Blockchain: Is 20,000 tokens for a month's work worth it?
April 20, 2017 11:30 AM   Subscribe

A company has proposed to hire me for a month as a contractor. It's a company that does work in the blockchain and they're offering 20,000 tokens for 30 days' work. Is this worth it or am I being taken advantage of?

I'm trying to get a job with a company that's doing some seriously awesome work in blockchain. I don't want to explain more for fear of giving it away, but suffice to say, it's real. They have real clients and have been around for 3 years.

I was recently laid off, and I've been trying to angle my way in for a job. The owner has proposed bringing me on board as a contractor first and in lieu of cash, wrote this to me: "As I mentioned before, we are gearing up the crypto-token sale launch of our company token which will grant us the opportunity to grow our current team. [...] As indicated in the offer letter, regardless on if you decide to continue with the company you will receive 20,000 tokens for your dedication over the 30 day period."

Help me understand this. How am I getting paid? Are those 20,000 tokens redeemable for cash? Is this a month's work essentially for free?
posted by zooropa to Work & Money (42 answers total) 5 users marked this as a favorite
 
They're trying to pay you in their own, not-even-yet-launched currency. It's worth nothing at the moment and likely to be worth nothing in the future.

I'm not convinced it's not a scam. Please consider carefully the wisdom of working for people promising to pay you in magic beans and acting like it's a totally normal thing to do.
posted by praemunire at 11:37 AM on April 20 [39 favorites]


If you need money, you should perform work in exchange for actual money. It sounds like they are not actually paying you legal tender.
posted by cellphone at 11:38 AM on April 20 [5 favorites]


These "tokens" don't appear to exist yet, so the usual advice about stock options applies. What if nobody buys them?
posted by rhizome at 11:39 AM on April 20 [7 favorites]


I should clarify that the company itself is not a scam. They're doing work for several very large corporations in the health care space and the value-prop is outstanding. If this wasn't blockchain, we wouldn't even be having this conversation. But it did sound fishy to me that no actual money is being exchanged, just a promise.

The closest comparison is to a non-Blockchain, pre-IPO startup. Comparing apples to apples, it's like they're offering equity in exchange for no salary up front. And admittedly, I would run for the hills if that were the case. Even Marc Andreesen didn't take those terms when commercializing Mosaic into Netscape back in 1994.
posted by zooropa at 11:43 AM on April 20


Something like those 20,000 tokens is generally icing on the cake after the actual money you would get paid for the actual work you do, shortly after doing the work. Right now they're offering to give you theoretical money for actual work you do, at some indeterminate point in the future, which basically means you might get icing if the stars align in your favor, but you're definitely not getting a cake regardless.
posted by griphus at 11:47 AM on April 20 [12 favorites]


If you did a month's work for your state lottery and they offered to pay you in tickets, would you do it?
posted by Etrigan at 11:50 AM on April 20 [11 favorites]


So if I'm understanding y'all correctly, I'm getting a promise. 20,000 tokens (which are worth $0 right now) for a month's work. The company is going to hold an ICO (essentially the blockchain version of an IPO) in late May, and if all goes well, I'll be able to convert that 20,000 into cash.

The question now is: how do those 20,000 tokens get converted into cash? How is the worth (1 token = $X) calculated?
posted by zooropa at 11:50 AM on April 20


Those are excellent questions for you to ask the company. Keep in mind that your normal rate (which I would bump up and get a deposit, due to them even trying to pay you in scrip), should not be a problem for a viable company.
posted by rhizome at 11:56 AM on April 20 [16 favorites]


How is the worth (1 token = $X) calculated?

That is an exceedingly difficult question to answer without knowing much much more about the firm and their technology.
posted by aramaic at 11:56 AM on April 20 [5 favorites]


The question now is: how do those 20,000 tokens get converted into cash? How is the worth (1 token = $X) calculated?

No one knows, it's completely speculative. You'd be taking a YUGE risk.
posted by Fidel Cashflow at 11:56 AM on April 20 [6 favorites]


you will receive 20,000 tokens for your dedication over the 30 day period.

It were me, they'd have to earn my dedication by paying for my labour. In dollars.
posted by klanawa at 11:59 AM on April 20 [6 favorites]


Real money only.
posted by Thorzdad at 11:59 AM on April 20 [10 favorites]


They get converted into cash by finding someone who has cash and wants tokens and doing a trade. In a successful cryptocurrency, such people will exist. For a new one---who knows?
posted by katrielalex at 12:01 PM on April 20 [4 favorites]


If they are not a scam and these blockchain things will be worth actual money then why don't you just ask for actual money? If they are not a scam they should have actual money to pay you for work.
posted by bondcliff at 12:02 PM on April 20 [3 favorites]


So if I'm understanding y'all correctly, I'm getting a promise. 20,000 tokens (which are worth $0 right now) for a month's work. The company is going to hold an ICO (essentially the blockchain version of an IPO) in late May, and if all goes well, I'll be able to convert that 20,000 into cash.

The question now is: how do those 20,000 tokens get converted into cash? How is the worth (1 token = $X) calculated?


There's no possible way for us to answer these questions if you don't feel able to give us any more information. Your prospective employers, however, should certainly tell you this.
posted by Urtylug at 12:08 PM on April 20 [4 favorites]


How many tokens are they releasing? Will your 20k be 20k of a million, or a trillion?

Can you afford to lose a month of hard work if these tokens prove valueless?

Can you afford to sit on your magic beans for a while if they underperformed at first but grow slowly but steadily?

You clearly believe in the company, and that they will be worth some money somehow. But you have not provided us enough data to convert tokens to cash or bitcoins or even stock options. Did the company provide you with their estimate of the conversion?

Is the job offer a guarantee? What salary do they propose then?

Basically... This sounds like a big gamble to me. I'd work for Apple for 30 days for Apple tokens, but I'm not going to starve if I do. I would not work for Firefox tokens, cause I don't believe it would pay off enough, even on resume boosting
posted by Jacen at 12:12 PM on April 20 [1 favorite]


Maybe you can offer to accept bitcoin instead. I'd work for bitcoin. Otherwise, you remember that Better Call Saul episode where a sovereign citizen wanted to hire Jimmy for some crazy lawsuit, but it was totally OK because he was going to pay him a million zillion Sovereign Bucks? Yeah, this is like that.
posted by spacewrench at 12:22 PM on April 20 [3 favorites]


Is this even legal? I mean minimum wage laws probably don't say "in actual money" but it seems like it would be implied.
posted by If only I had a penguin... at 12:25 PM on April 20 [7 favorites]


Yeah, what I'm really trying to get across to you here is: it's one, very standard thing to offer you an option of some kind in addition to salary. Most options either have a fairly straightforward valuation (mature stock that, while subject to the vagaries of the market, is probably going to vest within a reasonably predictable band of value) or are plainly lottery tickets (pre-IPO equity). They're trying to offer you the most extreme form of the latter while acting like it's the former (oooooh a defined number of tokens, yours to keep regardless!). Do you want to work for someone who's attempting to hustle you like this?

I also gently want to urge you to consider carefully how well you can possibly understand the "value prop" of this company if its business is entirely or primarily based in the blockchain and you yourself don't understand the basics of how a cryptocurrency works.
posted by praemunire at 12:28 PM on April 20 [16 favorites]


> They're doing work for several very large corporations in the health care space

I bet they're getting paid in actual currency that exists right now in the world. You should be paid like this as well.
posted by rtha at 12:28 PM on April 20 [51 favorites]


The company is going to hold an ICO (essentially the blockchain version of an IPO)...

Another reason to be super careful: as far as I'm aware (could be wrong!) an "ICO" is what blockchain companies use to get around SEC filings and disclosures required in an actual IPO. So whatever is going on is not truly the equivalent of an IPO as the SEC won't be regulating it from the get-go, only if things go really bad and someone gets the SEC involved. It's the Wild West right now which is all the more reason to ask for Real Money as opposed to Blockchain Fun Bux.
posted by griphus at 12:33 PM on April 20 [9 favorites]


My family member works for a blockchain company that has real clients, is doing amazing things, and pays in awesome $$USD.

You can offer a trial period of work for free (accepting "coin", tokens, wall drawings, whatever) with the contingency that for any hours above 80 you will be paid at $$$$ rate. In $$USD.
posted by Dashy at 1:11 PM on April 20 [1 favorite]


If you want to calculate the risk/reward ratio, what you want to examine is how many blockchain currencies have started up over time, the number that are still in use, and the stability/transferability of those currencies.

Also, how are they planning on using these? Are they doing the mining and selling the tokens for a market price (in which case it'll start low and go higher), or are they using the blockchain as a proof of ownership/transfer mechanism and entities will be buying them as a commodity? What's their plan for transfer, long-term?
posted by mikeh at 1:15 PM on April 20


Let me state that I know nearly nothing about cryptocurrencies.

Here are the top 20 cryptocurrencies by trading volume, their current price, and the value at 20,000 units. So if this new currency somehow makes it into the top 20, your pay for a months labor will be worth between 6/10,000ths of 1 cent or $26 million. The median value is about $250 bucks total.

CRPC/USD 0.00000003 $0.0006
DIME/USD 0.00000009 $0.0018
VTA/USD 0.0000039 $0.0780
ETC/USD 3.4322 $68,644.0000
LTC/USD 10.96 $219,200.0000
VRS/USD 0.0244 $488.0000
XRP/USD 0.02907822 $581.5644
DOGE/USD 0.00047015 $9.4030
XLTC/USD 0.000005 $0.1000
ETH/USD 51.775 $1,035,500.0000
XBY/USD 0.00012999 $2.5998
XFX/USD 0.0000255 $0.5100
UNC/USD 0.00005 $1.0000
EUR/USD 1.07353 $21,470.6000
PPC/USD 0.78 $15,600.0000
NMC/USD 0.749 $14,980.0000
WGC/USD 0.00004599 $0.9198
BTC/USD 1,300.00 $26,000,000.0000

Seems risky.
posted by TomFoolery at 1:33 PM on April 20 [19 favorites]


The question now is: how do those 20,000 tokens get converted into cash? How is the worth (1 token = $X) calculated?

Someone buys those tokens from you using some other currency. They're worth whatever that party (or some other party) is willing to pay for them. You probably don't know what that is.

The company you're working for possibly doesn't know what that is either. Right now, chances are very good they are offering you these tokens because they value them less than USD. This is also what happens with stock options -- no one knows what the future value of the instrument is (though there's some speculative upside, which is why it exists), so they trade the speculative instrument for something with known present value and use that, either to line their own pockets or to build value in the speculative instrument.

If you really smell opportunity here and really want to give it a shot, great! Sometimes it's fun, educational, and occasionally even enriching to take risks. Here's how you can protect yourself and find out how valuable the credits likely are:

(1) figure out the smallest amount of USD you can afford to work for. What do you *need* for 30 days of work in order to pay your bills and not draw down your assets?
(2) Figure out that amount. Add some three figure number, partly for for your trouble, partly just in case you're negotiating with someone who needs to get a concession from you in order to feel like something good happened.
(3) Tell them you want that amount in USD (Net 30, discount for Net 15, or something) and they can subtract that from the 20,000 credits they're offering you, but you'll take the rest in credits. That'll give you a clear idea of how they value the tokens.

If they're not willing to offer you any USD, ask yourself if you're willing to work for some number between free and small. There's only one case where I've had the value of some amount of a speculative instrument someone offered me turn out to be better than the best amount of cash I could command on the the labor market.
posted by wildblueyonder at 1:34 PM on April 20 [2 favorites]


If you're going to do it at least ask for 200K or 500K units of monopoly money. It'll likely all be worth the same anyway.
posted by TomFoolery at 1:35 PM on April 20 [3 favorites]


Ask them if they'd be willing to guarantee an optional buy-back of the 20K units, at an agreed upon minimum conversion rate, after a fixed date (likely at or post-ICO, but use a specific date, not relative to the ICO, in case it doesn't end up happening).

Let's say they agree to a rate of 1 token = 1 dollar, on or after 01 June 2017.

If they ICO in late May and the market conversion is 10 cents, instead of you selling on the open market for $2,000, they guarantee to buy them for $20K.

If they ICO in late May and the market conversion is 10 dollars, instead of selling them back to the company at $20K, you can sell them on the open market for $200K.

If they don't ICO in May, they buy back the tokens for $20K.

Whether or not they're willing to agree to this and put it in writing, and what conversion rate they're willing to promise, will tell you a lot more about the viability of these tokens than anything else.
posted by NotMyselfRightNow at 1:52 PM on April 20 [25 favorites]


it's like they're offering equity in exchange for no salary up front.

And this basically never happens outside of total con jobs. Except in your case the con job is something worth even less than equity....
posted by smoke at 2:06 PM on April 20


If you were an employee instead of a contractor, it would be illegal to pay you in scrip instead of real money.
posted by Huffy Puffy at 2:19 PM on April 20


I'm concerned also about secrecy, I remember a very early presentation from a cyber currency company (Circle) and it was very open about the business plan. Now the very scammy brazilian startup replicating mystery sharing that fell apart even before I could bail was very secretive.
posted by sammyo at 3:02 PM on April 20


Would you walk into a casino and put an entire month's salary on a single number on a roulette wheel? That is the best case - you're putting a month's salary on 19 black. The worst - and in my opinion more likely - case is you're putting a month's salary on 87 blue or twentington or ham sandwich or something else that isn't even on the roulette wheel.
posted by Homeboy Trouble at 3:21 PM on April 20 [5 favorites]


This sounds so sketchy that even if you decide to work for cash, I'd check the serial numbers on the bills.
posted by RobotVoodooPower at 3:28 PM on April 20


I'm not trying to be a jerk, but I really don't think you should do this. There are times in life and business that taking on a large amount of risk is the right thing to do. In those circumstances, you should be deeply familiar with the risks and the potential rewards. It's ok to buy a lottery ticket, but it's not a good idea to buy a failing restaurant chain if you have never worked in a restaurant. If you're asking a group of internet strangers as basic of a question as "how do those 20,000 tokens get converted into cash?" I don't think you're anywhere near informed or experienced enough to evaluate this risk. And I don't think a couple dozen AskMe answers are going to be able to get you the level of experience and knowledge you need to make an appropriately informed decision here. If you're excited about blockchain technology, there are lots of less risky ways to learn.
posted by primethyme at 4:13 PM on April 20 [12 favorites]


Equity with no where to sell it is imaginary bullshit futurebucks in and of itself, and this sounds like imaginary bullshit futurebucks to another level.

No one gets paid in imaginary bullshit futurebucks exclusively for a reason. When they do it's general in options on equity at a specific price *that is denominated in an exchangeable currency*.
posted by iamabot at 4:21 PM on April 20


If you can take whatever currency they're proposing to give you (I confess, I don't really understand it and it doesn't sound like you do either...) anyway, if you can take it and use it to pay your rent or buy food, sure, I'd accept it. But if it's something you can't use as money anywhere else, then what good will it do you? Find out if it's acceptable currency, like, anywhere.
posted by Jubey at 4:34 PM on April 20


Ask them if they'd be willing to guarantee an optional buy-back of the 20K units, at an agreed upon minimum conversion rate, after a fixed date (likely at or post-ICO, but use a specific date, not relative to the ICO, in case it doesn't end up happening).

This is a good idea, but you're still screwed if you try to exercise the buy-back and they suddenly get all "we don't actually have the cash" to pay you as promised (ask me why I know this). This arrangement is, at best, agreeing to work on credit for a company that has admitted to you that they're so under-capitalized that they are trying to pay you in magic beans instead of real money, and at worst, agreeing to work for free.

You could try to insist they hold the buy-back price in escrow for you somewhere, like deposit real money in a bank account and keep it there, which is something they ought to be in a position to do if they are really "doing work for several very large corporations in the health care space."
posted by zachlipton at 5:33 PM on April 20


How is the worth (1 token = $X) calculated?

By the trading market. (See TomFollery's comment.)

So I'm going to take a slightly different approach here and explain the way I see it.

You are being invited to engage in a form of gambling. This is currency speculation. If you are willing to work for no compensation and bet that this currency will in the future be worth a lot per unit, go for it. "The future" is not the day it launches, to be clear but I mean, if you had 20,000 units of bitcoin today, you'd be pretty happy.

If you a. can afford to take the risk and have no need for this currency as cash; b. would like to do this work regardless of payment; and c. possibly see this as a route to something, I would think about doing it. Alternatively, I would probably split the risk and make a counter offer. "My usual rate for four weeks / 160 hours is $6,000. I am not willing to accept payment entirely in crypto but I will take half in US$ and 10,000 units of crypto."
posted by DarlingBri at 8:11 PM on April 20 [3 favorites]


Are you going to make connections and a great line on your cv by doing this? I think it's ok to work for free sometimes, because it could help your career long term. But I'd assume these people are not paying you ever. Or they would just pay you.
posted by Kalmya at 6:19 AM on April 21


The question now is: how do those 20,000 tokens get converted into cash? How is the worth (1 token = $X) calculated?

That fact that you are asking this question here suggests to me, honestly, that you are in over your head and likely to be taken advantage of. It's like saying: this company has offered to pay me in a non-existent currency, hey, what do you think that's worth? The answer is: nobody has the slightest idea, which would be immediately apparent to someone who understood the basic facts of the situation.

If this job would make sense for you at zero pay (i.e., great connections, foot in the door, etc.) then it may make sense for you, but if you are counting on 20k in non-existent currency to be worth something, that does not seem like a good bet.

I would be worried about a scam, also. The phrasing of the message you quote in the OP sounds scammy: "we are gearing up the crypto-token sale launch of our company token" sounds like an email from a Nigerian prince to me. I would get very nervous if they start asking you for personal information like "bank transfer" info for your eventual payment.

Also, also - presumably this company has some exchange-rate value in mind when they offer you 20k of tokens--unless they just pulled the 20k figure out of the air they must think that the 20k is worth some type of ballpark value in dollars or yen or whatever (otherwise why not 2k or 100k?). So, ask them how they are valuing the tokens.
posted by Mid at 7:01 AM on April 21 [4 favorites]


I'd look at this as working essentially for free, with a very small chance you have a winning lottery ticket. If you have a winner that might pay $100 or maybe $100,000 and no one has any way of knowing.

There are many reasons this offer sounds very bad. But among others, you haven't said how many total tokens they represent. For instance, Bitcoin's design guarantees there will never be more than 21 million Bitcoins ever. So "20,000 Bitcoins" would be about 1/1000 of all Bitcoin. How much of the total assets they're creating with their blockchain will you own? Is it 1%? 0.1%? 0.001%?

Also I'm alarmed at the way you use the word "blockchain" as if that was a thing. "Blockchain" is not a thing. It is not an asset. It is a technology. Substitute the word "spreadsheet" or "ledger" for "blockchain", they mean roughly the same thing. You don't want to hear this, but I think you have bought into the hype the company is selling.

I wouldn't call it a scam per se; the founders may be entirely sincere and believe they're going to make the next Bitcoin. They're just very likely to be wrong. And they are asking you to work for no money, just a bet on whether they might be right. That may be the right thing for you, but it's very very likely to be worth nothing.
posted by Nelson at 8:56 AM on April 21 [2 favorites]


Thanks, everyone! I'm leaning heavily toward not going forward with this, based in large part on the feedback you've provided.

To those who replied back with genuinely helpful feedback and suggestions, I am truly grateful. For those who replied with snark ... well, bless your hearts as they say here in the South. :)

In case you're interested, here's what I wrote back in counterproposal. It's highly edited to remove the names and specifics, so forgive some of the choppy English.

I truly appreciate the offer. Respectfully, however, I cannot accept it on these terms. Under the terms you've outlined, I shoulder 100% of the risk. That's simply untenable.

Without a sense of the exchange rate or what you value the cyrpto at, it's hard for me to know what the 20,000 tokens is truly worth. Is there a ballpark range you're valuing them at?

I want to counterpropose a few options. All of these are for the the period you outlined (April 24-May 24).

Option 1
- My usual rate for $40/hour. For 4 weeks at 40 hours/week (160 hours total) is USD $6400.
- I am not ready to accept payment entirely in tokens.
- On May 24, I would be willing to accept $3400 in USD and 10,000 tokens instad.

Option 2
- Pay me entirely in USD at $6400 on May 24 as you would a typical contractor. No tokens.

Option 3
- Pay me solely in 20,000 tokens.
- You guarantee a buy-back of the 20,000 tokens at an agreed-upon minimum conversion rate at a fixed date (presumably post-ICO).

Thanks again. As I'm sure you'll agree, I've come up with counteroptions that are fair for everyone. If not, we can part ways with no harm, no foul.

posted by zooropa at 9:01 AM on April 21


Hi folks! It's now May 1, and here's a brief update on what's happened since I wrote this post.
  • The owner and I agreed on a four week contract starting today (May 1)
  • I'm getting $3400 and 5000 tokens.
  • Technically, I'm a contractor. Provided all goes well with the ICO and the owners likes my work, I will be brought on board as an FTE at the end of my contract.
Thanks again for all the advice. I appreciate it.
posted by zooropa at 10:34 AM on May 1 [1 favorite]


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