Between 2005 and 2015, a Harvard study found that, “all of the net employment growth in the U.S. economy… appears to have occurred in alternative work arrangements.” The study defined alternative work arrangements as, “…temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers.”
The Hustle Economy
In this time and place in America, we find ourselves in the “hustle economy.” Close to 40% of Americans and 2/3 of young people have “side hustles” or perform part-time jobs as freelancers, ridesharing drivers, and participants in the alternative work economy. The reasonings put forward for the growth of alternative work arrangements and independent work include the rise of independent work platforms such as Uber and Upwork, memory of the 2008 economic recession, and the desire for economic stability as 40% Americans find themselves unable cover an additional $400 burden.
Variety is the Spice of Life
Freelancers perform a variety of work, from driving for Uber to helping with software projects through Upwork. Despite this variety of work, both professional and part-time freelancers are linked by an independent spirit. They share the common goals of breaking free of a 9-5 schedule. In addition, they enjoy reducing dependence on a traditional job. Paying the bills and taking control of their own finances no longer requires an office setting. For many freelancers, cryptocurrency is the logical next step in reducing their dependence on a third party.
Due to the nature of cryptocurrency and blockchain-based technologies, accurate statistics on the adoption of cryptocurrency by independent workers can be hard to come by. However, a recent survey of 1100 freelancers by Humans.net found that 75% of freelancers know what cryptocurrency is and 55% of the survey participants have used cryptocurrency before. The survey participants listed a number of advantages for using cryptocurrency, including ease of international payments, removing middlemen, and reducing transactional costs.
A 2018 report found that, among full-time freelancers, 17 percent “export” their services to clients abroad. This helps explain the comparatively higher adoption and acceptance of cryptocurrency amongst freelancers as opposed to traditional payroll job workers. Paypal charges a fee between 5-7% of the money sent for international transfers; in comparison, the three most traded cryptocurrencies (Bitcoin, Ethereum, and Litecoin) have an average transactional fee shown below:
While the average costs of these transactions are subject to volatility, in general these transactions are a much cheaper alternative to Paypal. Moreover, while Paypal is not available in certain countries, cryptocurrencies can be used anywhere in the world.
In addition to the reduced transactional costs of sending money abroad, freelancers see additional benefits with cryptocurrencies. For example, one pain point of many freelancers is employers ghosting a freelancer after a job is completed. Blockchain smart contracts are a way to reduce this because of the nature of smart contracts which autonomously enforce the predefined rules of a contract between employee and employer. For more visual learners, a Youtube video posted by Savjee contains a fantastic and concise explanation of smart contracts here.
Increasing the Side Hustle
For many in the United States, freelancing and side hustles are here to stay. Time and additional regulation will tell if cryptocurrency will become the payment of choice for freelancers in years to come.