For employers, this new form of digital payments offers lots of opportunities to make transactions faster, cheaper and safer.
It takes a lot of effort to change the status quo, the way things have always been. But that’s what technology is forcing us to do. Change the way we do everything, from shopping to interacting, banking to parking, dating to paying for things. Sometimes new technology improves our working and social lives, other times it becomes cumbersome and annoying. Disruption can be good and bad.
So where do you stand on blockchain and cryptocurrency? (cryptocurrency has its roots in blockchain). There is a temptation to ignore these new two new technological advances in the hope they are just fads. But it looks like they are here to stay as their presence grows. Earlier this year, the New Zealand government became the first country in the world to allow employers to pay staff via cryptocurrency. That was quite an endorsement for the likes of Bitcoin, Ethereum, Ripple and Litecoin.
And following the Singapore Fintech Festival 2019 in November, it was revealed the Monetary Authority of Singapore (MAS) is working with Singapore’s financial services industry to develop a new blockchain-based cross-border digital payment system. Sounds impressive, but what does it mean for employers?
Quite a lot actually, but perhaps the biggest impact could be for paying staff. This is particular relevant if you regularly pay salaries to staff based overseas. While the New Zealand government gave its seal of approval to compensate staff with cryptocurrencies, others are sure to follow.
Not only will employers save money (by bypassing traditional banks and financial institutions), but blockchain can also speed up transaction while making them safer, given the multiple layers of encryption. Having blockchain at its core, any payments system will also be more transparent as you can see where the money is throughout the entire chain, thanks to the public ledger.
And the growth of a blockchain-based cross-border payment system couldn’t come at a better time as companies become increasingly global (or regional in some case). More Asian employers are now using remote employees and contractors, building their own virtual worker networks. Then there are the freelancer platforms such as Upwork and Workana, aiding cross-border projects and collaborations while supporting the global gig economy. Having a cheaper, faster and more secure way to pay contractors and freelancers is good news.
Cryptocurrency had a bad press in its infancy, and is still viewed by some as being incredibly volatile. In many cases that’s still true. But even that is being addressed with the emergence of a new type of cryptocurrency known as stablecoin. Stablecoins are cryptocurrencies designed to minimize price volatility as they are backed by real assets such as fiat currency or commodities. Such hybrid cryptocurrencies could win over more people.
So as blockchain becomes more widely used (and understood), and cryptocurrencies more stable, they are making a strong case for themselves as a viable alternative to the traditional banking system. And after more than 200 years of banks sitting at the centre of the transactional universe, maybe it’s about time for a change. All hail digital disruption.