New Zealand is now making it legal for workers to garner their paychecks in bitcoin, but there are several problems with this plan.
New Zealand Only Thinks It’s Leading a Bitcoin Revolution
This isn’t the first time a nation has sought to utilize cryptocurrency to pay out its workforce. One of the first was Venezuela, which has been subjected to severe poverty over the years given inflation and the financial death of its national currency the bolivar. At press time, store shelves are practically bare, and many residents have sought to attacking zoo animals to put meat on their tables.
Given the country’s financial problems, President Nicolas Maduro has sought to implement a new system in which workers are paid in Petro funds, rather than the bolivar. The Petro is the new national cryptocurrency implemented by Venezuela. Making its official debut in early 2018, reports emerged (likely false) that suggested billions of Petro units were sold through its initial coin offering (ICO).
For the most part, however, the Petro has remained purely speculative given all the shady details surrounding its properties and creation. For one thing, the coin is allegedly backed by the country’s many oil reserves, though analysts say this is untrue and even point out that there’s no mention of oil reserves in the currency’s whitepaper.
The controversy surrounding the Petro has become so severe that U.S. President Donald Trump has instilled a ban on all future Petro trading.
This time, things are a little different. New Zealand is implementing the same paycheck system only with bitcoin instead of Petro funds. Bitcoin is far more mainstream and well-known that the Venezuelan currency, but that doesn’t mean issues won’t arise.
For one thing, bitcoin is not a stable currency, meaning it’s not tied to fiat. Thus, New Zealand is making it mandatory that all persons who receive their paychecks in bitcoin must convert the funds immediately into fiat through a government exchange platform. Thus, a person does not have the option of letting his or her paycheck “grow” or subjecting it speculative purposes.
In addition, only workers making more than a set amount have this option available to them, and they must be salaried employees working under legitimate company contracts. That means all independent contractors, freelancers or gig-seekers cannot take advantage of the bitcoin payout system.
How Successful Will This Be?
For the most part, this system seems to be in an experimental stage. It will go into effect on September 1 of this year and remain in effect for roughly three years. Depending on the success of the system, it could continue or ultimately cease without notice.
Either way, one thing’s for certain: bitcoin and crypto have become mainstream enough that global markets are at least willing to try new processes like these, rather than dismiss digital assets altogether.
