Monday, June 5

More and more celebrities and athletes collect their payroll in Bitcoin. It’s a risky move

Taking payroll in bitcoin seemed like a good idea when the cryptocurrency was on the rise, but the recent drop may have caught those who made the decision to receive their salary this way on the wrong foot. And they are not few. as they point from Recode, numerous athletes, celebrities and influencers, mainly from the US, have publicly announced that they receive their payments instead of dollars in bitcoins. A move that seemed very lucrative, but carries its risks.

From politicians to NBA stars. Among the personalities who have opted for this modality are stars such as Klay Thompson or Andre Iguodala, NBA players until Eric Adams, mayor of New York, passing by the NFL player Aaron Rodgers.

In Europe we also have some examples in the world of sport, such as the Southampton that you will pay your premiums in Bitcoin or Messi himself, which in this case is not directly a charge in BTC but part of incentives in ‘fan tokens’. It is not something new, since in 2017 we saw that in Japan there were already companies that began to pay interested employees in bitcoins. Seen the return since then, it was as if they had doubled their salary.

Celebrities can allow their salary to vary so much. As in most investments, success or loss depends on the risk we are willing to accept and how lucky we are. Bitcoin, a value declared “extremely volatile” by the Bank of Spain, can go up or it can go down.

The question is: are we willing for our salary to depend entirely on a value that can go up or down so much? For many celebrities, their salary is a small percentage of their income and therefore you can afford that risk. But there is the case of some soccer players, where it is not their salary but some supplements that decide to charge in Bitcoin.

In reality no one is directly collecting their salary in bitcoins. When we talk about collecting payroll in bitcoins, we must understand what exactly we mean, because the truth is that both in the US and in the European Union it is prohibited to do so. These people receive their salary in bitcoins, but technically they are paid in dollars or euros. The conversion is done a posteriori, just before sending them the money and with the value that the Bitcoin has at that moment.

This is because the laws require the establishment of a minimum wage and payrolls are associated with a series of labor rights protected by the corresponding economic organizations. That is to say, the States cannot allow, for example, that if Bitcoin were to sink tomorrow, the person would see their payroll drop to levels below the minimum.

Miami started paying salaries with Bitcoin to those who wanted: six months later it is still a disaster

Bitcoin wants to be mainstream, but is still unable to establish itself at these levels. That celebrities want to get paid in bitcoins is one thing, but that it becomes a financial instrument on a day-to-day basis is much more complex. It is the case that the greatest strength of cryptocurrencies is also their greatest challenge to be used for payroll, for example. Their decentralization and not having any organization that watches over their interests is a handicap in cases where we are not just talking about an amount of money, but about a set of rights.

An example of the difficulties of paying payroll in bitcoins was seen in Miami, where the city council allowed city employees to receive part of their salary in bitcoins. But the plan didn’t work out. In addition to rights issues, there were also logistical issues such as implementing payments and ensuring providers were offering fair changes when converting.

A whole series of technical challenges that could be solved in the future, but that show that there is still a long way to go to be able to collect in bitcoins and that it is still a financial movement that very few can afford.

In Xataka | Why am I not going to invest in bitcoin or cryptocurrencies?