#18 - Crypto-wages day
Hi there! My name is Diego Parrilla. I’m a developer that became an entrepreneur and my latest company is Threatjammer. Subscribe now to my weekly digest about tech, threat Intel, privacy, and security!
In 2021 New York City Mayor Eric Adams announced that he would accept his first three paychecks in Bitcoin. In January 2022, he confirmed that his salary was converted into Bitcoin and Ethereum via Coinbase prior to the funds being available to him. At the same time, the City of Miami Mayor Francis Suárez said he would do the same and also proposed to the Miami City Commission a resolution to allow “our employees to take a percentage of their salaries in Bitcoin if they so desired.”
The NFL Carolina Panthers offensive tackle Russell Okung asked for 50% of his $13 million salary in Bitcoin. Okung’s arrangement with the NFL meant that they took $6.5 million of his salary and diverted it to the bitcoin exchange Strike by Zap. They then took a fee and purchased 240 BTC on Okung’s behalf.
In the US, the Fair Labor Standards Act, a 1938 statute, dictates workers must be paid in American currency. In Spain, the Labor Laws dictate that the employer must pay the wages in the official currency of the State (Euro). As far as I know, this is a typical pattern in any country willing to tax the workers depending on incomes because then the taxes can be easily calculated and traced.
Politicians do not care about getting paid in crypto, but they want to show the world that their cities can be friendly hubs for crypto-businesses. And sports professionals want to get a better value for their money thanks to sponsoring and advertising contracts. These are necessary baby steps before the end-to-end crypto payment of wages and professional activities mature enough to become an alternative.
This the version 1.0. But there are signs pointing to a future that can challenge the foundation of State Nations. In the beginning, mankind had a naturally monetary arrangement with gold as the standard. With the creation of the Nation-State, we slowly moved to a government-controlled monopoly system. For the first time in centuries, a new asset can challenge this monopoly. It’s happening in front of our eyes slowly but steadily. Let’s see what is going on with the early adopters: remote workers of the digital economy.
There was a time when being an “Expat” meant you were a highly qualified worker that could choose who to work for and where to live. Countries with high quality of life were competing to attract them with very competitive low-tax packages. Soon these low-tax packages became attractive, and even some countries started offering no income tax.
With the explosion of remote working and better communications, the concept of “Expat” is democratizing: more and more people move from their country of residence to places with better prices, weather, taxes… whatever. They don’t need to be very scarce and highly qualified workers; being a good professional is enough. When they move to a new place for a few months, or better to multiple places, they are called “digital nomads.”
Sounds idyllic, right?
No. Because getting a salary when you are in a different country, or even invoicing from a country that you are not living in (or worse, multiple different countries) can be really challenging. Sometimes, a tax fraud. The fact is the “Expat” laws worldwide are driven by the exceptionality of the worker. They exist to manage an exception, but when the exception becomes the standard, it simply doesn’t work.
So how can a digital nomad avoid all the burden of the bureaucratic procedures to get paid? There are companies that can help you, and even countries that are “digital nomad” friendly. But they are patches to fix a broken system: the pitch field where digital professionals play their game is the World, and monetary monopolies constrain their moves. But a serious alternative is, you already guessed: Crypto payments.
If you are a white-collar worker like them but with kids and a loan, you will start laughing: “That’s impossible; I have to pay my taxes to keep the country moving.” Now go back to when you were a young professional, and you did not care about your health plan, your kids’ school, or the weekly pilgrimage to the mall center. They are a new generation of talented professionals that can work and live anywhere without boundaries.
So hey, why don’t I get paid in crypto, keep my savings in my crypto-wallet and only convert to the local currency of the place I’m living now? And, of course, I don’t pay income tax at all! It’s perfect!
Not so fast; traditional companies will not accept an invoice without a purchase order in the currency they work. So if you want to adopt this schema, you need to find non-traditional companies like crypto startups, DeFi, and Web3 that can embrace the model from scratch.
To my surprise, I have discovered a new service economy between this kind of untraditional companies and their workers: they pay them in crypto assets end-to-end. Services like Superfluid or CakeDeFi allow implementing streams of payments to compensate professionals for their activities. A model designed for DAOs but theoretically could work for any company. The funny thing about this model is that it is not something new. It’s something that cybercriminals organizations have been doing since the early days of Bitcoin to pay their workers and the services. It is not so automated and designed, but it is essentially the same process.
State Nations control money flow in their economies thanks to a monetary monopoly. That’s an integral part of the deal between the Nation States and capitalism. But out of the blue, a virtual world in its early stages where there is no need for lawmakers, a central bank, taxes, etc., and the first early adopters realize that they can use it to bypass the rigid laws that limit them the physical world.
When I discovered Bitcoin in 2012, I thought it was the dream of any libertarian or anarchist. At that time, it was impossible to live far from the chains of the monetarist economy controlled by the states. Ten years later, we realize that it was simply a maturity problem.
Enjoy the ride.
The music snippet
Crypto sometimes is a strange parallel universe.