Career Testing
Career Testing
Career Testing
WEB & TECH / MAR. 05, 2014
version 5, draft 5

Bitcoin: Is it the Salary of the Future?

The Bitcoin is currently hovering around $600 per coin mark - higher than the price of silver. Considering where it started out in 2008 - selling at 1,309 Bitcoins for a single dollar - it has grown immensely in the last few years.

More and more people have come to accept Bitcoin as a viable currency in this digital day and age, but will it become mainstream enough to replace cash or bank transfers as a method of paying your salary in the future?

Why Bitcoin Could Succeed or Fail

What makes Bitcoin such an excellent option is that it provides people with a "trustless" way to pay for goods. It presents people with an essentially risk-free way to make purchases in the murky world of online business. People accepting Bitcoins will not need to provide bank information to their employers - instead receiving the anonymous transactions as payment.

Of course, this can lead to tax fraud - a legitimate concern that may cause the IRS to step in and take control of Bitcoin usage.

Another reason that Bitcoin may be here to stay is due to the fact that there are virtually no fees deduced for transactions. With Western Union or regular banks, sending money overseas subjects it to transfer fees, credit card charges, or exchange rate losses.

The purchases made online using Bitcoin are all recorded in a "ledger" - a virtual log that tracks the movement of every single coin. This ensures that no Bitcoins are duplicated, and the system continues to remain tightly controlled.

However, it's not all sunshine and roses with Bitcoin.

 Many people don't understand how the Bitcoin works, so they're hesitant to accept them as a form of salary or payment for purchases.

One serious flaw in the Bitcoin concept is the lack of "gold standard". Most countries have physical gold to back up their currency, but the Bitcoin has no base value. It is a volatile currency that functions similar to a stock, and it rises and falls with extreme unpredictability.

The challenge of buying Bitcoins is one of the greatest obstacles to its success. It is difficult to find the coins for sale, much less be certain that you are buying the legitimate item.

So what does this mean for Bitcoin? Could it be the 'salary of the future'?

As of 2014, at least one city has agreed to use Bitcoin as a form of salary. Vicco, Kentucky will be paying its city employees with Bitcoin, with police chief Tony Vaughn leading the way. The government will simply take the state and federal taxes out of his salary before converting the rest into Bitcoin. This ensures that the IRS receives its due, while permitting the Police Chief to use the new form of currency.

The University of Nicosia in Cyprus now accepts Bitcoin as payment for tuition, and many online vendors also consider it a viable payment method. BitPay - the largest digital currency payment processor in the world - has released the Bitcoin Payroll API, a way for American W-2 employees to receive part or all of their salaries in the form of Bitcoin.

Of course, owning Bitcoins means that all of your purchases will have to be made online - a virtual impossibility. Bitcoins cannot be used for the daily transactions for which credit cards and cash are necessary, so receiving all of your salary in the form of Bitcoins could lead to difficulties.

However, holding some Bitcoins is akin to owning silver or gold - it's an investment in your future that could very well mature as the value of the Bitcoin continues to rise. It may be a good idea to look into receiving part of your salary in the form of this new electronic currency. 

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