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The Node: Crypto Doesn't Pay

It's not really money until people can get it in a paycheck of some kind.

CoinDesk Insights
Mar 15, 2021 at 6:46 p.m. UTC
Updated Sep 14, 2021 at 12:26 p.m. UTC

I like the classic definition of money. It makes sense: method of payment, way to store value and unit of account. That all seems pretty smart.

But I also like the way I defined money when I got my first wages at a Southeast Kansas J.C. Penney's department store in the 90s: Money was what my time turned into when I let someone else tell me how to use it.

This article is excerpted from The Node (formerly Blockchain Bites), CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here

Also known as a paycheck.

This is, in fact, the way I think most everyone I know in fact defines money (as we know, hardly anyone really thinks about it).

So, to me, crypto isn't really money yet because the cryptocurrency industry isn't doing a very good job paying people wages. It's barely even trying.

Buterin’s bootstrapping

In Camila Russo's readable and entertaining book on the origins of Ethereum, "The Infinite Machine," we meet a young Vitalik Buterin before he could even really code. Baby Buterin was fascinated by Bitcoin and the possibility of money native to the internet, and he wanted some.

But he was so young! He didn't have money of his own to speak of and he definitely didn't have access to the fiat on-ramps of the internet, like a credit card. So, Buterin started asking around to see if there was some actual work he could do. It turned out that the best way for Vitalik to earn some BTC was to write useful explanations about the technology. Eventually this work would lead him to founding Bitcoin Magazine.

There's a larger lesson there. It's not really money until people can get it in a paycheck of some kind.

For crypto, wages would create an additional benefit: people could get into its economy and completely sidestep the traditional financial system.

Machine work

A certain kind of crypto denizen will have been reading the last few paragraphs and thinking something along these lines: In its earliest days, turning work into crypto was no problem. A technically adept user could run the Bitcoin software on a PC and earn a steady stream of bitcoin. The same went for Ethereum for a long time, as well.

Those heady days are long past, though.

Others have come along to make similar promises but the facts don't live up to the hype. I recently reported that the forthcoming Chia might be the easiest cryptocurrency for normal people to mine, but that weekend I tried to join the testnet and check out that claim. It went badly.

But honestly, mining is beside the point. Staking and mining are only "work" in the most abstract sense, not in the way that real people, people who think in paycheck terms, think about work.

Work – in the minds of enough people that it's not really worth arguing the point – is human time for hire.

Crossing the chasm

If crypto wants to cross the chasm with regular folks, it needs to provide more ways for people to earn it with actual work. I'm not talking about full-on jobs. It's too soon for that. What's missing is a place for side-hustles that earn crypto, like what Vitalik did in writing helpful blog posts via crowdsourced commission.

We saw some hints of that kind of economy in August when one of our contributors presented the story of Filipino grandmas playing Axie Infinity for far too many hours each day. That one was more than a little dystopian, obviously, and not, I'm pretty sure, anything Axie really had in mind when it built the game.

The blogging sites Steem, Hive and Cent have also paid creators for content to some degree, but that's also just one kind of work. More are needed.

There must be ways to connect talented people around the world with people who need work done. Folks with skills like copyediting and design, who have time for a little side work, can earn additional income on marketplaces such as Fiverr, and it's cool to see there is some demand there for a crypto payment option. EthLance and FreelanceforCoins are nice starts down that road.

But it doesn't feel like these are as crypto as they could be.

One idea: What about a crowdsourced meme factory? Imagine: a founder could post a message a company wanted to get across and invite memesters to submit concepts. Each memester would have a reputation score, and everyone who submitted would get paid something for taking part, but those with better reputations would earn slightly more (and the ones with bad track records would earn nothing).

Then a few memes would get voted up by other users, earning more, until the founder picked however many the team wanted to use on Crypto Twitter or wherever, and each of those selected would get the real payday.

Boom.

An actual economy.

Side note: I'm sure everything above raises all kinds of legal and tax issues, particularly in the U.S., whose regulators are determined to keep the online world as dull as possible. No doubt, no doubt. But look, I'm a writer, not an attorney nor a founder, and those issues make me very sleepy. Regardless, the larger point stands. 

Until crypto finds ways to get over any and all obstacles to regular people turning time into money, it will remain an industry that exists somewhere down the rabbit hole.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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