A number of startups are developing payments platforms and cryptocurrencies solely for the sharing economy. Claiming there is a need of a fair and efficient path to compensation, they believe the sharing economy might serve as an experiment for adapting digital tokens as a chief form of payment.
The Challenges and Solutions Cryptocurrencies Present to ‘Gig’ Workers
That audacious idea faces a few challenges. In the short term, gig workers would need to trust their livelihood to the volatile world of cryptocurrencies. Additionally, the whole process of converting their digital assets into cash would leave them exposed to unpredictable transaction fees and capital gains tax each time they use their cryptocurrency, and eventually pay income tax.
Selva Ozelli, CPA and lawyer, commented:
“A taxpayer who receives cryptocurrency as payment for goods or services must, in computing gross income, include the fair market value of the cryptocurrency, measured in U.S. dollars, as of the date that the cryptocurrency was received.”
Employers would face troubles as well: “Payments using cryptocurrency made to independent contractors are taxable”, Ozelli continued. “These employers must issue a 1099 to their contractors, but an employer can’t enter 1,000 Bitcoin on IRS Forms 1099.”
Regarding the volatility in the cryptocurrency market, Niam Yaraghi, Assistant Professor at the University of Connecticut’s business school, sees risks many ‘gig’ workers might choose not to take: “If I say this year I’m spending one-tenth of a Bitcoin on office supplies, how much will I be spending next year in Bitcoin? I don’t think there’s anyone in the world who can answer that question. It’s very, very dangerous”, Yaraghi told CNBC.
A 2014 survey conducted by the Freelancer’s Union found that one in every two freelancers had difficulties in getting paid, waiting nearly 100 days to receive compensation or never getting paid at all. In spite of this, the sharing economy keeps growing, with an estimated value of $335 billion by 2025 from $14 billion in 2014, according to the Brookings Institution.
David Chin, Chief Executive Officer of Thor Token, said:
“I have spoken with freelancers in the past that have had a lot of trouble tracking down payments for jobs they had already completed. Leveraging the blockchain seemed like an obvious solution to this problem as it can facilitate secure, instantaneous payments at the completion of a job.”
Chin’s platform aims to offer gig economy workers traditional benefits such as health insurance and retirement accounts.
Sharing economy startup Latium will soon go live enabling people to earn cryptocurrencies by delivering tasks such as walking dogs and delivering food: “It takes the complexity out of how to get and store cryptocurrencies. Anyone with any kind of skill set can go on Latium, do a task, and be rewarded with cryptocurrencies”, said Latium CEO Johnson.