Amid high-profile partnerships, flashy commercials and influencer promotions, Bitcoin has exploded into mainstream conversation. Now it’s entering the workplace – but some aren’t so sure it’s a good idea.
Earlier this month, Bitcoin company NYDIG launched its
NFL quarterback turned celebrity investor Drew Brees and businessman Tilman Fertitta have announced that their companies will participate. These high-profile partnerships signal a growing popularity of bitcoin as a compensation strategy, but some experts are skeptical.
“Notwithstanding all the hype surrounding bitcoin, there is no way of knowing if it will go up or down in value,” says David Mendels, director of planning at Creative Financial Concepts, LLC, a web-based financial planning platform. “While the supply of bitcoin is controlled by the algorithm, the other side of the price setting mechanism is demand, and there is absolutely no way of anticipating what that will be.”
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Interest in cryptocurrency skyrocketed in March of 2020, when the government issued trillions of stimulus dollars and lowered interest rates in an effort to shore up the pandemic-battered economy. Some of these funds went to digital assets, driving up the price of Bitcoin to a high of $69,000 last November. Now, as investors anticipate rate hikes from the Fed this March, Bitcoin is down 39% from its peak.
Opting to receive part of a paycheck as cryptocurrency could leave employees financially vulnerable, says Leonard Comberiate, a certified financial planner and fellow of the Institute of Certified Employee Benefits Specialists.
“If the value of bitcoin goes up or down dramatically, you will not be able to count on the value of your net pay to meet your financial goals for immediate, short term or long-term goals,” he says. “Your rent payment is a fixed dollar amount paid monthly, so will you be able to make the rent payment if bitcoin drops in value?”
Still, adopting cryptocurrency as an employee benefit may appeal to some groups of workers, says Anna Tavis, academic director of NYU’s Human Capital Management program.
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“I see the most viable application of this benefit in reaching out to the unbanked workforce,” she says, pointing to gig workers as an example. “They can bypass third parties (banks, exchanges, etc.) and receive payments directly, while employers can keep an immutable token of the payment records for audit and compliance purposes.”
A Bitcoin Savings Plan could also gain ground among employees in countries with unstable currencies and high inflation-prone economies, she says, as people in these regions could be eager to seek an alternative asset class for investing.
For now, however, Tavis thinks the primary adopters in the U.S. will be very young employees, who don’t have as much to lose if the value of Bitcoin tanks, taking their savings with it. Smaller organizations like startups — who are inherently more comfortable with risk — could also see employees embracing the option.
“Benefits are insurance against risk,” says Tavis. “[NYDIG] is coming to companies and saying, here’s the most risky asset for us that’s out on the market. Please play with it with your employees’ money.”
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For the plan to gain wider acceptance, she says, it should be presented as a perk rather than a benefit. For instance, companies could offer employees the opportunity to put money into a “crypto sandbox” fund so they can explore crypto investing and learn from it together — but paychecks should remain untouched.
As NYDIG and its partner companies roll out the Bitcoin Savings Program, it will be a barometer of workers’ desire to maximize their financial security — and how much of that security they’re willing to give up.
