In a sign of growing adoption, workers around the world are opting to be paid in cryptocurrency rather than exclusively in fiat currency. Interest in opting into crypto salaries is surging as the public becomes more familiar with cryptocurrency and more wary of volatile fiat currencies in the throes of inflation.
It’s happening faster in some parts of the world than others. To illustrate this, global payroll platform Deel published a study based on data from 2021 that found that 52% of contractor requests for crypto payments came from Latin America, followed by 34% from EMEA (Europe, the Middle East, and Africa). Other areas were demonstrably behind the curve at the time, with North America and Asia Pacific accounting for 7% each.
The regional instability of fiat currencies is driving much of the interest in crypto salaries. This can best be seen in Latin America where inflation has taken off in recent years. Economist Steve Hanke puts Venezuela at a 395% inflation rate, along with Argentina at 87% and Colombia at 23%.
With that kind of high inflation, it’s easy to see why workers are choosing cryptocurrencies rather than their local fiat currencies, which are becoming rapidly worthless.
The global interest in crypto salaries is spiking even with the ups and downs the cryptocurrency market has seen over the past year, showing just how much people are turning to crypto as an alternative. Through 2022, Deel reported that the number of workers opting in to crypto salaries increased from 61 to 64%.
Younger workers are further fueling the rise in interest in receiving crypto payments. Last year, a deVere Group study found that half of Gen Z respondents and more than a third of Millennials would be willing to receive their salaries in cryptocurrency.
Investing into decentralized digital currency is clearly seen as a better option than investing into fiat currencies, and that’s a trend that’s not likely to reverse any time soon as economic instability looms. Necessity is indeed the mother of invention, and the same could be said for adoption, as well – the more people and businesses need to adopt cryptocurrency, the more they will do so.
Avoiding the pitfalls of Central Bank Digital Currencies
Countries aren’t blind to this. A mad dash has been underway for the past few years for countries to develop their own official currencies, and now countries representing 98% of the world’s economy are doing exactly that. The difference here is that countries are developing digital currencies based on their existing currencies – in other words, they come with exactly the same problems that their fiat currencies bring.
All the same, crypto coins like the USD coin are steadily rising in popularity. Whereas 63% of crypto salaries in 2021 were Bitcoin (according to Deel’s data), 7% are USD Coin.
Just as not all fiat currencies are successfully riding the wave of global and regional inflation, not all central bank digital currencies (CBDCs) are, either. The International Monetary Fund reported that, a year after it’s launch, Nigeria’s CBDC had little uptake. And in Senegal and Ecuador, development on CBDCs has stopped altogether.
CBDCs come with their own inherent issues, and serve as “a (not so) great self-marketing device for regulators and central bankers”, wrote Michele Mandelli on Fintechna in 2021. Serving as little more than unnecessary alternatives to existing digital payment methods, steam will gradually run out for CBDCs.
Decentralized cryptocurrencies, in the meantime, will reap the benefits of not being dependent on national politics, local and regional catastrophes, or access to resources to retain their value – none of which can be said for CBDCs. For more and more of the workers around the world, it’s an easy choice to make. Cryptocurrency simply offers workers far more advantages than typical fiat currency, and it might not be long until we see standard crypto payment options as part of a potential employment offer package. It’s a relatively simple and cost-free benefit for employers to offer, and employees clearly see value in it.
Photo by SPF
