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The potential and pitfalls of paying your way in crypto

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The potential and pitfalls of paying your way in crypto

By Sean Sanders, Co-Founder, Revix

Although still a relatively new phenomenon, a growing number of employers are investigating the potential of paying staff and contractors in cryptocurrency, instead of traditional fiat currencies. Many are beginning to recognise the benefits, particularly as a means of skirting costly international exchange fees when paying overseas-based staff. However, payment in crypto can also come with challenging assimilations for payers and providers alike.

The present system for sending money to independent contractors abroad is woefully inefficient and laced with costs for employers and time delays for employees. Regardless of where in the world your company is based, forex and transaction fees can be anywhere between 2-8%, sometimes even more, which can take a toll on the employer’s budget.

We’ve found that paying in digital currencies, on the other hand, saves us and our freelancers both time and money. While paying highly sought after senior developers and other technical contractors in crypto works for us, cryptocurrencies are still difficult for many non-technical individuals to use – whether they are company owners or employees. Users have to understand the definition and nature of public keys, private keys, cold storage and digital wallets. It’s not an especially user-friendly means of payment as yet, but the savings are there.

With an increasing number of employees and freelancers working remotely from around the world, crossborder payment transaction fees can rapidly mount up. For the past year, Revix has been using Bitcoin, Ethereum and various stablecoins – cryptocurrencies pegged to hard currencies like dollars or pounds – to pay US and UK contractors. Revix has been reaping the benefits of almost instant transactions through borderless payment platforms such as Binance, Coinbase and Kraken, typically at one-tenth of the cost of traditional transaction fees.

Borderless payment platforms and exchanges have made the proposition of paying employees in crypto more appealing and certainly more accessible. In our experience, individuals will convert their crypto salary directly into a hard currency or a stablecoin, while others refuse to deal in traditional currencies altogether.

Numerous borderless payment platforms dealing in cryptocurrency have emerged in recent years, that allow users to keep their transactions entirely digital. They also serve as a vital intermediary, to ensure that payers and providers are protected. A select number provide a Visa card, enabling those paid in crypto to simply swipe for goods and services, in much the same way as a traditional credit or debit card. Like a credit card, users are subject to a transaction fee, although in the case of crypto it includes a conversion fee for converting cryptocurrencies into everyday currencies for retail vendors. This is a similar model to when someone travels internationally and uses their credit card to make a purchase. The difference is that a cryptocurrency is converted into a foreign currency instead of a home currency.

While in principle, it appears to be a relatively simple payment and transaction solution from a contractor’s perspective, employees need to be mindful that being paid in crypto is not the same as receiving currency. Instead, they are receiving an asset which can appreciate or depreciate after they’ve received it. Therein lies the aspect of volatility. For example, if you were to receive payment in Bitcoin and the price goes up by 20%, you stand to make a 20% gain on your invoice fee. However, the reverse is also possible, which could see you making a loss on what you’d initially expected to be paid.

Of course, employers need to do their research and understand the intricacies of paying in digital currency.

A Bitcoin payment, for example, will usually transfer within 45 minutes – an international bank transfer can take up to five days – so this is an immediate benefit. That said, fluctuation in the price of cryptocurrencies means that employers need to get their sums right and be prepared, in case the value of whichever digital currency they are paying in changes over the course of the hour-long transaction.

If the value of, for example, Bitcoin, goes up or down over the course of the transaction period it can mean the difference between you underpaying or overpaying your contractor, which of course is bad for business and employee relations. We learned quite quickly how important it is to speed up crypto payment transactions.

Crypto transactions have to be validated by the network before someone can spend or send what they have received. In the case of Bitcoin, a new block of pending transactions are confirmed every ten minutes and each platform, like Binance, has their own set of rules around how many blocks of transactions need to be processed after the first block that contained your transaction was validated.

This number is based on the risk appetite of the individual platform. Every ten minutes, after a new block of transactions is processed, your transaction becomes more permanent and secure, so some providers require more in order to ensure that deposits are valid. “Choosing providers that do not require too many confirmations is essential to combat price volatility – It’s a whole different kind of payroll administration.

While complementary crypto products and services are still in the early stages, the time and cost benefits far outweigh the volatility aspect, which can currently be mitigated once you’re a little more familiar with the small constraints we face today. As more businesses start developing products like accounting suites and simpler ways to handle and spend cryptocurrencies it will become easier for businesses, staff and service providers to interact with this new, frictionless and secure form of money.

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Energy stocks drag down FTSE 100, IG Group slides

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Energy stocks drag down FTSE 100, IG Group slides 1

By Shivani Kumaresan

(Reuters) – London’s FTSE 100 slipped on Thursday, weighed down by falls in energy stocks as oil prices slid after a surprise increase in U.S. crude inventories, while IG Group tumbled on plans to buy U.S. trading platform tastytrade for $1 billion.

The blue-chip FTSE 100 index lost 0.4%, while the domestically focussed mid-cap FTSE 250 index also slid 0.4%.

Energy majors BP and Royal Dutch Shell fell 3.2% and 2.5%, respectively, and were the biggest drags on the FTSE-100 index. [O/R]

“What is holding back the UK is a lack of tech stocks to capture the ‘rotation’ back into tech seen since Netflix results,” said Chris Beauchamp, chief market analyst at IG.

“Stock markets overall are much quieter today, looking so far in vain for a new catalyst for further upside.”

The FTSE 100 shed 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy and led to mass layoffs.

British Prime Minister Boris Johnson said it was too early to say when the national coronavirus lockdown in England would end, as daily deaths from COVID-19 reach new highs and hospitals become increasingly stretched.

IG Group tumbled 8.5% after announcing plans to buy tastytrade, venturing into North America after a stellar year for the new breed of retail investment brokerages.

Ibstock jumped 7.3% to the top of the FTSE 250 after the company said fourth-quarter activity benefited from better-than-expected demand for new houses and repairs.

Pets at Home Group Plc rose 2.2% after reporting an 18% jump in third-quarter revenue, boosted by higher demand for its accessories and veterinary services as more people adopted pets during lockdowns.

(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V and Mark Potter)

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Wall Street bounce, upbeat earnings lift European stocks

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Wall Street bounce, upbeat earnings lift European stocks 2

By Amal S and Sruthi Shankar

(Reuters) – European stocks rose on Wednesday after Dutch chip equipment maker ASML and Swiss luxury group Richemont gave encouraging earnings updates, while investors hoped for a large U.S. stimulus plan as Joe Biden was sworn in as president.

The pan-European STOXX 600 index closed 0.7% higher, getting an extra boost as Wall Street marked record highs.

All eyes were on Biden’s inauguration as the 46th U.S. President, with traders betting on a bigger pandemic relief plan and higher infrastructure spending under the new administration to boost the pandemic-stricken economy.

Tech stocks rallied to a two-decade peak in Europe after ASML Holding NV rose 3.0% to all-time highs on better-than-expected quarterly sales and a strong order intake for 2021.

Meanwhile, Richemont rose 2.8%, after posting a 5% increase in quarterly sales as Chinese splashed out on Cartier, its flagship jewellery brand.

Britain’s Burberry jumped 3.9% after it stuck to its full-year goals, saying higher full-price sales would boost annual margins, while Asian demand remained strong.

The pair boosted European luxury goods makers that are heavily reliant on China, with LVMH and Kering gaining between 1% and 3%.

“Any sign that retail spending is picking up in China is going to be a boost to the Western markets and those heavily exposed to it,” said Connor Campbell, financial analyst at SpreadEx.

The European Central Bank is set to meet on Thursday. While no policy changes are expected, the bank could face more questions about an increasingly challenging outlook only a month after it unleashed fresh stimulus to bolster the euro zone economy.

“With the new round of easing measures fully in place and no new forecasts to be presented tomorrow, it should be a fairly uneventful day for the euro,” ING analysts said in a note.

Italy’s FTSE MIB gained 0.9% and lenders rose 1.6% after Prime Minister Giuseppe Conte won a confidence vote in the upper house Senate and averted a government collapse.

Conte narrowly secured the vote on Tuesday, allowing him to remain in office after a junior partner quit his coalition last week in the midst of the COVID-19 pandemic.

Daimler AG jumped 4.2% after its Mercedes-Benz brand unveiled a new electric compact SUV, the EQA, as part of plans to take on rival Tesla Inc.

Germany’s Hugo Boss added 4.4% after Mike Ashley-led Frasers said it boosted its stake in the company.

(Reporting by Sruthi Shankar and Amal S in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur and Kirsten Donovan)

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Miners lead FTSE 100 higher on earnings cheer

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Miners lead FTSE 100 higher on earnings cheer 3

By Shivani Kumaresan

(Reuters) – UK’s FTSE 100 rose on Wednesday as miners gained after a strong production forecast from BHP Group, while encouraging updates from luxury brand Burberry and education group Pearson drove optimism about the earnings season.

BHP Group Ltd climbed 2.8% after it forecast record iron ore production for fiscal 2021, helped by high prices for the commodity. Other miners Rio Tinto, Anglo American and Glencore rose more than 2%.

Global markets rallied in anticipation of more fiscal spending as Joe Biden prepared to take charge as the 46th U.S. president.

“There is a view in the markets that more spending is in the pipeline, after all, Mr Biden will want to start his presidency on a positive note,” said David Madden, market analyst at CMC Markets UK.

The FTSE 100 index rose 0.4% and the domestically focussed FTSE 250 index added 1.4%.

The FTSE 100 has recorded consistent monthly gains since November after the sealing of a Brexit trade deal and hopes of a vaccine-led economic recovery, but has recently lost steam as tighter business restrictions sparked fears of a slow rebound.

Burberry rose 3.9% as it stuck to its full-year goals and said higher full-price sales would boost annual margins and Asian demand remained strong.

Global education group Pearson jumped 8.6% after its global online sales grew 18% in 2020, helped by strong enrolments in virtual schools.

WH Smith Plc surged 10.4% to the top of the FTSE 250 index as its trading during Christmas was ahead of its expectations.

(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V, William Maclean)

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