Blockchain – chances are you’ve likely come across this phrase from one of the enthusiastic tech experts in your office.
But do you truly grasp the theory behind the excitement? And how can this new modem actually enhance your HR function?
Soumyasanto Sen, co-founder and partner at People Conscience, and HR tech leader, provided valuable insights into the rapidly growing technology.
“Blockchain is the new internet of the world,” he began. Organizations have started implementing blockchain technology primarily to enhance the privacy and security of data, as well as to foster trust and transparency. Blockchains are distributed ledgers that facilitate secure peer-to-peer encrypted transactions and foster trust. There is no centralized database, and there are no middlemen or intermediaries involved.
Today, the majority of our data is stored in centralized platforms like Google, Facebook, or LinkedIn. While this allows companies to utilize the data for customer benefits, it raises concerns about privacy.
Storing data centrally poses a significant risk, as hackers are constantly finding ways to exploit it, as evidenced by the numerous cases we witness worldwide on a daily basis. This is a significant problem that companies strive to solve constantly, but with limited success. On the flip side, it offers individuals the chance to exert greater control over their personal data.
“Blockchain deals with the concept of decentralizing data storage, where information is distributed across a network instead of being confined to a single location,” Sen explained.
Every transaction in this network is updated and verified in every single node, making the data much more difficult to exploit and fostering trust among the peers.
Based on that premise, Blockchain has the potential to establish unique digital identities that serve as reliable proof and verification of an individual’s professional trustworthiness, identity, qualifications, certifications, memberships, previous work experience, performance metrics, and education.
The elimination of intermediaries is a crucial aspect of blockchain technology. Whenever we engage in a transaction, there is always a third party involved. Sending money to another person requires going through a bank, which inevitably incurs charges. With blockchain technology, data can be secured without the need for a middleman, resulting in enhanced security, safety, and speed.
So, what are the potential benefits of this new technology for HR? Sen highlights a clear example when it comes to the future of work and its impact on part-time employees.
According to him, there is currently a significant number of individuals in the workforce who consider themselves freelancers, with many of them working across different countries. Freelance workers face several challenges, with one of the primary ones being authentication. The verification process for the pay structure can be quite complex and demanding.
The second challenge involves contracts. Each country has its own unique set of laws and policies, which implies that a comprehensive set of contracts would be required for employees working across different countries. Blockchain offers Smart Contracts technology that can help address these challenges, making contract management and freelancer payroll more manageable. In addition, the fees charged by intermediaries are being reduced.
Using Bitcoin or Ethereum to pay employees has contributed to the significant growth of the cryptocurrency market in recent years. There is a significant demand for it from workers and freelancers who prefer to receive payment through this modem, while HR’s interest in blockchain has also started to increase. These functions enhance the security and efficiency of contracts and payment processes for workers.
