How crypto is influencing the gig economy
It's no surprise that some gig workers are delving into digital finance by signing up to get paid fully or partially in cryptocurrency such as bitcoin or Ethereum.
Gig economy workers — from rideshare drivers to errand-runners to dog walkers — already live on the economy's frontier. Many of them value flexibility and autonomy, which are also attributes associated with cryptocurrency. So, it's no surprise that some gig workers are delving into digital finance by signing up to get paid fully or partially in cryptocurrency such as bitcoin or Ethereum.
The economic sector of contract or gig work has been ballooning for years, with one study pegging the growth at 33% in the past decade.1 It's likely this growth accelerated during the COVID-19 pandemic as workers looked for flexibility.
At the same time, cryptocurrency has also seen massive growth in public awareness, as well as value. In fact, the price of one bitcoin has soared from about $1 a decade ago to more than $40,000 in 2021.2 As the gig sector continues to grow, adoption of disbursement innovations such as payment in crypto could be a major boost to the adoption of digital money throughout our economy.
To date, the major freelance work apps, such as Uber, TaskRabbit, or Upwork, have not yet set up cryptocurrency payments. However, there are emerging upstart apps aimed at paying gig workers in various cryptocurrencies. On these apps, workers are hired for tasks ranging from voice-overs to computer repair to website design. Soon, delivery drivers for the BringMeThat service will be able to choose cryptocurrency compensation through a partnership with Bakkt.
In addition, some gig workers are taking crypto payments into their own hands by using third-party services to accept tips in cryptocurrency. For instance, some rideshare drivers display a QR code that riders can use to add a crypto tip and you can now send bitcoin tips on Twitter over the Lightning Network.
Potential crypto benefits
Cryptocurrency holds several potential attractions for gig workers:
- Instant payments
- Global payments without costly international wire transfer fees or, usually, currency conversion
- Reduction in fraudulent payments and credit card chargebacks thanks to blockchain technology
- Payments tied to project milestones, so freelancers don't have to chase after late payments3
Potential crypto challenges
On the other hand, cryptocurrency payments could also present some challenges for gig workers:
- The volatile values of various cryptocurrencies cause crypto payment amounts to fluctuate, which could be an issue if gig workers depend on crypto payments for a large part of their income.
- There are tax implications of crypto, particularly if the values fluctuate and individuals sold their holdings. Gig workers who accept bitcoin or other crypto tokens will need to calculate the difference between the value of the coin they accepted and the value upon selling and pay taxes on any gains.
As time goes on, it seems likely that more platforms will offer gig workers the option of accepting some or all payments in cryptocurrency. As the ubiquity of this type of digital finance grows, gig workers should have the opportunity to learn how to make crypto work best for them, whether it's accepting just tips in crypto, accepting a certain percent of payments in crypto, or even working for cryptocurrency exclusively.