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Why payroll - and lunch - may soon be paid with bitcoin

Is bitcoin the future of payroll? One company, ingenuously named 'Bitwage', certainly thinks so. According to Bitwage founder Jonathan Chester, the company is “the largest bitcoin payroll provider in terms of users and volume”, enabling individuals (regardless of their employer) and companies to receive wages – or pay employees – in bitcoin. Chester claims that by doing this, employees, employers and freelancers can save “90% or more on international wage payments”.

'Savings on payroll' are three words that would certainly make any CFO or corporate treasurer's ears prick up. Whether there really are savings remains to be seen. In any case, until virtual currencies gain a critical mass among consumers, corporates are unlikely to be able to use them in payroll.

But the increasing popularity of bitcoin among consumers is shown very nicely in an infographic on the Coupofy blog: Bitcoin, switching from investment commodity to everyday use. It tells us that companies such as Microsoft, Expedia and Dell are among the world's biggest bitcoin accepting merchants.

There were 100,000 merchants accepting the currency as of December 2014, with most use in the US, UK, Canada, Germany and the Netherlands. While about two-thirds of transaction volume in bitcoin is created by bitcoin mining, the number of transactions seems to be driven by consumer purchases, such as gift cards, IT services, e-commerce and food delivery.

When it comes to offline business that accept bitcoin, more than three-quarters of those are food outlets and 15% are accommodation. The graphic creates a compelling idea that bitcoin really is gaining ground as a means for paying for consumer goods, from sunglasses, to coffee tables, to lunch.

Bitcoin is switching from commodity investment to everyday use

Made by: Coupofy

Jeremy Light, head of Accenture Payment Services for Europe, Africa and Latin America, took the time to explore the possibility of buying lunch with a virtual currency in his blog 'Buying with bitcoins...' 

He bought his colleague lunch in a cafe near Old Street and found it to be as easy as paying by card: “The whole experience was seamless, easy and as quick as paying by Apple Pay (except for entering a 4 digit PIN in my mobile Bitcoin wallet).”

However, he calculated that the lunch cost 5% more when paying in bitcoin (due to the cost of having to top up at a Bitcoin ATM), compared to the cost had he paid in sterling.

Light's conclusions are interesting: “...for bitcoins to become less costly to use, there needs to be much, much more liquidity – more ATMs, more exchanges, more volume, more merchant acceptance, for the spreads to narrow.”

He also notes that bitcoin needs to become truly 'borderless', again to avoid illiquidity. The currency's success in payments hinges on its liquidity. As interest and acceptance grow, it looks like it's only a matter of time before bitcoin is more widely used. Moving payroll over to bitcoin is not so far away – when that happens, we'll all be paying for lunch with it.  

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