For employees joining the companies staking a claim on these new virtual worlds, an important consideration is whether it’s better to be paid in fiat or tokens.
Fiat money, such as GBP, is a currency backed by a government and not pegged to the value of commodities like gold. Tokens are cryptocurrencies based on blockchain technologies, with Bitcoin and Ethereum the best known.
Tokens have become the prominent payment method within the metaverse itself, so does it make sense for metaverse jobs to be paid in tokens too?
Crypto and the changing world of work:
Gen Z willing to take higher risks
Soaring oil prices and the war in Ukraine have pushed UK inflation to a 40-year high of 9%, with rates forecast by the IFS to reach 14%. For workers, as inflation increases, take-home salaries are shrinking.
Many workers are turning to crypto as a high-risk hedge to these declines. Gen Z in particular is turning to higher-risk investments to counteract the rising cost of living, with over 25% of 18 to 25-year-olds in the US holding cryptocurrencies and stocks, according to Investopedia.
Many high-profile workers are now taking their salary in tokens. This includes former England and Arsenal footballer Kieran Gibbs who receives half his playing salary in bitcoin, with newspapers reporting many Premier League footballers are asking about being paid in crypto too.
The endorsement of crypto doesn’t end in sport. In politics, former chancellor Philip Hammond has taken an advisory role to London-based crypto trading firm Copper, while his successor Rishi Sunak has said it is his wish to turn the UK into a global hub for crypto.
However, recent volatility shines a light on the very real risks involved. This is not a new phenomenon; it’s been widely reported that a single tweet from Tesla CEO Elon Musk can send the value of a token soaring or plunging.
Since last November Bitcoin and other cryptocurrencies have dropped in value by $1.6 trillion. Even stablecoins pegged to fiat currency have been affected, with TerraUSD and Luna also crashing.
Despite this, there are advantages to receiving a pay cheque in crypto. For those with an interest in tokens, being paid directly in crypto eliminates the conversion fees associated with exchanging fiat for tokens. It also speeds up their investments, with the tokens immediately becoming part of their portfolio.
For employers, offering to pay workers in crypto can help attract early adopters, particularly within the competitive tech field or areas like Fintech.
But there may be tax implications to consider. In the UK, individuals must report any crypto gains as part of their tax return, while wages paid in crypto are currently subject to the same income taxes as wages paid in fiat.
However, the UK government recently announced plans to create a new regulatory framework for crypto, so conditions may change. Policies are constantly evolving as the world’s governments adjust and introduce new regulations. For workers, this could mean more complexities to come.
There may also be extra cybersecurity risks around holding all your assets in crypto which those receiving payment in tokens should consider.
But for those already investing in crypto with an eye on the long-term horizon, receiving at least some of their salary in tokens is likely to grow in popularity.
Paul Lewis is chief customer officer at job search engine Adzuna