Key Benefits of Using Stablecoins for International Payroll

Businesses are expanding globally, especially with remote international teams, find out how stablecoins can simplify the payroll process for remote international workers!

Let's dive in! 👇

What are Stablecoins?

Stablecoins are a type of digital currency designed to maintain a stable value. This stable value comes from being pegged to a reserve such as gold, or a fiat currency like the US dollar.

Unlike other cryptos that tend to be volatile and have constant price fluctuations, stablecoins aim to be digital assets without price volatility or price fluctuations.

This makes stablecoins a staple in various use cases. Some of the use cases include being a store of value, an asset to trade for other items or currencies, and, last but not least, an extremely effective tool for transferring payments globally.

Stablecoins are becoming extremely popular as a bridge between the traditional and digital worlds regarding payroll.

Different Types of Stablecoins

Now let's jump a bit more into the tecnicals of stablecoins.

Each stablecoin has its own way or mechanism in place that lets it maintain price stability. Each type of stablecoin has unique advantages, disadvantages, and challenges, it's up to you to decide which you would like to use and it's crucial to do research before choosing which to use. Make sure that you choose a stablecoin that is reliable and if possible has many audits to ensure the 1:1 peg remains stable.

Fiat-backed Stablecoins: These are by far the most common and popular type of stablecoin. These stablecoins maintain their value by holding reserves of a specific fiat currency (like the US dollar) to maintain the 1:1 peg. Some companies like USDT (Tether) or USDC (Circle) offer the ability to exchange your stablecoins for their fiat counterpart. In this case, you can change 100 USDT for 100 USD through Tether.

Algorithmic Stablecoins: These stablecoins are a bit more technical and rely on smart contracts and incentives to manage supply and demand. The smart contracts and incentives automatically adjust the supply of the token to maintain its peg. Unfortunately, these stablecoins have recently received backlash for not being backed by a counterpart like fiat-backed stablecoins. Especially taking into account how tragic the TerraUSD (UST) algorithmic stablecoin crash was.

Asset-backed Stablecoins: These stablecoins are pegged to numerous assets, including metals, other cryptocurrencies, commodities, and even things like real estate. These stablecoins can offer stable pegs, yet they might be a bit more volatile than fiat-backed stablecoins.

Advantages of Stablecoin Payroll

The novelty approach of receiving stablecoins as part of your salary offers many advantages over the more traditional methods.

Let's dive into some reasons why receiving stablecoins as part of your salary or conducting payroll with stablecoins upgrades your finances.

Currency Stability: A major benefit of receiving payments in stablecoins is their consistent value. Unlike cryptocurrencies such as Bitcoin and Ethereum, which can be highly volatile, stablecoins are linked to stable assets like the US dollar, gold, or other commodities. This consistency makes them appealing for payroll purposes, as it ensures your salary's value remains steady over time.

Lower Fees: Traditional financial institutions typically impose high fees for processing payments, particularly for international transactions. In contrast, stablecoin payments have much lower transaction fees. By using blockchain technology, stablecoins remove the need for intermediaries, which cuts costs for both employers and employees. This is especially advantageous for cross-border payments, where traditional fees can be extremely high.

Quick Transactions: Ah yes! Stablecoin transactions are way faster than traditional banking systems. Traditional international transfers can take several days to process and could lead to banks closing accounts or freezing assets. Stablecoins take minutes and accounts can't be frozen.

Inflation: This is particularly important in places with extreme inflation or bad monetary politics. Receiving your salary in stablecoins can provide a hedge against local currency inflation and ensures that employees retain the full purchasing power behind their salary, giving stability in unstable environments.

Cross-Border Payments: Cross-border transactions can be costly and complex. Yet stablecoins offer employees working abroad the chance to receive their salary without worrying about currency conversion, transaction costs, delays, or frozen accounts. This makes stablecoins ideal for cost-effective payments, reducing the overall time and cost of payroll while also maintaining a happy workforce.

Bitwage for Crypto Payroll

Bitwage offers a unique, non-custodial solution for paying international teams in stablecoins. Bypass traditional banking fees and delays while maintaining full control of your money.

Bitwage gives you:

• Flexibility to mix currencies of your choice: Through Bitwage, individuals have the ability to choose which currencies they would like to get paid in. This includes stablecoins, cryptocurrencies like Bitcoin or Ethereum, and even fiat currencies, catering to all employees.
• Transparent, low-cost transactions: Bitwage reduces the fees associated with cross-border international payments. By leveraging blockchain tech, both employees and employers enjoy more of their money, cutting out largely on high international transaction costs
• Pioneering Bitcoin and stablecoin payroll: Bitwage has over a decade of experience providing reliable payroll solutions. Companies and employees can confidently use Bitwage without sacrificing stability.
• Add-on to existing service: Bitwage acts like an add-on to your existing payroll process. Making it extremely simple to set up without having to recreate your current payroll process

Stablecoins vs Fiat

Traditional fiat currencies have dominated the salary landscape, but now stablecoins are upping the game. Businesses and individuals can now choose between using the traditional means or going for the modern solution of stablecoins. Let's look at some of the pros and cons:

Fiat Currencies Pros and Cons:

Pros:

• Fiat currencies like the US dollar are universally accepted for transactions and are part of the global payment and financial systems.
• Generally stable currencies with little to no price fluctuation. Price fluctuations are generally managed by central banks, and inflation is based on where the currency is used and that country's politics.
• High level of user protection provided by government regulations, which prevents users of fiat currencies from being prone to fraud.

Cons:

• Inflation is a key negative of fiat currencies. Over time, fiat currencies like the US dollar tend to have inflation, which slowly cripples users purchasing power.
• Centralized control of the currency by banks and governments.
• High fees and long processing times when doing international payments.

Stablecoin Pros and Cons:

Pros:

• Transactions are faster and can be processed 24/7 and 365 days of the year without pause.
• Lower fees than traditional banking systems.
• Can be used globally even to those countries and individuals who remain unbanked.
• Minimize volatility, providing a stable value, like fiat currencies.

Cons:

• Risks associated with the reserves of the stablecoin issuer.
• They constantly face regulatory actions and legal challenges.
• Still in the early adoption stages

Conclusion

If you're looking for a modern unique blend of stability, efficiency, and access to web3 and blockchain, getting paid in stablecoins is the way to go. While there are a number of things to consider, the advantages that stablecoins give you are undeniable.

More and more companies are recognizing the benefits of stablecoin payroll, which will most likely cause stablecoins to continue to grow. Offer a modern, cost-efficient, simple solution to payroll and meet today's needs for modern payroll solutions.