The rise of crypto payroll with stablecoins: A viable option to hedge against inflation?
Inflation is rising, and the possibility of a cost of living crisis is becoming an increasingly real concern for people around the world.
Global rate of inflation in 2022 is estimated to have reached 8.75% — the highest annual increase in inflation since 1996, according to Statista. IMF forecasted global economic growth to fall from an estimated 3.4% in 2022 to 2.9% in 2023. There is a decline in global economic growth amid increasing fear and uncertain outlook.
As the world’s economy continues to face inflationary pressures, businesses and individuals alike are seeking ways to hedge against the effects of inflation. One increasingly popular option is to use crypto for payroll.
The rise of crypto payroll — better for employees and employers
Crypto was initially adopted by big corporations and banks for investment and operational purposes, but is increasingly gaining popularity as a means of payment among businesses as a viable payment option for salaries.
Companies are now leveraging crypto payroll to hire talent globally and pay their employees in crypto, and stablecoins pegged to the US dollar. This helps avoid the high costs associated with international money transfers.
Compared to fiat payroll, which goes through multiple banks with bank fees costing up to 10% of transfer value and an average of 30 days to be fulfilled, crypto payroll is simpler and faster to manage. Companies and individuals have been drawn to its near-instant receipt of funds, absence of overhead expenses and third-party services despite initial hesitations.
For employees, they want to get paid in crypto for more investment opportunities, immediate transactions, and the possibility to make international transactions without fees — according to a study by Zety. In fact, more than 70% of employees are more willing to work for an employer if they paid a salary or bonuses in crypto.
In another study done in partnership with research firm Workplace Intelligence and personal finance startup SoFi at Work, 36% of survey respondents would want to receive part or all of their paycheck in crypto. Many are turning to these digital assets as a means to grow their wealth as stories of beginner investors achieving financial success through crypto continue to circulate.
The practice of offering salaries in cryptocurrency is no longer limited to decentralized crypto wallet services, exchange and crowdsourcing platforms, and prediction or betting markets. Public figures and professional athletes have also jumped on the bandwagon.
Miami Mayor Francis Suarez, for instance, tweeted that he will be receiving his paycheck in Bitcoin, and football stars Aaron Rodgers and Russell Okung have taken a portion of their salary in Bitcoin.
This trend is set to continue as more companies and individuals recognize the advantages of crypto payroll. With its fast and secure transactions and growing acceptance, it is becoming an increasingly viable option for payroll.
Stablecoins, a safe haven in times of inflation
Gold has traditionally been used as a hedge against inflation as people seek out assets that can hold their value over time. In recent years, crypto has emerged as a popular alternative.
Unlike fiat, which can be manipulated by central banks through changes in interest rates and money supply, crypto is not subjected to the same inflationary pressures. It offers a unique hedge against inflation because of its decentralized nature and finite supply.
Bitcoin, for example, is an attractive store of value for citizens of countries with unstable fiat currencies who are seeking to protect themselves against hyperinflation and rising costs of everyday goods and services. In 2021, Bitcoin hit a new all-time high in Turkey when the lira lost 15% of its value against the US dollar in a single day.
However, its volatile nature continues to be a point of concern for many investors.
Stablecoins, which are fundamentally reliant on fiat currencies to stabilize their value, can be a viable alternative for people to hedge against inflation.
Adrian Kolody, founder of non-custodial decentralized exchange Domination Finance, suggests that investors could find a way to earn interest on their stablecoins in DeFi markets that would be above annual inflation rates. “The best way to look at it is that crypto gives you the flexibility to take control of your finances in a variety of methods instead of being at the mercy of the federal government.”
Moreover, dollar-denominated stablecoins are increasingly being used as a store of value and a hedge against inflation and weak currencies in emerging markets. There is over $100 billion in combined market capitalization of dollar stablecoin adoption in Sub-Saharan Africa to safeguard against the devaluing of local money. Similarly, stablecoin usage surged from 42% in January 2022 to 67% in March after Ukraine’s attack in Russia, and has been on the rise since to hedge against currency devaluation.
As one of the largest crypto payroll solutions with nearly $300 million in total crypto payments volume, dollar-denominated stablecoins account for 60% of the crypto payments on Request Finance.
The popularity of invoices and payroll being paid in dollar-denominated stablecoins on the app likely reflects stablecoins being increasingly used as a store of value and a viable alternative to hedge against inflation.
How to manage your business’ crypto payroll
If you’re looking to pay full or partial salaries in crypto easily, Request Finance’s crypto payroll feature can help you automate payroll in crypto.
The feature allows enterprises to easily schedule recurring crypto salary payments for their employees regardless of their location. This frees up team members from the hassle of submitting invoices to HR or finance departments to receive payments.
It also provides both employees and employers with the ability to easily review transaction histories, including the exact amount paid, to whom, when, and the market price at the time of payment.
The tool also allows you to auto-fill your employees’ personal information and wallet addresses on payday, manage your team by business units, and see your employee data securely in one place.
If you want to get paid in crypto as a freelancer, you can use Request Finance’s invoicing tool to automate the way you invoice clients, allowing you to easily pre-set your billing details in crypto.
Freelancers can also automatically create, and schedule invoices to be sent at a specific billing date, or even set recurring invoices so you never have to worry about forgetting. You can also schedule automated email reminders that chase clients for payment on your behalf.
With this, you and your employer can have a record of your paychecks.
Concluding thoughts
With the growing acceptance and adoption of crypto payroll, the use of crypto for payroll has emerged as a viable option for businesses and individuals looking to hedge against the effects of inflation. Crypto payroll offers a simpler, faster, and cost-effective solution compared to traditional fiat payroll.
Stablecoins, in particular, is an increasingly popular option as a store of value and a means for investors to earn interest in DeFi markets to hedge against inflation. However, recent events such as the temporary depegging of USDC to $0.87 following Silicon Valley Bank’s collapse serve as a reminder that there are still inherent risks to major stablecoins.
Businesses and individuals who rely on stablecoins should exercise caution and have a comprehensive treasury management strategy in place to mitigate potential risks.
Originally published at https://www.request.finance.