Real-World Benefits of Crypto for the Gig Economy
As I’m writing this article, cryptocurrency prices are crashing.
You can sense that investors are beginning to wonder whether cryptocurrencies will ever reach mainstream adoption and become more than an alternative investment or asset.
It’s a scary time for investors, especially for those who bought their first Bitcoin during the run-up in prices in late 2017. But what the average investor may not realize is that there are hundreds, maybe thousands, of companies working on real-world use cases for cryptocurrencies and blockchain technology. Many of these projects have the potential to bring cryptocurrencies into mainstream use.
Take earn.com for example, which lets users earn Bitcoin for completing simple tasks like responding to an email. Who’s paying? It’s companies that are looking for user feedback. Rather than paying a lump sum for an email list, for example, companies that use earn.com only pay per response. The service is already being used by major companies like Amazon, Facebook, Google, Microsoft, Goldman Sachs, Airbnb, and more.
I mention earn.com because I see it as analogous to Amazon’s Mechanical Turk, which can be thought of as a precursor to the gig economy. I think we’re now at the early stages of a new gig economy that’s powered by cryptocurrencies. And I’m not the only person who thinks this way.
“Most people will earn and not buy their first crypto.” — Coinbase CEO Brian Armstrong
There’s no question that many (maybe most) people who’ve bought Bitcoin and other cryptocurrencies did so to make a profit. They’re speculators, buying with the hope that prices will rise so they can sell their coins for a massive profit. But there’s a growing community of people trying to make a living by earning cryptocurrencies.
The gig economy and the crypto economy are both growing like crazy. And I think they’re bound to converge. Just look at the data: the number of gig economy participants in the U.S. alone has increased from 3.9 million in 2015 to 6.7 million in 2018.
Meanwhile, the volume of Bitcoin transactions continues to rise over the long term (despite a sharp drop beginning in January 2018). We’re now at somewhere between 2B and 5B transactions a day. That’s lower than the 50B peak reached in December 2017, but it’s also 20- to 50-times higher than transaction volumes at the end of 2013.
The convergence of the gig and crypto economies seems inevitable for two key reasons:
- Gig economy marketplace fees are unsustainably high, and a marketplace powered by crypto could charge much lower transaction fees.
- Gig economy marketplaces place limits on who can participate, while cryptocurrencies know no boundaries.
Consider the potential benefits of a gig economy powered by crypto.
Benefit #1 — Much lower fees
Gig economy jobs are typically very short compared to traditional jobs.
For example, an Uber or Lyft driver will typically pick up several clients in a single hour. Similarly, most contracts on freelancing websites like Upwork are valued at less than $500.
So to make a living, gig economy workers need to take on lots of small jobs. But the problem is that marketplace fees are very high. For example, Uber takes 25% of every fare and Upwork charges 20% for contracts under $500. These fees add up and make it difficult for gig economy workers to make a decent living.
Typical crypto transaction fees, on the other hand, amount to mere pennies (about US$0.80 for Bitcoin and US$0.12 for Ether as of Nov. 21, 2018). And when combined with the rapid confirmation speed of blockchain transactions, it’s easy to see how cryptocurrencies are ideal for the gig economy.
Rather than waiting up to a week for money to get transferred to your bank account, you could access your money the instant you complete a contract. And you can also avoid foreign exchange fees if you don’t have a bank account in the U.S. but get paid in U.S. dollars.
Of course, there are still kinks to work out, including the cost of converting crypto to fiat. But it’s still early days. The crypto economy is just getting started.
Benefit #2 — No limits on who can participate
In an ideal world, there would be no restrictions on who could participate in online marketplaces. But leading marketplaces like Upwork are not truly global.
If you happen to live in a developed country and have a bank account, you don’t face many restrictions. You could easily work remotely for a company on the other side of the world. For example, a Canadian freelancer can use Upwork to work for a company in Singapore and get paid in U.S. dollars. And a Singaporean would have no trouble working for a Canadian company.
But many people in developing countries lack access to a bank account and are therefore shut out of the online gig economy. A gig economy powered by crypto could change that.
Anyone can create a new cryptocurrency wallet. But not everyone has disposable fiat currency (or access to credit) to buy cryptocurrency. For these people, it’s now possible to earn their first Bitcoin using websites like earn.com. Crypto-powered gig economies (like the one we’re building at Accept.io) will give unbanked people a chance to leapfrog the traditional financial system and earn crypto by working remotely.
A truly global gig economy powered by cryptocurrencies might not solve all the world’s problems. But it could help people with an entrepreneurial spirit improve their standard of living.
I think that’s a vision worth striving toward.
Conclusion
Cryptocurrencies have had a huge impact on the way we think about money and investing. And now they’re starting to change the way we think about making a living.
The crypto-powered gig economy is coming, and it’s going to be much better than today’s gig economy: it will have radically lower fees, faster transactions, and will be open to anyone with the right skills.
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If you’re interested in joining the gig economy, visit Accept.io to try out our prototype marketplace.
Thanks for reading! Don’t forget to follow us for more updates. In an upcoming article, I’ll share real examples comparing crypto-marketplace transactions with transactions on traditional marketplaces.
