At least one contract worker for Coinbase, the Bitcoin startup backed by Union Square Ventures & Andreessen Horowitz with over $30M in investment, has been paid in BitCoin to do work on a contract basis. Given that the startup manages thousands of dollars worth of bitcoins on a regular basis, it’s no surprise that it has accumulated a stock of the cryptocurrency, and, as the value continues to go up, it is in Coinbase’s favor to pay using Bitcoin.
Initially, I was a bit shocked regarding the idea of being paid via Bitcoin – surely this is circumventing labor laws, right? Well, no. Services like BitPay which launched earlier this year already allow employers to enable their employees to receive part or all of their income in BTC – nevermind whether that’s a reasonable thing for an employee to do – essentially by deducting taxes and then paying the net paycheck in some combination of USD$ and BTC. I highly doubt that services like BitPay account for overseas employment – I wonder what local governments would think of knowing that one of its citizens is working for BitCoin, given their recent hearing on BitCoin?
Despite the fact that CoinBase has found itself in hot water a few times for, well, taking $35K from someone and not delivering their BitCoin, the company has already been hailed as the first Billion Dollar Bitcoin startup – although, that’s only ~1.6 Million BTC. It’s no stretch to say that in the past 12 months, BitCoin, which jumped from $13USD to $1000USD and back down to around $600USD today, has become more present in our lives – or at least, you can now buy almost anything with BitCoin, if you know who accepts it.
2014 may be the year that BitCoin crashes, or stabilizes, or both – the fun that people had up until 2012 mining BitCoin is certainly over, as the currency has evolved from libertarian geek fantasy to a highly uncontrollable anonymous currency. I’ve been enjoying watching the new TV Show Almost Human, which has managed to interweave BitCoin as the go-to criminal currency in its futuristic buddy cop series – Hollywood is great at imagining today’s technology as standards of tomorrow’s living.
The government may have thought Silk Road was the worst thing that could happen with BitCoin, but what happens when the very companies that are trying to be BitCoin banks are paying workers in their own currency? Can this expenditure be properly tracked, taxed, and quantified, or will it slip between the cracks?
One thing’s for sure – BitCoin is real. A real payment method, and a real problem that governments need to figure out.