Ryan S. Gladwin reports.
We need to have an honest conversation about how we pay each other in the crypto space.
It's all so… confusing?
Everyone wants something different — measuring their rates with a different ruler leaving us with hands full of rulers, measuring tape and other straight edges.
Some want to be paid in a flat crypto rate (e.g. 1 ETH = 1 ETH), some want a dollar amount of crypto, others want to be paid in stablecoin… and some just stick to plain old fiat (counterintuitive in the crypto world, but oh well).
Due to these confusing payment preferences, employers have to keep their fingers in multiple pies, playing the market while keeping track of everyone's preference — not to mention the gas fees!
Crypto content creator Taylor Mitchell spoke about this issue on her TikTok, labelling payments in the crypto space as a major issue that needs to be solved if cryptocurrency wants to go mainstream.
"A lot of the contractors I use are in high demand so they set their own terms and rates." Taylor explained, "This won't always be the case. Eventually, employers will have the power to set the terms a little bit. Until more developers come into the space, we're sort of at the will of the contractor."
We met with Taylor to dive deeper into this topic.
Different Crypto Payment Methods
Flat crypto rate
Setting a rate in your chosen crypto (most likely ETH) and sticking to your guns is probably the most crypto bullish approach to getting paid for your work. You're essentially ignoring the USD exchange rate of the coin, valuing one coin simply as one coin just like we do with the dollar.
We don't buy milk one week and then next week complain about the dollar increasing in value but the milk staying the same price… or do you?
Taylor Mitchell brought forward the point that this is the approach NFTs take, "[When] an NFT sells for 1 ETH — one day that could be $4,000, the next day $3,000." She explained that her contractors work in a similar way, taking payments just at the crypto value.
So, are contractors and NFT traders assuming that the increase in the price of Ethereum is increasing the worth of their labor? Like I said, extremely bullish.
This approach means that employers and subcontractors, like Taylor, have to track the market. Accumulating ETH when the market is down, in order to pay her contractors when the market is up is the best play for them.
"The truth of the matter is my clients that use this method are only doing it to their own benefit, it is of no benefit to me," the crypto content creator finished.
Dollar amount of crypto
Converting a dollar amount into crypto at the point of payment might make more sense to some, but it also means we are accepting the power of the dollar over crypto. This is something we have to deal with as in the real world, crypto isn't used for payment. If we don't have fiat, we can't survive… for the time being at least.
"This is a very similar issue that occurs while working with international clients on fiat [due to currency conversion costs]." Taylor said, "the whole point with cross-bridge payments is it's meant to be instant and no-cost. Until the world of cryptocurrency levels up to using an appropriate payment system then this is the kind of growing pains [we are going to experience]".
For me, this is the goldilocks option. I am provided an agreed amount without the volatility.
Taylor's issue with this approach is, "you are not avoiding the inflation of USD but you're also compounding the cost of USD".
What's the fix? Well, maybe staking. If you can find a place to stake your stablecoin where the APY is higher than inflation, then you're beating the system. You're still fueling the fire, though. Maybe it's time to get a stablecoin pegged to gold or beanie babies or something.
If this sounds like the way you want to be paid, you should read our piece on everything you need to know about stablecoins. We help choose the best one for you!
Some people want to be paid in fiat, but it might be unclear why. Surely, if we are in the crypto space, we are bullish on it. It should be the first natural option for others to be paid in it, right?
That being said, some people prefer fiat due to the ease of use in daily activities like buying groceries. We all need them groceries (unless you're an AI reading this, in which case please close this tab). And if you're in a country that has restricted crypto as payments, you're sorta forced to accept fiat.
But being paid in fiat means you are missing out on understanding the speedbumps crypto has, just like this. Being paid in crypto also means that if you want to invest in crypto projects, your money is liquid already and can be easily moved around.
"I am very pro-crypto, so I like to use crypto in my daily [life]", Taylor explained.
In this space, it feels important to actually use the technology we are passionate about in order to iron out the wrinkles. That’s the only way mass adoption can happen. However…
Crypto is the currency of the FUTURE, not the present
Unfortunately, this issue burns a gaping hole in our space.
"I'm having issues with [the fact that] one client who pays me is a flat rate of Ethereum, while another client wants to pay the value of $500 in Ethereum or a stablecoin." Taylor Mitchell said, "[these different payments] combined with the volatility and the gas fees means that I'm always getting the short end of the stick."
This payment issue holds a metaphorical mirror in front of the crypto industry, forcing us to figure out what is wrong. We are not working together to create a healthy ecosystem that is friendly for others to join yet.
Or maybe it's the technology’s fault. For instance, everyone knows that Ethereum fees are ridiculous so why are we continuing to use it for transactions?
"If I'm trying to send you $500 for your work, it'll be more like $600," Taylor said, "Ethereum 2.0 is a different story but currently, with its gas fees, it is just not efficient enough. [...] I think it really comes from a lack of education. I don't think anyone really has ill intentions. People want to get paid in crypto, so they think 'Oh, I'll get paid in Ethereum'. But that isn't what Ethereum was made to do."
We have a scaling issue in the space right now and those who are building the space are bearing the brunt of it. We are burning a ridiculous amount of money paying gas fees that could be invested in a project or be used to pay an employee. Surely, there is a better way.
How do we fix this as an industry?
Let us work together. How do we fix this issue while the technology catches up to the growth this space has ensued?
Taylor says, going forward, we must set the price beforehand and work based on the US dollar value for now. Otherwise, we fall victim to the volatility of the market. Currently, she will second guess taking on an employee if they insist on being paid a flat rate of ETH.
The reasoning behind this is, "I have to decide if their work is worth it to take on that extra cost or [see] if I can negotiate with them to switch over. Even if that means paying an extra 10% on top, [I would choose them if their work was good]"
Her advice to employees trying to get paid in the space was simple: Look at blockchains that aren't Bitcoin or Ethereum.
"Definitely check out other blockchains. I would probably be able to convince an employer to pay an extra 5% on top of my price if I move to a blockchain that has no gas fee. It'll benefit both you and the employer," Taylor said. "Avalanche, XLM, and XRP were made for payments, there are projects designed to be a payment system. [In contrast,] Ethereum is the layer one, the internet of cryptocurrency. We just have to use it for what it's made for."
While we wait for the technology to catch up with us, it might be time to jump ship. Put your sacred ETH down and opt for the AVAX blockchain if you want to save money on transactions. It'll benefit your employer and might even get you a pay rise. Who'd have thought asking to be paid differently could make you more money?
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Egg allegory by KS KYUNG:
It is the heart of another egg that watches the egg which became an egg fry. It is placed on the same plate, but someone feels like an egg fryer and another waits with an edgy heart. Life is the same. They are all in a similar situation, but we must look at the sadness of others and think of a better life. If someone breaks an egg, it becomes an egg fry. However, when they come out of their own eggs, they get new life with their chicks. Even if you have time for frustration and pain, you need wisdom to withstand this.