Work across borders? Work from home? There is a salary revolution coming and Bitwage and partners are driving it.
Most of us work hard to make our living. Salaried employees or workers are possibly the happiest on or around payday but if you work from home with your colleagues over the Internet or if you are an expat who gets paid by their company across borders, the wait for salary is longer.
Your salary may also actually cost you a hefty fee in international money transfer fee and bank charges. This is not an ideal situation for such workers but they have no solution but to bear the delays and costs attached.
The cost of getting paid
The phrase “laugh all the way to the bank” is a cruel joke for those that work from home or across borders. One of the greatest problems for people employing freelancers and for the freelancing folks themselves is simply - how to move money from Point A to Point B.
The options are usually SWIFT Bank Transfer, Paypal or if you work with some rather unconventional folks, then Western Union or MoneyGram.
All of these options are expensive. Choose any of them and you will be hit by high currency conversion charges, high transfer fee that ranges anywhere between 2.5 per cent to 45 per cent (depending on the amount) and a ridiculously long wait.
Even though paypal is near instantaneous by the time you withdraw money in some countries, it can take up to 7 days! If you live paycheck to paycheck, this can be an excruciatingly long wait.
Cryptocurrencies can cut costs radically
Getting paid through bank transfer, wire transfer or paypal is no longer economically viable in this day and age. That is where bitcoin, cryptocurrencies and blockchain can really come to the rescue of the world’s freelancers, expats and others like international students or elderly that depend on these money transfers to survive.
We talked with Jonathan Chester, CEO and Founder of Bitwage, a company that is working to provide salary solutions with cryptocurrencies.
Chester says to Cointelegraph:
“With globalization, we are seen an ever growing trend towards distributed workforces. Because of the advent of the internet, people can work almost anywhere in the world and have almost the same level of interaction with co-workers, bosses and employees as they would in person. However, most innovation around payroll has focused on paying domestic employees, like what you see going on with Gusto.”
According to Chester, this means that when companies pay their distributed workforces, they are just using systems such as the international wire system or paypal. The average cost of sending payments across borders through these traditional payment methods is 4 to 14 days and 8%. By leveraging virtual currencies, these costs can be brought down to same or next day settlements and costs as low as 1%.
New Innovation to the rescue
According to the Bitwage Blog, Airbitz and Bitwage have started collaborating along with others like Coinomi, and Multibit to make getting paid a lot more similar internationally and across borders as it is for domestic workers.
In fact one of the greatest challenge that people transacting through cryptocurrencies face today is that while it is quite easy to give your wallet address to a website (for example an employer’s website), it is very difficult for you to send an address directly to a website and request a payment.
The Airbitz and Bitwage solution is specifically exploiting Request for Payment Address Protocol, an extension to the Bitcoin protocol to address this issue. Airbitz’s CEO Paul Puey has issued a Youtube video that explains how they will implement it.
The system works rather simply as explained on the Bitwage blog and takes out all the usual cutting,copying and pasting out of the equation:
- Go to the scan option in your Airbitz wallet
- Scan the QR code on Bitwage’s Choose Distribution Page
- Choose the Airbitz app and select the wallet to send to Bitwage
- Confirm and you will be redirected to a mobile browser
- Complete the two factor authentication
- Your wallet is saved as the user’s distribution method.
If you would like to see screenshots, they are available here.
Roadblocks in the way of crypto salaries
Everything has its upside and then a potential downside. While the cryptosystem is great for saving costs associated with money transfers and for saving on time, there are concerns. Bitcoin and other cryptocurrencies are very volatile.
When we talked with Jonathan Chester, he concurred that some people may have concerns about cryptocurrency volatility but on the other side he pointed out that cryptocurrencies also break the oligopoly of the correspondent banking system and brings democracy on board.
He pointed out that the bigger challenge remains liquidity as in some countries, you simply just cannot send $1m into without crashing the local bitcoin economy. Chester is also of the view that in countries with unreliable banking systems such as Greece and Argentina, Bitcoin already has a role to play when it comes to receiving wages.
His company Bitwage offers a system that allows people to use the cryptonetwork to get paid but receive money in local currencies or keep money stored in a mix of different currencies.
We also talked with Aaron Lasher, CMO of Breadwallet who has a unique take on Bitcoin’s volatility and receiving wages in this cryptocurrency.
Lasher says to Cointelegraph:
"There is a well-established risk mitigation strategy when investing in volatile assets called dollar-cost-averaging. By earning and spending bitcoin on a regular basis, one adopts a de facto dollar-cost-averaging scheme which alleviates most of the negative effects of volatility - so much so that a hypothetical individual who chose to earn and spend bitcoin as their primary currency starting two years ago at $1,200/coin would be better off today financially than had they stuck with dollars, even though the bitcoin price is 65% off its all time high."
The road ahead
We often think of the well heeled and people of means but seldom of those that have few resources available to them. Today many millions of people in the world remain unbanked or underbanked.
Few companies dominate the forex and the money exchange business as well as international remittances and the systems of today are inadequate for the needs of a globalised world. We can’t definitely continue with business as usual.
Aaron Voisine, Co-founder and CEO of Breadwallet, is right on the money when he says:
“Breadwallet allows breadwinners to protect their earnings against inflation, and gives access to financial services to the 40% of the world population currently who have no access to bank accounts.”
If someone can make getting paid and paying people easier, more power to them.