There are many businesses utilizing crypto and DeFi solutions to pay their employees and manage their bills while moving away from traditional exchange systems offered by banks (TradFi). Today, however, we’re looking at the risks involved in these payment solutions and discussing some of the considerations one should make when conducting investment payments. There will always be risks involved when paying for traditional services or labor upfront, but what if there was a way to diminish them entirely?There are many businesses utilizing crypto and DeFi solutions to pay their employees and manage their bills while moving away from traditional exchange systems offered by banks (TradFi). Today, however, we’re looking at the risks involved in these payment solutions and discussing some of the considerations one should make when conducting investment payments.
There are a number of issues to look out for when dealing with investors and funds. For example, there is little transparency regarding token allocation, government visibility of exchanges, and the allocation of capital from grant givers to recipients, just to name a few. Trust is paramount when it comes to public projects and their token allocation, and these projects should be entirely transparent regarding their allocations. This includes complete visibility of transactions so governments can monitor projects for taxation purposes.
In such cases traditional banking simply doesn’t cut the mustard, there’s too much room for error and risks for bad actors to do devious things. Lump-sum payments from grant givers to recipients also tempt dishonest entities to take off with the invested capital without rendering their promised services.
Big names like PayPal and Square have entered the crypto payment sphere hoping to capitalize on the advancement of DeFi payments. Both of their apps have made buying, selling, and storing currencies a breeze for business owners by allowing them to make payments, or for regular people to conduct P2P transactions.
This solution is not without fault, however, unfortunately. For example, Square only supports Bitcoin. Also, both of these companies act as brokers, earning transaction fees and a profit margin on exchanges much like any traditional banking structure would. Plus there’s always the risk that if an investor or a grant giver is required to make full payment upfront, there’s the possibility a bad actor could make off with the investment without rendering their service.
For businesses that have started with a great deal of capital, crypto streaming may be a better option. Decentralized biomedicalized network, DeBio, utilized streaming solution Roketo to pay a team of 200 investors and advisors while their business was still in development.
Paying these employees via crypto streaming means they received tiny increments of their salary over one period of time. The crypto streaming process is as simple as setting a beginning date, an end date, and the amount to be paid. From there, the funds will flow through the streaming channel steadily like water through a pipe. When the company is performing well the stream is on, but if things take a downturn it’s as simple as turning it off without ever leaving anybody in the lurch.
Also, if there’s a situation where an advanced payment is required, the funds come in steady increments rather than one big lump. The potential for bad actors to make off with large sums of invested capital is essentially eliminated. This is incredibly beneficial for start-ups that wish to utilize a workforce, but don’t yet have a massive amount of capital. The payment system is fully automated and transparent so trust between all parties involved in concrete. Streaming like this also allows businesses to plot their finances easily and utilize a set-and-forget system for payroll that erases virtually any need for tedious bookkeeping.
When it comes to utilizing crypto or regular payment solution, it should be convenient and suitable for one’s personal needs. An increasing number of businesses are using digital assets for a host of investment, operational, and transactional purposes. As with any new frontier, there are dangers, but also strong incentives. Streaming solutions are a new opportunity to reimagine payment solutions as we know them. One option allows bulk payments at one time much like what we’re used to, while the other is a gradual flow of funds that allows businesses to develop without breaking the bank.