The Confluence of Cryptocurrency and Gig Economy
Lois and Clark. Mulder and Scully. Ross and Rachel. Sometimes we know when two things are destined to come together, long before they finally do. When considered side-by-side, the gig economy and cryptocurrency are a real-life example of this phenomenon. For their exponents both hold the promise of a new way of doing business with increased flexibility and freedom from traditional models. For this reason the gig economy and cryptocurrency can form a potential union which is simply irresistible to contemplate.
Among the many reasons for this is the growing importance of gig jobs and the gig economy. A recent study by Upwork found that 35% of the American workforce were gig workers with the value of the sector valued at $1 trillion dollars.1 The global valuation is estimated to be a cool $3 trillion.2 What’s more, the gig economy continues to grow. Gig work is popular because it creates choices for the individual even if it comes at the expense of benefits and stability.
At the same time cryptocurrency and the blockchain technology which powers it, is also undergoing rapid economic growth, with its value estimated to be worth $60 billion by 2024.3 Since blockchain cryptocurrency is a decentralized technology it supports and complements many of the most appealing aspects of gig working. By design blockchain offers a break from centralized systems, both as a currency and in other fields. The convergence of the gig economy and cryptocurrency might therefore appear to be a libertarian’s dream, but a dream which comes with prescient questions about the future.
One of the biggest issues surrounding the gig economy is how national institutions will cope as more and more people leave traditional job roles in search of the greater freedom and flexibility that gig work provides. Taxation, healthcare and pensions are three key areas where questions must be asked about a growing number of people operating outside of the traditional workforce model. Considerations must be made to how crypto gig workers will be taxed, how they will make pension contributions and what kind of medical care they will receive.
The picture for taxation is a muddled one and varies hugely from country to country. Cryptocurrencies are global, tax rules are national, and that is the first of many a circle to be squared. For gig workers operating in a global marketplace receiving payment in cryptocurrency is the perfect solution since it is fast, secure and avoids the hassle and expense of exchanging currencies across borders. For governments they must answer how they intend to monitor and assess what gig workers receive and are paid. For now the only solution is to instruct the gig workers to self-declare. It’s a system that works for cash in hand workers, so why not here?
Taxation is a good entry point into the question of governance because what applies to it, also applies to pensions and healthcare. At present the model for gig/crypto workers is an honor system of self-declaration combined with having the foresight (or not) to set up pension plans and health insurance. As the number of gig workers grow the debatable matter is exactly what proportion will make those pension contributions and take out insurance. With the freedom to choose comes the freedom not to participate, and if enough people choose not to, what does that mean for services?
Gig Workers and Crypto
As for healthcare the gig economy is an increasingly political space. Statnews sums up the timbre of the political climate when it states: “Uber drivers, web designers, programmers and even adjunct professors who teach more than half the courses in American universities are relying on Obamacare”.4
There are several crypto-powered solutions emerging that offer easy access to private healthcare for the gig workforce by their platform. It’s not a cure in itself, but ease of use often goes a long way towards increased adoption. In the 90s the Napster threat to CD sales wasn’t caused by people suddenly refusing to pay for music, but because downloading MP3s was easier than visiting a shop. Later, new business models emerged to monetize the system such as iTunes and Spotify. As cryptocurrency and blockchain technologies mature and coexist with the gig economy efforts should be made to make it easy for everyone ‘to do the right thing’.
Legislative matters aside cryptocurrency and the gig economy are the perfect marriage since crypto allows for faster, more secure and seamless payments on a global scale, but its benefits go further still. Unlike major credit card issuers, cryptocurrency is non-discriminatory and can be used by businesses of all varieties. If you’re not sure what that means simply check the terms and conditions on PayPal and Stripe and you’ll quickly realise just how exclusionary these companies are for some business types. With crypto there is no such headache and once again the blockchain proves itself as force for freedom and personal choice.
For all the personal benefits of gig work there are potential downsides as well. One of the biggest pain points in for gig workers is ensuring clients pay on time and pay exactly what they say they will. In this area, cryptocurrency steps in to offer a direct solution. By utilising smart contracts which are a feature of blockchain technology it is entirely possible to create an intermediary which releases payment after the work is finalized. The client pays the cash upon hiring the contractor and it is only paid upon completion. Platforms like Oraclize are emerging to provide the checks and balances required to release the payment to make such work arrangements simpler.
When it comes to the gig economy and cryptocurrency the direction of travel is for increased adoption as more people discover the freedom of choice offered by both. It is a truly significant change in the way employers and employees choose to engage with each other and one which brings about new opportunities and new challenges in equal measure. Although the challenges might seem daunting at first, especially in regards to governance and regulation issues it is clear that the clock cannot be wound back.
The emergence of cryptocurrency at the same time as a growing gig economy could present at least some of the solutions to the issues surrounding these challenges. Already a number of intrepid companies are doing all they can to improve the gig economy and working conditions for gig workers. In the creation of our Interface app WhenHub aspires to be part of the solution. When the gig economy and cryptocurrency come together in perfect harmony it will usher in the dawn of a new economic powerhouse; the gig economy 2.0.