Bitcoin Payroll = Fail

[JupeB]

I was thinking about how to set up a system for payroll that would allow companies to pay their employees in Bitcoin, but would convert the necessary taxes to dollars for the government's pound of flesh. That got me thinking about how Bitcoin would look to the employee, especially with regard to deflation.

I get deflation, over time the Bitcoins I have become more and more valuable, ie. I am able to convert a single bitcoin into more and more products and services. The flip-side of that? The average employee won't get it. We've been conditioned our entire lives that we get more and more money in our paycheck, not less and less. In order for the company to stay solvent, they will have to pay less and less bitcoin over time as they become more valuable.

Could you imagine sitting down with an employee and telling them they are an "A player" and they are only getting 3% less bitcoin instead of 5%? As much as I love the idea of Bitcoin, it is a tall order to change the mentality of the entire world from an "inflationary" mindset to a "deflationary" mindset, and for that reason, Bitcoin will have a tough go of it.

[dree12]

I was thinking about how to set up a system for payroll that would allow companies to pay their employees in Bitcoin, but would convert the necessary taxes to dollars for the government's pound of flesh. That got me thinking about how Bitcoin would look to the employee, especially with regard to deflation.

I get deflation, over time the Bitcoins I have become more and more valuable, ie. I am able to convert a single bitcoin into more and more products and services. The flip-side of that? The average employee won't get it. We've been conditioned our entire lives that we get more and more money in our paycheck, not less and less. In order for the company to stay solvent, they will have to pay less and less bitcoin over time as they become more valuable.

Could you imagine sitting down with an employee and telling them they are an "A player" and they are only getting 3% less bitcoin instead of 5%? As much as I love the idea of Bitcoin, it is a tall order to change the mentality of the entire world from an "inflationary" mindset to a "deflationary" mindset, and for that reason, Bitcoin will have a tough go of it.

Bitcoin will remain inflationary (measured by money supply) for at least the next few decades. This is plenty of time to switch mindsets.

[Taz]

I'll get stick for saying this, but...

The public aren't idiots, they can understand anything, as long as it's relevant to them.

If a company picks it up and trains its employees how it works, word will spread, people hearing about will ask questions and think,
"Hey, if it works for them, it'll work for me".

In the end, it's not rocket science.

[JupeB]

I was thinking about how to set up a system for payroll that would allow companies to pay their employees in Bitcoin, but would convert the necessary taxes to dollars for the government's pound of flesh. That got me thinking about how Bitcoin would look to the employee, especially with regard to deflation.

I get deflation, over time the Bitcoins I have become more and more valuable, ie. I am able to convert a single bitcoin into more and more products and services. The flip-side of that? The average employee won't get it. We've been conditioned our entire lives that we get more and more money in our paycheck, not less and less. In order for the company to stay solvent, they will have to pay less and less bitcoin over time as they become more valuable.

Could you imagine sitting down with an employee and telling them they are an "A player" and they are only getting 3% less bitcoin instead of 5%? As much as I love the idea of Bitcoin, it is a tall order to change the mentality of the entire world from an "inflationary" mindset to a "deflationary" mindset, and for that reason, Bitcoin will have a tough go of it.

Bitcoin will remain inflationary (measured by money supply) for at least the next few decades. This is plenty of time to swich mindsets.

How do we begin switching that mindset? By having more companies using BTC for payroll?

[dree12]

I was thinking about how to set up a system for payroll that would allow companies to pay their employees in Bitcoin, but would convert the necessary taxes to dollars for the government's pound of flesh. That got me thinking about how Bitcoin would look to the employee, especially with regard to deflation.

I get deflation, over time the Bitcoins I have become more and more valuable, ie. I am able to convert a single bitcoin into more and more products and services. The flip-side of that? The average employee won't get it. We've been conditioned our entire lives that we get more and more money in our paycheck, not less and less. In order for the company to stay solvent, they will have to pay less and less bitcoin over time as they become more valuable.

Could you imagine sitting down with an employee and telling them they are an "A player" and they are only getting 3% less bitcoin instead of 5%? As much as I love the idea of Bitcoin, it is a tall order to change the mentality of the entire world from an "inflationary" mindset to a "deflationary" mindset, and for that reason, Bitcoin will have a tough go of it.

Bitcoin will remain inflationary (measured by money supply) for at least the next few decades. This is plenty of time to swich mindsets.

How do we begin switching that mindset? By having more companies using BTC for payroll?

Exactly, while it remains inflationary.

[smithy]

Why do you think the value of Bitcoin will keep rising? It goes up and down all the time.

[Taz]

It fluctuates up and down, but moves up more than down.
Kinda like two steps forward, one step back.
Remember it started at zero, now it's around US$7.8.

Plus the more people that use it, the smaller denominations that will be needed.
So the little you have now will be worth more later.

[Meni Rosenfeld]

Once equilibrium is reached, appreciation in the purchasing power of a bitcoin will not be due to growth in Bitcoin usage, but due to growth in the economy. If the whole economy manufactures 3% more value this year than last year, and this value chases the same number of bitcoins, the value of each Bitcoin will increase by 3%. But assuming the population is fixed, the productive capacity of each employee will also have increased by 3%, which means that the nominal Bitcoin salary will remain constant on average.

Of course, since this is just the average, the not-so-bright employees will probably receive a nominal salary decrease where before they would just get no raise, so some change in mindset will have to be adopted.

And, while Bitcoin is still growing, the nominal salaries will indeed decrease.

[trifith]

It's just my opinion, but as the bitcoin becomes more widespread and more used, it will appreciate in value. The early adopters, such as the members of this forum, understand that the value of bitcoins will be higher, year over year, and our own competition for whatever employment is offered in BTC terms will result in a gradual decrease in the nominal wages we may earn, but this will be more than offset in the real value that those bitcoins can purchase in goods and services, either in bitcoin or conversion to government fiat. To those who don't comprehend this rise in value, employment paid in bitcoins will be uninteresting, and they likely won't accept such employment. They don't have to take bitcoins if they don't like it. They can take gold, silver or government fiat instead.

[DublinBrian]

A currency gains credibility thru longevity. The longer it continues to exist, the more people can trust that it will continue to exist.

At the moment, many of my colleagues dismiss bitcoin as a kind of fad that will collapse. They will not be able to say when it has been in use, for ten years.

[Serge]

I don't think there will be a problem specifically with mindset if employee given an option to receive "paycheck" in either bitcoins or fiat, or both. They can figure out for themselves what's more beneficial to them.

The problem with payroll may be taxes that employer deducts from "paycheck". Lets say at a time of payroll bitcoins were worth $5/BTC. Employee keeps bitcoins for savings. Then after a while lets say bitcoins are worth $100/BTC and an employee decides to convert his/her saved bitcoins into fiat. He paid taxes when he received payroll when they were $5/BTC, does this employee don't pay any more taxes or does he have to pay additional taxes for the difference of $95 in value? This may potentially be nightmare situation for accounting payroll taxes when dealing with bitcoin payroll payments.

Are there any cases of people receiving payroll in precious metals and how was appreciation/depreciation handled once converted into fiat? If there are then it may be applied to Bitcoins as well.

[knight22]

Also, if there is another economic crash, you can be sure that more people will accept to be paid in bitcoin.

[Durendal]

The problem is, most corporations will never adopt bitcoins in the foreseeable future. It's easy for small businesses to begin using it for payroll, but big businesses will find much resistance to the move from employees, the public, and the government. Perhaps some kind of option system. But once this begins to interfere with government finance and taxes it will be shut down quickly. Meaning either the government will make it illegal to pay in bitcoins, or the public will be engineered to see bitcoins as another rebellious creation by radicals.

[moparguy528]

I think with the increasing usage of bitcoin, even limited payroll applications could launch. For the dimmer folks within a company just  put "paid xxx BTC (~yyy fiat)" on their paychecks. As long as the fiat remains high/increasing...the masses will get their pay in terms they can understand.

[JupeB]

I don't think there will be a problem specifically with mindset if employee given an option to receive "paycheck" in either bitcoins or fiat, or both. They can figure out for themselves what's more beneficial to them.

The problem with payroll may be taxes that employer deducts from "paycheck". Lets say at a time of payroll bitcoins were worth $5/BTC. Employee keeps bitcoins for savings. Then after a while lets say bitcoins are worth $100/BTC and an employee decides to convert his/her saved bitcoins into fiat. He paid taxes when he received payroll when they were $5/BTC, does this employee don't pay any more taxes or does he have to pay additional taxes for the difference of $95 in value? This may potentially be nightmare situation for accounting payroll taxes when dealing with bitcoin payroll payments.

Are there any cases of people receiving payroll in precious metals and how was appreciation/depreciation handled once converted into fiat? If there are then it may be applied to Bitcoins as well.

Couldn't you just convert at the time of payroll? Let's say federal taxes are 15%, and they get paid 100 bitcoin. You could take 15 bitcoin, convert it to dollars at the market rate, and pay federal taxes. I think at that point it's done; if the money appreciates or depreciates after that, it doesn't matter. Any accountants that can shed light on the matter?

[Zara]

I don't think there will be a problem specifically with mindset if employee given an option to receive "paycheck" in either bitcoins or fiat, or both. They can figure out for themselves what's more beneficial to them.

The problem with payroll may be taxes that employer deducts from "paycheck". Lets say at a time of payroll bitcoins were worth $5/BTC. Employee keeps bitcoins for savings. Then after a while lets say bitcoins are worth $100/BTC and an employee decides to convert his/her saved bitcoins into fiat. He paid taxes when he received payroll when they were $5/BTC, does this employee don't pay any more taxes or does he have to pay additional taxes for the difference of $95 in value? This may potentially be nightmare situation for accounting payroll taxes when dealing with bitcoin payroll payments.

Are there any cases of people receiving payroll in precious metals and how was appreciation/depreciation handled once converted into fiat? If there are then it may be applied to Bitcoins as well.

Couldn't you just convert at the time of payroll? Let's say federal taxes are 15%, and they get paid 100 bitcoin. You could take 15 bitcoin, convert it to dollars at the market rate, and pay federal taxes. I think at that point it's done; if the money appreciates or depreciates after that, it doesn't matter. Any accountants that can shed light on the matter?

Do any of you own businesses? have you offered to pay in BTC? It must start as a grassroots practice. My boss favors BTC and has offered to pay us in BTC.

[Chalkbot]

What if the paystub showed your pay in both BTC and USD? Wouldn't that alleviate this problem?