Blockchain and Crypto in the Labor Market: Overview of Salaries, Taxes and the Most In-Demand Jobs
Over the past months, the cryptocurrency market has been demonstrating bearish sentiment,
with crypto prices falling to a yearly lows. This is making some blockchain companies rethink their business models and cut employees. However, the slump didn’t prevent the blockchain industry from experiencing a human resources boom, as evidenced by an active growth of vacancies associated with blockchain and digital assets, according to the latest study by recruiting site Glassdoor.
Increase in demand for blockchain-related jobs
As estimated by LinkedIn analysts, 645 vacancies tagged with the words “blockchain,” “Bitcoin,” or “cryptocurrency” were published on the site in 2016. By 2017, this value has surged to approximately 1,800 and to 4,500 vacancies by mid-May of this year. As of now, LinkedIn’s search system displays 13,816 records related to blockchain and 2,479 records related to cryptocurrency.
These estimates are supported by recent data published by Glassdoor’s recruitment portal. As of August 2018, United States companies had posted 1,775 vacancies related to blockchain technology, which is three times more compared to the previous year. As noted in the Glassdoor report, 79 percent of the vacancies are concentrated in the 15 largest American cities, and the most saturated demand regions show that New York and San Francisco account for 24 percent and 21 percent of the total number of crypto-industry job openings. The current total number of blockchain and cryptocurrency vacancies worldwide has grown to around 3,000 and 900 correspondingly.
Software developers are the highest demanded occupation, with 19 percent of vacancies published by employers seeking employees falling into this category. In addition to programmers and technical specialists in the crypto industry, there is a shortage of product managers, risk analysts and marketing specialists. Traders and investment analysts are not among the most sought-after professionals in the crypto industry. But there are more and more vacancies for specialists in new disciplines that have appeared in the wake of blockchain technology’s popularity — “Decentralized Finance,” “Decentralized Internet,” and “Security Hardware.”
However, if taking into consideration the last three months, a fuller picture looks partially different. According to the extended analytics shared by job-search platform Indeed with Cointelegraph, from October 2017 to October 2018, job-seeker interest for roles related to Bitcoin, blockchain and cryptocurrency declined by 3 percent, while employer interest for roles related to the same terms only rose (25.49 percent), which was different than the interest levels from the year before by both parties. If looking at data from 2016 to 2017, job-seeker interest for roles related to Bitcoin, blockchain and cryptocurrency rose by 481.61 percent, while employer interest for roles related to the same terms rose by 325 percent. The following graph shows both the growth of job-seeker interest in jobs with these keywords and the growth of job postings for jobs with these keywords for that time period.
Today, IBM, ConsenSys and Oracle have the greatest need for qualified personnel. Each of them has more than 200 corresponding vacancies, as Glassdoor reports. They became strong competitors of the industry leaders like crypto exchanges, among which Coinbase and Kraken have the greatest need for qualified personnel. The list of major employers for blockchain professionals has also been joined by larger consulting firms Accenture and KPMG. At the same time, the lack of vacancies related to blockchain from such giants as Facebook, Google and Apple could be noted. The need for crypto industry experts isn’t a uniquely American phenomenon. In August, Cointelegraph reported a 50 percent increase in the number of vacancies associated with blockchain and cryptocurrency in Australia, India, Singapore and Malaysia compared with 2017. At the same time, developers who are proficient in the Python programming language are among the most desirable candidates.
“Half-a-million-dollar” jobs and “insane” packages
The lack of qualified personnel means higher salaries for blockchain specialists. As estimated by Glassdoor, the average base salary for such employees is $84,884 a year. This is 62 percent higher than the average wage in the United States ($52,461 per year). At the same time, the variation in salaries ranges from $36,046 for junior developers to $223,667 a year for qualified software engineers. Blockchain developers with three to five years of experience can earn “half-a-million-dollars” a year, according to Blockchain Developers recruitment agency. At the same time, analysts suggest that newcomers can count on a salary “definitely well over $120,000.”
Company executives also noted the increase in salaries in the blockchain and cryptocurrency industry. According to David Schwartz, chief cryptographer at Ripple, the hiring packages have "gotten insane" since “ICOs dumped a bunch of money on the industry.” In particular, a couple of Ripple developers received “$1 million signing bonus offers,” Schwartz disclosed. Notably, the current average salary of software engineer at Ripple is $125,000, as estimated by Glassdoor. Given the fact that the same job was paid $85,000 in May 2018, according to Paysa, it doesn’t seem the crypto market prices affect the developers salaries, at least not at Ripple.
Some employers attribute the decline in the quality of products produced by developers to the increase in salaries. According to Alex Ferrara, partner at Bessemer Venture Partners, which invests in crypto funds, such an “overeagerness” is “impacting the pace of development. A lot of these projects are way behind on their launch schedules.” The current realities of the blockchain industry has been continuously battered by a declining cryptocurrency market, which is partially responsible for the tightening of staff shortages. As raising funds through ICO became more accessible than crowdfunding, qualified specialists prefer to launch their own projects and begin to assemble their development teams, as was the case with Amber Baldet. The leader of JPMorgan Chase’s blockchain team left the company on April 2 to start her own project. As a result of such “forks” inside companies, the shortage of personnel is becoming increasingly acute.
Who needs salaries in crypto?
The popularity of cryptocurrency as a means of remuneration is also growing, although not as quickly. On Sept. 17, HR startup Chronobank published the results of its survey of 445 crypto enthusiasts from around the world, including the U.S., Australia and Russia. The respondents were asked in which currency they preferred to receive wages. Two-thirds (66 percent) of them stated that they were ready to be paid for work in Bitcoin or other cryptocurrencies. The majority (83 percent) of respondents indicated they were supportive of receiving their bonus payments in digital money. Of the individuals interviewed, 72 percent said that, when choosing their next job, they would prefer an employer who offered the possibility of paying salaries in cryptocurrency.
One-fifth of the respondents indicated that they would exchange cryptocurrency, received as wages, for traditional money. Notably, half of the respondents believe that if they receive a salary in cryptocurrency, they will spend less than they do now. The results of the latest survey conducted by peer-to-peer (p2p) platform Humans.net demonstrated the high level of interest and readiness among U.S. citizens to get paid in cryptocurrencies. Eleven percent of 1,100 freelancers responded that they would like to have their salaries be paid in digital money, and 18 percent expressed their desire to receive a part of their wages in crypto.
Today, wages in cryptocurrency are popular mainly inside the industry. On Aug.18 TechCrunch editor Michael Arrington tweeted that Binance CEO Changpeng Zhao told him that 90 percent of the company's employees preferred to receive a salary in the platform’s native token, Binance Coin (BNB).In December 2017, GMO Internet, a Tokyo-based IT giant, announced its plans to start paying salaries in cryptocurrency. The company intended to pay up to 100,000 yen ($884) of over 4,000 employees monthly salary in Bitcoin. Bitcoin.com also offers its employees the opportunity to get paid in Bitcoin Cash, given the information from job openings located on its website.
However, cryptocurrency wage payment goes beyond the industry. In August, semi-professional football club "Gibraltar United" announced plans to pay its players a salary with a cryptocurrency called Quantocoin. Club owner Pablo Dan believes that the use of cryptocurrency provides greater transparency and, most importantly, simplifies financial relations with foreign footballers playing for the club. Experts believe that the salaries in cryptocurrency will help international companies attract remote foreign specialists.
“Several U.S.-based companies are paying their international workers in Bitcoin, as it can save both the company and the employee money,” Bloomberg Law analysts suggest. According to the statistics published on the company’s website, nearly 200 companies use Bitwage, a service allowing employees and freelancers to receive payments in cryptocurrency. As estimated by Bloomberg Law, about 65 percent of Bitwage clients are U.S. companies, and 95 percent are using it for paying wages to international workers.
The current statistics, located on the Bitwage’s website, shows that over $31 million has been paid to employees by the companies through this service. Among the clients mentioned are Google, Facebook, Uber and Airbnb. For some people, cryptocurrency payments become more than just a new way to carry out the transactions. Workers in such regions like Latin America, which might not have a matured banking system or stable currency, are given the ability to be paid in cryptocurrencies. For example, developers in Venezuela got more business opportunities and revenues with the advent of Bitcoin. However, receiving wages in cryptocurrency may involve tax liability.
The main obstacle to the spread of cryptocurrency salaries remains the lack of clearly defined legislation, including tax rules. Today, the regulatory approaches of different countries and their views on the taxation of digital money vary greatly. In the European Union, there are no special rules for regulating activities related to digital money, and the taxation of crypto transactions is regulated by the national legislation of each country. As a result, in France, digital currencies are subject to capital gains taxes, with fees of 14-45 percent. Germany doesn’t charge any taxes as long as cryptocurrency is used as a means of payment. Bitcoin has no established legal status in the U.K,, but is commonly treated as a foreign currency for most purposes, including value-added and goods-and-service taxes.
Asian countries offer a different approach to taxation of crypto-related activity. In Singapore, if digital currencies are part of the taxpayer's investment portfolio, then the profits from selling them are not taxed, since they are considered capital gains. Notably, Bitcoin is recognized not as money but as a service, and therefore a tax on goods and services (local analogue to VAT) is applied to it. In China, cryptocurrency transactions are subject to income tax and capital gains tax, and revenues are subject to taxation. Japanese individuals are charged from 15 to 55 percent for any activity related to Bitcoin. In Australia, cryptocurrency transactions are subject to income tax. In Canada, they are subject to income and capital gains tax, with up to 50 percent of the revenue charged. In the U.S., cryptocurrency owners pay taxes on digital money as they would on property.
Blockchain in recruitment
As blockchain technology and cryptocurrency give birth to new jobs, business models reliant on third-party involvement may become increasingly outdated. The bottom line is that smart contracts — decentralized, digitized commercial agreements — control the fulfillment of obligations by all parties and manage all essential financial flows. As a result, the third-party services of various kinds of intermediaries may no longer be required. Meanwhile, mediation services constitute a large segment of the modern economy. After all, in traditional contracts used by banks, brokers, authorities, realtors and others, it is the intermediary that describes the terms of the transaction, draws up the document template, monitors the execution of an agreement, and appropriates a significant part of the payment.
Smart contracts automatically coordinate and ensure the interests of all parties, almost instantly and free-of-charge. Moreover, the inability to change information in the blockchain provides the highest level of security to all participants in the transaction, eliminating the possibility of data manipulation and deception. Basically, one smart contract can replace a room full of corporate lawyers, realtors, recruiters, risk managers and other professionals whose work essentially boils down to the formal assessment of documents.
In addition to regulating labor relations inside the company, blockchain technology can become a magic pill for the freelancing industry. During the past couple of years, the scale of remote work around the world has increased significantly, and the sector is expected to continue to expand. Former U.S. Secretary of Labor Robert Reich calculated that in a couple of years, 40 percent of the U.S. workforce will be freelancers. However, this could lead to a number of issues since freelancers are not considered to be full-time employees, which means that they remain outside the scope of health insurance, pensions and other social benefits. Moreover, they are forced to use the services of aggregator sites, which primarily focus on the interests of the customer, and not the freelancers themselves. In addition, such platforms like Upwork charge up to 20 percent for a bill, and payments for the work performed are often delayed.
Some projects use the advantages of blockchain technology to solve the problems that currently plague the freelance economy. Some provide freelancers with service where blockchain is leveraged to ensure paid vacation and sick pay when needed. Other solutions offer a blockchain-based system for resolving disputes between customers and freelancers. Some platforms are deploying blockchain-powered Human Resource Bank to allow p2p matching of potential employers with contractors on the basis of verifiability of all user data, and excluding the possibility of falsification. The use of blockchain technologies in social networks and internet sites for freelancers demonstrates the high demand of the industry for new solutions using advanced technologies and cryptocurrencies. The exclusion of intermediaries, direct communication, reputation systems is what the blockchain brings to the labor industry.
The pace of development and the integration of blockchain and cryptocurrency in everyday life will likely depend on the position and attitude of national governments. Countries with a friendly position on cryptocurrency are already leaders in the use of blockchain technology. Florida residents pay for property taxes, driver's licenses, ID cards and car numbers in cryptocurrencies — Bitcoin and Bitcoin Cash — using the BitPay payment system. The corresponding decree has been approved by the State Department of Taxes.
Meanwhile, in 2017, China banned cryptocurrency trading, ICOs and cryptocurrency exchanges, and the result was a tenfold decrease in the circulation of cryptocurrencies. According to the country's central bank, the yuan's share in the Bitcoin market fell from 90 percent to 1 percent, and 88 crypto exchanges and 85 blockchain startups that had been operating in China since autumn 2017 left the country. In such conditions, the numbers of those who want to receive a salary in Bitcoin may also gradually drop.
Another factor, which may impact the adoption of cryptocurrency in the labor market, is the price of digital currency. As of now, most cryptocurrencies are volatile, and that dramatically cools the enthusiasm of workers regarding the payments of wages in digital currency. As the sector continues to develop, mature and adhere to government-mandated regulations, the number of workers choosing to receive their wages in Bitcoin, Ether and other cryptocurrencies may become more and more common. Raj Mukherjee, senior vice president of products at Indeed,
“While over the last few years, Indeed saw a steady rise in job-seeker interest for roles related to cryptocurrency, our data shows that job searches for these roles really picked up around the time when the cost of Bitcoin was at its highest. Since then, job-seeker interest has gone down, but still remains strong.”
On the other hand, the demand for specialists capable of solving specific tasks will grow. Stephane Kasriel,
CEO of Upwork said:
“In just a few years, more than 30 percent of the workforce’s essential skills will be new. We’re seeing that shift take place on Upwork, where new and emerging skills like blockchain surface on a monthly basis."
Large corporations like IBM and Microsoft have been willing to invest for the long term in blockchain by expanding hiring over the last year. The trend of mid-2018 will likely continue moving to smaller companies, as experts predict. Though the overall number of applications posted by job-seekers has declined by 3 percent since last year, the continuous fall in cryptocurrencies’ prices hasn’t affected the interest that companies seeking blockchain specialists have demonstrated.
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