Smithson: Take wooden nickels over bitcoins
When I was a youngster, people I considered to be old fogeys (they were younger than I am, now) used to say: “Don’t take any wooden nickels.” The modern equivalent of that caution might be: “Don’t take any bitcoins.”
According to Wikipedia (the repository of all knowledge), “In the United States, a wooden nickel is a wooden token coin, usually issued by a merchant or bank as a promotion, sometimes redeemable for a specific item such as a drink.” The saying 'don’t take any wooden nickels' is “considered a lighthearted reminder to be cautious in one's dealings.”
Compared to bitcoin, wooden nickels may seem like a pretty good deal. At least a wooden nickel is something you can actually hold in your hand.
So, what exactly is a bitcoin? Again, according to Wikipedia, “Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by pseudonymous developer Satoshi Nakamoto. It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money. Conventionally, the capitalized word ‘Bitcoin’ refers to the technology and network, whereas lowercase ‘bitcoins’ refers to the currency itself.”
I admit that, having been born in 1961, the concept of a virtual currency is a foreign concept to me. Back then, Al Gore hadn’t yet invented the Internet, a wristwatch had to be wound up at least daily, cable television (13 channels!) was a revelation, there was no such thing as a “Loonie” (much less a “Twoonie”), and telephones were still used for talking.
So, the concept of virtual currency doesn’t exactly land easily with me. Where, precisely, is this stuff located? Who is safeguarding it? How is its value determined? Can I use it to buy coffee?
Bitcoin’s bid to become accepted as a standard form of currency took a large hit, recently, when one of the largest bitcoin exchanges, Tokyo-based Mt. Gox, vanished into the night.
According to the Associated Press, a “coalition of virtual currency companies said Mt. Gox went under after secretly racking up catastrophic losses. The exchange had imposed a ban on withdrawals earlier this month. By Tuesday, its website returned only a blank page.” There were published reports that $350 million worth of bitcoins had been stolen over several years as a result of flaws in its payment software.
The AP also reported that “Mt. Gox's origins are rooted in fantasy instead of finance. The service originally specialized in trading colorful cards featuring mythical wizards and derives its name from a game. The initials stand for, ‘Magic: The Gathering Online Exchange.’
Yikes. Colorful cards featuring magical wizards? I’m imagining currency displaying a picture of Voldemort, which in Canada would quickly come to be referred to as a “Voldie.”
In any event, there are now reports of employers seeking to pay their employees in bitcoins.
In Poland, web developer EL Passion announced: “After much interest in the company about bitcoin and crypto-currencies in general, we’ve decided to provide our employees with the choice of having their salaries paid in bitcoin.” Apparently, the employees embraced the concept and over half indicated an interest in participating.
In Australia, 21st Century Media and Education Group of Companies has commenced paying some of its employees’ salary in bitcoin. 21st Century also happens to be the parent company for 21st Century Bitcoin Exchange, so it’s no surprise the company has agreed to pay employees in the digital currency.
In the U.S., www.coindesk.com/companies/bitpay, the world’s largest digital currency payment processor, has released its https://bitpay.com/bitcoin-payroll-api" \t "_blank" Bitcoin Payroll API, which allows employers to pay employees in bitcoin.
After receiving requests from its own employees – all of whom are paid to some extent in bitcoin - BitPay decided to develop the payroll application for others to use as well.
Here in British Columbia, our Employment Standards Act is explicit on the topic of currency. Section 20 of the Act (“How Wages Are Paid”) states that “An employer must pay all wages in Canadian currency.”
That’s just about as plain a direction to B.C.’s employers as you could ask for - pay your employees in bucks, not bitcoins. Statutorily speaking, a bitcoin isn’t worth a wooden nickel.
Robert Smithson is a labour and employment lawyer, operating Smithson Employment Law. For more information about his practice, or to subscribe to You Work Here, www.smithsonlaw.ca. This subject matter is provided for general informational purposes only and is not intended as legal advice.