Stock options, bonuses, more paid vacation days â€“ there are a variety of alternative compensation schemes that companies use to lure potential employees and provide options to existing employees. But only a few offer an alternative currency.
Square, a financial services and mobile payment startup, recently announced it would hire a few engineers to work on some of its plan to expand into crypto currency.
Their pay? Bitcoin.
Square founder Jack Dorsey, who is also the chief executive of Twitter, announced the hires on his platformOpens a new window in late March and explained his rationale for the compensation scheme:
â€œThis will be Square’s first open source initiative independent of our business objectives,â€ Dorsey wrote on TwitterOpens a new window . â€œThese folks will focus entirely on what’s best for the crypto community and individual economic empowerment, not on Square’s commercial interests. All resulting work will be open and free.â€
Part of the hiring model for the positions Dorsey outlined, which included work-from-anywhere options and reported directly to Dorsey, is the option to get paid in crypto currency â€“ digital values considered in the U.S. to be â€œassetsâ€ and not their own, sovereign currency â€“ that are produced in a decentralized way.
The systems that underpin cryptocurrencies, using mining that takes increasing computational power, are such that the expansion of the currencies is limited. Proponents say that this makes the currencies more stable. There are currently hundreds of different kinds of cryptocurrencies.
Dorsey isn’t the first to offer cryptocurrencies as a compensation option for employees. In 2017, Japanese company GMO Internet said it would start offering Bitcoin as a potential currency compensation option. â€œEmployees can receive by Bitcoin if they want to,â€ a company spokeswoman toldÂ The Guardian.Opens a new window . â€œWe hope to improve our own literacy of virtual currency by actually using it.â€
It’s not clear how GMO Internet’s experiment turned out, but what it decided strikes at the heart of how offering cryptocurrency as an option to employees can benefit companies.
In addition to supporting individual employees’ potential desire to learn about a new digital system, it also allows firms the option to start incorporating cryptocurrencies into daily operations in ways that will increase the firms’ own understanding of them.
Since Bitcoin and other cryptocurrencies are still new to the market, and widespread understanding of how they operate isn’t deep yet, incorporating them into company culture is a strong signal of what’s important.
Especially for tech companies, making Bitcoin or another cryptocurrency an option is akin to putting up a billboard announcing that they are friendly to innovation and unafraid to try something new.
That’s especially true for compensation schemes, which are among the most forward-facing aspects of company culture, and one that employees interact with from the very start.
Bitcoin and other currencies offer real value to certain industries, with their underlying blockchain technology that can allow for easier tracking and transparency. As noted by Toolbox contributor Simon GrayOpens a new window , â€œblockchain is based on a series of cryptographic developments that allow transactions to be fixed indelibly in place, making it nearly impossible to tamper with a cryptocurrency or interfere with a smart contract.â€
Those kinds of features could make cryptocurrencies the preferred method of payment in industries that require a high degree of accountability, like the pharmaceutical industry supply chain.
The popularity of cryptocurrency has also explodedOpens a new window , rising from a market cap of $18 billion at the start of 2017 to more than $800 billion a year later.
Nevertheless, cryptocurrencies still have their drawbacks and aspects to keep in mind when incorporating into compensation systems. Their value still fluctuates, and undeveloped regulatory frameworks could mean more volatility in the future as the currencies adapt to a potential crackdown in legal regimes. China, for example, has said that it wants to ban Bitcoin miningOpens a new window and cryptocurrency more generally, placing a global damper on enthusiasm.
Bitcoin mining, with its need for ever more computational power to derive the next value, is also an enormous energy consumer. As increasing numbers of industries scrutinize their environmental footprint, Bitcoin starts to earn a bad rap on the sustainability front.
For the time being, though, it’s a mark, if nothing else, of a certain level of digital fluency. To offer it as an option to workers is a clear signal of a willingness to embrace the future, risks and all.