It is not the first time in history that people such as professional athletes are asking to get paid in Bitcoin, and it is not the last either. It is part of a trend, one that seems to repeat itself in cycles. When people see Bitcoin rise in value, they
start clamouring for wages
to be paid in the new age currency, but when it falls in value, they quiet down. So this time around, with Bitcoin clawing its way all the way up to $11000, it is not surprising that there are many people asking (and preferring) to be paid in Bitcoin. The
thing is, there are many reasons for and against this, and the likeliness of this happening, at least in the short term, is slim. Yet, now that we have arrived into the second decade of cryptocurrency existence, we need to strongly consider the many possibilities
and abilities that cryptocurrencies and Bitcoin specifically provide to the world in general. After all, if all works out as it is supposed to, and as it seems to be going, cryptocurrencies will end up being a major part of the daily lives of the average citizen.
But for now, all we can do, is try and explore the options of the modern day person desiring wages in Bitcoin, why it might not be a wise idea, why someone might not like the idea, what the effects of it might be and how likely it is for Bitcoin wages to happen
in today’s world.
The effect of large scale investment
One of the largest effects of large scale investment is that Bitcoin has been seeing a surge in value over the past few weeks. The surge has allowed it to
go back to $11000 in value, but what is most fascinating is the slight stabilizing effect that it has had on the currency. While there are still lurches both towards up and down, trending towards higher prices seems to be endless, while the volatility of
the currency seems to be a bit lower than it used to be. As a result, one cannot help but wonder whether BItcoin is approaching a point of stability where it might stop being a tool for speculation and start being a stable currency that might become useful
in order to pay for goods and services. This might be debatable, but one thing is for sure: the investment that is happening, on a large scale, is helping Bitcoin recover and institutions are as much to blame for this as private investors.
The point of stability will not be happening at any of the coming highs though. Bitcoin might keep growing, and
some might even consider buying Bitcoin, but the currency is not going to be stable at 15 thousand dollars. Bitcoin is going to come down to a more manageable level one more time and
will stabilize at that point, which is when it will be most useable as a currency to pay wages. But that is not when the people want to get paid Bitcoin, because they will not see value in Bitcoin when it stops growing. Everyone wants Bitcoin only when it
is growing quickly and providing returns, since most who are asking to get paid in Bitcoin are hoping to make money off of it.
The effect of wages on the exchange markets
The problem with not wanting Bitcoin wages when the crypto stabilizes is that it misses the biggest point. Once a company starts paying wages in cryptocurrency it will be competing with large scale investors and investors holding the currency in order to
be abel to purchase the crypto. After all, it would be impossible to pay wages with a currency that you do not have. With additional competition comes additional demand and a limited supply. This means that the value of Bitcoin will go up the moment a large
number of companies start paying wages with the help of Bitcoin, which would have the exact result the people have been hoping for, previously. Except, this is not how the majority of the people see it.
Many think that the stabilization of Bitcoin would mean that they gain no net benefit beyond whatever Bitcoin has to offer. No return on investment basically, which is the wrong way to look at it, for the reasons stated above. But beyond just the increase
in value from the base stable value, Bitcoin wages would also result in a stable stream of exchange for the currency throughout the market. There would be someone buying the currency and someone selling the currency at all times. This constant exchange of
the crypto would increase the market capitalization and the value of the coin at the same time, while also allowing it to become less volatile over time. The constant flux of Bitcoin would allow for the stable value of Bitcoin to remain at a steady level,
which means that the currency would become even more viable as a reliable currency for the daily use of purchasing and selling products.
In the end, wages paid in Bitcoin would actually benefit the markets, simply by introducing the much needed stability to the already high value of Bitcoin. The more stable the coin is, the fewer people speculate with it and the closer the currency comes
to its original intended purpose as an actual currency. This would make a net win for the entire world, providing it with a stable, untraceable and easily transferable piece of currency which it is great need of right now.
How likely is this to happen?
Unfortunately, the wage payment is very unlikely to happen any time soon. The problem with wages is multi levelled. The first level is the lack of stability that the coin displays right now. While stable growth is happening and volatility seems to be slightly
down from previous levels, the truth of the matter is that there is no guarantee that Bitcoin will have the same value tomorrow as it has today - especially if you consider how fast the value can fall. This would make Bitcoin a liability for a company, since
in the absence of a specific contract, it might end up still owing the person it paid in crypto after the fall of the crypto’s value resulting the wages not being paid fully. While a good contract might mitigate this issue, it is still one that might bother
a number of people, especially those who would be getting paid in cryptocurrencies. Nobody wants to end up burnt by the fact that cryptocurrencies are not stable and lose a chunk of their expected wages because they didn’t realize the coin might have dropped
in value the day after. But this is a minor issue, when compared to the next.
Competition between large scale investors and companies trying to pay wages, which was mentioned before, is not only going to drive demand. For investors, cryptocurrencies are speculative tool. They make money off of the changes that happen in the value
of the cryptos, so for them, it is best if cryptos are kept volatile. On the other hand, those who would be paying and/or getting paid, would prefer for the coins to remain stable so that they would be able to receive stable pay without issue.
This creates an incentive for both sides to either make the coin more volatile or more stable, just so that the other doesn’t get it. If we consider the fact that currently most of the currency is owned by investors speculated and getting rich off of the
value changes of Bitcoin, it is only logical to assume that they will do their best in order to keep it that way. For them, the real money is in Bitcoin that can go from $5000 all the way up to $15000 in a week, so that they can grow the amount of capital
they have by a huge amount. Which is why they will do their best to prevent cryptocurrencies from going too stable. This means there will come times when whales will dump the coins they have in order to have the value drop significantly, and disincentivize
anyone from wanting to be paid of the wages. Then they are going to simply purchase the coins back in order to pump the price and keep the currency volatile. This process might seem like a very time consuming project, but there are some that would keep doing
this in order to lengthen the amount of time and the amount of money they can get out of the currencies.
In the end, the likelihood of cryptocurrencies becoming a way to pay wages is very low, at least in the short term. In the long term, as the market naturally becomes more stable and the coins stopped being as volatile, the cryptos will become more ubiquitous
in their use as currency and soon enough might even become used for currencies. But how long do we have to wait till then, we are not sure.