A Japanese company, the GMO Internet Group, has announced that starting next year they will allow their employees to elect to receive a portion of their compensation via Bitcoin, the digital currency that is currently in the news nearly every day.
Bitcoin is a decentralized form of currency that is generated via complex computer algorithms that “mine” the coins. When the currency was first introduced nearly ten years ago by someone who pseudonymously referred to himself as “Satoshi Nakamoto,” mining of Bitcoins was something that could be done on a desktop PC.
Over time, the calculations to generate a single Bitcoin have become intentionally more complex, and now it takes hundreds of computers to do this. Bitcoins are now mined in “pools,” or groups of computers.
It has taken Bitcoin a while to gain acceptance in the real world, as any digital currency only has value if people actually assign value to it. This has taken time, and at one time, a single Bitcoin was worth a fraction of a U.S. penny. As recently as 2011, the currency was valued at less than $1 each.
In January, 2017, a Bitcoin was worth about $1000 as interest has grown. As of today, a single Bitcoin is now worth $17,699. Fluctuations of hundreds or even thousands of dollars per day are not uncommon.
While Bitcoin has drawn investors, it has been slow to catch on as actual currency. It’s favored by people who engage in the sale of illegal goods online, as it’s quite difficult to trace individual transactions, but the adoption by traditional retailers has been slow. Wal-Mart is not yet accepting Bitcoin for payment, for example.
GMO Internet Group has a lot invested in Bitcoin and they are hoping to help spur it along by persuading their employees to accept part of their paycheck in Bitcoin. In order to encourage more people to participate, the company is throwing in a 10% bonus for any employee that offers to accept.
The company will allow employees to contribute anywhere from ¥10,000 to ¥100,000 (about $90 to $900) of their monthly pay.
There are still a few problems with Bitcoin that might make this difficult for GMO employees. Bitcoin is still somewhat difficult to convert into “real” currency, which might be a problem for employees who need that portion of their monthly salary in order to pay their bills.
The other problem is the tremendous volatility of the currency itself. As we said earlier, the value of a single Bitcoin can swing by hundreds or thousands of dollars in the span of just a few hours. That makes accepting Bitcoin a bit of a risk for many employees, as the value of their pay might fall dramatically the very day they receive it.
It also might increase, and the company is hoping that if enough people participate, with other companies doing the same, that the market for Bitcoin may eventually stabilize.
We’re nearly a decade in to this new currency, and no one is yet certain if it will ever become a useful commodity for daily purchases or if it will ever survive at all.