume.

A report by the World Bank from 2020 shows that the costs for transfers are low 6.5"> %, more than twice the goal of the United Nations for sustainable development of 3 %. In comparison, cryptocurrency transfers are much cheaper because they are not connected to bank fees and exchange rates.

"If I use other methods to get money, I lose 2 % to 5 % of the funds obtained," said Oshiegbu. "The conversion course is determined by the platform and is usually lower than the current market course, and conversion to locally costs some additional funds."

With crypto it costs almost nothing, said Oshiegbu.

"I get the full value and it works faster," he added.

At the time of the writing of this article, the transaction fees on Ethereum base are about 0.11 USD . This amount is significantly lower than with traditional banks such as the Bank of America, the costs $ 45 for outgoing international transfers.

The employer of Oshiegbu, Oliver Schantin, co-founder and CEO of Baseode.io, says that the employees can choose which token they want to be paid for or have the option to be paid in Fiat currencies.

"Usually people don't want to be paid in Bitcoin or ether because it is volatile, so they prefer something that is coupled to the US dollar," said Schantin.

This assessment is shared by Melissa Quinn, Chief Operating Officer at UMA Protocol, an optimistic oracle with around thirty employees in ten different countries, including Canada, the USA, Brazil and Argentina.

"We avoid payment in ETH and BTC, not because we do not believe in it, but only because volatility makes it difficult," said Quinn.

The price volatility is not only limited to ETH and BTC, said Quinn.

"We actually see [Volatility] with exchange rates and local fiat currencies, which is why we offer to pay in USDC, as this is stabilized and compensated for internationally for all of our employees."

Expansion of the talent pool

The payment of international employees in cryptocurrencies not only benefits the employee, employers also receive access to a significantly larger talent pool.

"This leads to a variety of cultures and perspectives that can have a strong impact on the ability of the company to develop great products," Lena Bachmeyer, technical recruitment at SET Labs, told Blockworks. "The flexibility and relief of the sensible integration of everyday life and work is one of the main advantages that are interested in people in the professional change to Web3."

For Schantin, the payment of employees through cryptocurrencies Basenode.io also enables talents in sanctioned countries such as Iran with volatile local currencies.

An Iranian employee who spoke on the condition of the anonymity with block works said that they tend to keep payments as stable coins on Kucoin, a crypto exchange based on the Seychelles.

"But if necessary, I will use a different wallet address that was created on a local crypto exchange. In this way I immediately convert the funds obtained to my local currency and transfer it to my bank account in less than 2 minutes," added the employee.

The employee used crypto to pay rent, Amazon gift cards and books, they said.

"being paid in cryptocurrency was a really pleasant experience for me," said the employee. "I believe that the speed and fees that offer cryptocurrencies make working from a distance or across borders much more convenient and will help us create more efficient markets."

The limits of blockchain technology

Although the payment of employees in cryptocurrencies offers many advantages, people who live in countries with strict cryptocurrency regulations are not available.

The USA again imposed sanctions against Iran in 2018 and recently had the crypto binance Supposedly Iranian crypto dealers were found that no sanctioned people were used. Binance will only hurt this commitment if Iranian customers sanction the US trading bobbar as a result of the transactions on their platform.

Last in China, salary payments in the form of USDT were banned, on the grounds that digital currencies did not have the same legal status as legal means of payment according to CoinTelegraph.

In the United States there are still crypto-salary checks in a relatively gray zone. The IRS defines cryptocurrencies as "" The capital gains tax is subject to the purchase or sale of cryptocurrencies. Income from cryptocurrencies must reflect the bar value of the currency on the day of the payment, so that the value of your currency depending on the value of the cryptocurrency that you select for the deposit fluctuates.