29% of Freelancers Wish to be Paid in Crypto: Are Legacy Systems Inefficient?
According to a survey conducted by Humans.net, a job recruitment platform, 29 percent of freelancers would rather get paid in crypto over legacy systems and banks.
The survey, which covered 1,100 U.S.-based freelancers, disclosed that 18 percent of the respondents would like to receive all of their payments in crypto while 11 percent would prefer to receive a portion of their payments using digital assets.
The respondents of the study were randomly selected from the freelance market of the U.S. and, none of the respondents disclosed any particular interest in cryptocurrencies prior to the survey.
Why Would Freelancers Use Crypto?
Freelancers often receive cross-border payments from their employers as most work for overseas companies.
Currently, there exists a limited number of alternatives with which freelancers can receive their compensation — remittance platforms like Western Union, online fintech platforms such as PayPal, and bank wire transfers.
TransferWise remains as the most efficient payment system for freelancers because it clears bank wire transfers with minimal transaction fees. But, TransferWise, the multi-billion dollar platform, can also be highly impractical in countries with strict capital controls. South Korea, for instance, does not allow TransferWise to clear more than $1,000 a day and $20,000 a year.
PayPal and Western Union charge high conversion fees in the range of five to ten percent. Hence, if a freelancer is to receive $5,000 as monthly compensation from an employer, about $250 would be spent as the transaction fee.
In the U.S., PayPal charges 2.9 percent plus a flat $0.3 fee, but for international users, the fee increases substantially depending on the location.
Major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) allow freelancers to receive payments almost instantaneously with low fees, especially with large payments. On legacy systems, it is relatively easy to process small payments. But, once the size of the payment exceeds $10,000, documents are involved and a rigorous verification period is required.
On November 17, Binance, the world’s largest cryptocurrency exchange, sent $600 million with a $7 fee. Hypothetically, while it would most not likely be possible to send $600 million on PayPal, if a user is to send that amount on the platform, a five percent fee would result in a $30 million fee, as opposed to $7 on the Bitcoin blockchain network.
One component of cryptocurrencies that still remains weak is merchant adoption. It is difficult to go out and spend Bitcoin at coffee shops, restaurants, and stores.
As such, realistically, most individuals would have to cash out Bitcoin to fiat to cover day-to-day expenses and necessities like food, rent, and utility bills.
In regions like South Korea and Japan wherein it is cheap and fast to withdraw Bitcoin from exchanges to bank accounts with a fee of less than $1, payments through cryptocurrencies can be practical.
However, in countries like India where exchanges are not able to operate due to unclear regulatory frameworks, it can be challenging for freelancers to cash out to fiat.
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