The bitcoin landscape is evolving so rapidly these days it’s hard to keep up.
That said, despite some bumps in the road, the winds of change are certainly blowing in a positive direction for the digital currency.
World leader in currency news Coindesk’s recently published “State of Bitcoin Q2 2014” reveals a dramatic uptick in consumer adoption, with a 7X rise in the number of bitcoin wallets held, from 765,000 in June 2013 to 5.3 million in June 2014. In addition, Coindesk reports some 63,000 businesses are now reported to accept the currency, with established brands such as Dish and Expedia announcing their willingness to accept payment in bitcoin.
It is inevitable, then, that employers and their employees turn their thoughts and attention to the potentials for the currency. Bitcoin-based job sites such as Coinality are experiencing a 25 percent increase in site traffic from job seekers looking to apply for roles paid in bitcoin. For instance, in April of this year, an Irish electronics repair firm called GSM Solutions announced it would begin paying five of its employees partly in bitcoin.
Technology startups in Canada are also giving the concept serious consideration. Bitcoin as a payment option has garnered “surprising” acceptance, says Shrad Rao, founder and CEO of Wagepoint, a Waterloo-based provider of online payroll and the first payroll provider in the world to offer a bitcoin payment option. The feature, which is available to customers today within the Wagepoint application, started out as an experimental hack, explains Rao.
“Like others in the tech community we were attracted to the whole idea of a virtual currency, but honestly we didn’t think it would gain the traction it has,” admits Rao. “Adding bitcoin payment started as a fun side project for our team, but has taken off with customers. Our small business clients—many startups themselves—share our passion for bitcoin and are loving the option.”
Andrew Finkle, cofounder and CEO of Structur3D Printing—which allows its customers to quickly and inexpensively do 3D printing with materials such as silicone, clay, and cake frosting—was encouraged to use Wagepoint’s bitcoin option by his cofounder John Mardlin, who joined Structur3D from another bitcoin startup.
“Jon immediately wanted to take a percentage of his pay in bitcoin, and I soon followed in his footsteps,” says Andrew. Finkle had owned bitcoin currency prior, and participated in local bitcoin meet ups so was very comfortable with taking a portion of his pay in the digital currency.
“I call it my rainy day investment,” says Finkle. Recognizing that bitcoin’s volatility can drive the currency’s value up as well as down, both he and Mardlin hope to take advantage of the upside at some point in the future.
Employees love having the flexibility to take their pay in bitcoin. After his CEO casually mentioned the bitcoin payment option in conversation, one software engineer with Toronto-based startup RateHub, who prefers not to be named, quickly went into Wagepoint and set up the payment option himself.
He can also fine-tune the percentage of bitcoin he receives, sometimes taking more, or less depending on his financial situation. The risk associated with the currency’s valuation doesn’t bother this technologist at all.
“I never leave myself financially vulnerable, but more often than not, when I’ve taken my wage in bitcoin I’ve ended up making more,” he says. “And I actually feel like I have more control within the bitcoin realm than I have at the whim of the traditional banking system.”
While some raise concerns that bitcoin is still not widely accepted as a currency, he has found it very easy to exchange the digital currency for Canadian dollars. “In fact, I can complete a bitcoin-based exchange in hours, where it might take days with traditional currency.”
There is still an element of risk associated with taking your wages in bitcoin, due to the volatility and newness of the currency, says Shrad Rao. He always advises his employers to tread with caution.
As one safeguard measure, Wagepoint only allows payment based on net pay (after taxes), to ensure it, and its employer customers stay on side with Canada Revenue Agency (CRA) and the US Internal Revenue Service (IRS). He also counsels employers and employees to take only a percentage of wage in bitcoin, rather than the whole amount, “we care about our customers deeply, and we want to make sure people make rent and all that,” he explains.
Finally, he recommends that employers planning to pay wages in bitcoin have a policy in place and discuss the risks with their employees. “It still is an unregulated currency, and it is important that both sides understand and accept the risks involved,” says Rao.
Of the $120 million Wagepoint is currently processing in payroll for Canadian small businesses, bitcoin-based transactions still form a very small percentage. But technology to make it happen is there, and demand is rising.
“It’s fun and progressive, and that fits the personality of a startup to a tee,” says Rao. “I’m certain we’re going to see more of our customers taking advantage of this feature very soon.