The metaverse is on its way to reality. Employers must look carefully at how remuneration in this new reality may be managed. A blended reality requires a blended remuneration; cryptocurrency-based bonuses and benefits may play an essential role.
Why Employers Can't Ignore the Metaverse
The metaverse is a digital space that uses virtual reality to enable people to have realistic personal and business experiences online. It will combine the use of cryptocurrency, artificial intelligence, virtual reality, augmented reality and spatial computing. In comparison with today's internet, it will be more immersive and interactive: a completely new spatial dimension.
The idea of the metaverse is quickly catching public attention. In 2021, internet searches about metaverse increased by 7,200%, and an increasing number of consumers are excited about moving daily activities such as shopping and working into the metaverse.
The metaverse has also begun to attract investors and capital. In 2022 companies related to the development of the metaverse generated approximately USD 120 billion. Eventually, the metaverse is expected to generate up to USD 5 trillion in value by 2030.
How will Finances Run in this New Meta-Reality?
It is possible to imagine that in the near future, the metaverse will become a workplace for a significant part of the population. If the terms of employment change in this way, the means of pay will follow.
In this regard, we will likely see an increase in the use of cryptocurrencies. These are decentralised digital currencies that use cryptographic techniques to ensure the security of exchanges between users. The technology that enables cryptocurrencies is called the 'blockchain', which is the same technology that moves the metaverse. In some cases, to enter the metaverse it is necessary to obtain a specific, related cryptocurrency and transfer it into a virtual wallet.
Another application of blockchain technology is NFTs (non-fungible tokens). These are digital assets created on blockchain platforms that represent unique and recognisable digital objects. At this stage, we can reasonably speculate that in a blended work arrangement (i.e. partially in the metaverse and partially in the real world), NFTs may be also become part of the employee's compensation package.
Blended Remuneration in the Metaverse
A blended working scenario may involve new ways to compensate, attract and retain employees, and cryptocurrency may play a role here. Bonuses, for example, could be paid through cryptocurrencies or NFTs.
Some existing employers have already moved in this direction. In both Japan and the US, allowing employees receive part of their salary in cryptocurrency is already a fairly widespread practice.
However, this sort of metaverse-oriented remuneration has both potential advantages and disadvantages for employees and employers.
The possible advantages may be:
- Attraction of digital natives, who are more likely to be interested in cryptocurrencies.
- Instantaneousness payments. Due to the blockchain technology, payments are in real time worldwide.
- Transparency and efficiency. Due to blockchain, both the parties to a transaction automatically recognise when the payments have been received, eliminating the need for financial records.
On the other hand, some disadvantages still persist:
- Taxation issues. Taxation of cryptocurrency will be subject to further legislation in the future, and the details cannot be clearly foreseen.
- One of the biggest issues with virtual currencies is that they are less stable than traditional currencies.
- Due to the blockchain mechanism, once a payment is made, there is no way to withdraw it.
- ESG issues. To sustain the cryptocurrency system, an enormous amount of energy is required for the computers doing the mining (i.e. to 'create" the cryptocurrencies).
- Generational issues. Not all generations of employees are keen to experiment with blended remuneration. What for many may be considered as a benefit, others may not find attractive.
- Institutional gaps. At this stage, no institutional third public body governs and regulates exchanges in the metaverse.
Remuneration in the metaverse will be bound to the development of cryptocurrencies, but these matters are still poorly regulated. This means that there is a lack of certainty regarding possible methods of remuneration in the metaverse. In addition, the diversity of the global working population (both generational and cultural) does not allow a single view on how much interest employees may have in blended remuneration. In any case, employers cannot ignore the phenomenon and will need to further analyse the means to attract talent to colonise the metaverse, and cryptocurrency-based bonuses may play a key role in this regard.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.