I n the procurement and staffing industries, as in a growing number of industries, buzz has been increasing around the technology known as “blockchain.” People want to know what it is, what it does, and if, how, or when it will affect their lives.
Since Beeline is in the workforce innovation business, we track a whole host of emerging and potentially disruptive technologies – to determine which will impact our clients’ operations, and which we should employ to give our clients a competitive advantage. One of the technologies we are tracking closely is blockchain.
A short history
Essentially, Blockchain is a distributed, decentralized ledger technology that allows users to authenticate information, determine ownership, transfer assets, and create contracts without the aid of a trusted third party, middleman, or intermediary. Invented by an anonymous figure called “Satoshi Nakamoto” in 2009 to create a decentralized cryptocurrency called Bitcoin, the potential application of blockchain technology goes beyond the world of finance and has direct implications for many other industries, including procurement and staffing.
One procurement example is TrustChain, a gold-and-diamond industry initiative that tracks and authenticates diamonds and precious metals through every stage of the supply chain. Powered by the IBM Blockchain Platform, TrustChain tracks and authenticate diamonds and precious metals from their place of origin to their retail location. By providing digital verification, physical product and process verification, with an unalterable and transparent record of every transaction, the consortium hopes TrustChain will help to instill trust in the origin and ethical sourcing of jewelry.
Disruption through disintermediation
Industries that rely on a network of intermediary players (not just buyer and seller) have a strong incentive to make transactions and their underlying data immutable and auditable. This makes these industries likely candidates for disruption from blockchain in the form of disintermediation. As intermediaries between contingent talent and hiring companies, staffing firms may profit in the short term from meeting the growing demand for blockchain skills, but they must be aware of the potential threat of finding themselves victims of blockchain disintermediation.
In addition to a number of general or industry-specific blockchain initiatives and consortia that have been created in the last decade, several blockchain initiatives directly relate to the staffing industry. While they do not directly target high-touch intermediaries like staffing suppliers and MSPs (or VMS providers), some may pose a direct threat to job boards or online staffing platforms.
Online staffing sites using blockchain established in 2017 and 2018 include:
· BitJob (https://bitjob.io)
· Blocklancer (https://www.blocklancer.net)
· ChronoBank.io (https://chronobank.io)
· Ethlance (https://ethlance.com)
· GigEcoin (http://gigecoin.com)
· HireMatch (https://hirematch.com)
· Jobeum (https://jobeum.com)
Compensation for transactions on these sites is made using blockchain-based cryptocurrencies or tokens such as bitcoin, Ether, GigEcoin, Fiat, JobTokens, HIRE tokens, and student (STU) tokens,
The multiplicity of non-currency “virtual” payment methods points to one current limitation of blockchain technology: the lack of universal or even generally accepted standards. While more than two dozen consortia, including Ethereum, Hyperledger, and R3, are working to develop platforms and standards for blockchain application development, the state of blockchain today is reminiscent of the “Wild West” environment of the internet in the late 1980s and early 1990s, when many companies staked their claim, but few survived to reap the benefits they promised to customers or investors.
While the technology behind this “crypto-boom” gained traction from being a public network (anybody can be a peer on the Bitcoin or Ethereum networks), the last few months have seen an emergence of a permissioned network – one where there is a degree of gatekeeping, particularly for enterprise-related use cases. Linux Foundation has launched an open source initiative, called Hyperledger, to create highly scalable, governed and expert-designed blockchain networks for the enterprise.
Business advantages of Blockchain
Despite the immaturity of today’s blockchain industry, it is clear that the technology offers a number of attractive potential benefits (as delineated in Staffing Industry Analysts’ December 2017 report, “The Impact of Blockchain in Talent Acquisition”):
· Verification – For a transaction to be valid, all participants in the supply chain must agree on its validity
· Security – Security features protect against tampering and fraud while distributed network avoids single point of failure
· Neutrality – No centralized ownership or control, so existence is not dependent on any individual entity
· Speed – Transaction times for complex, multi-party interactions can be slashed from days to minutes
· Transparency – All participants have access to the same records and can validate transactions and verify ownership
· Collaboration – Networks can evolve to support end-to-end business processes and a wide range of activities
· Authenticity – No participant can tamper with a transaction after it has been recorded in the ledger
· Cost – Network is self-policed while intermediaries and duplication of effort are eliminated
· Traceability – Participants know where assets come from and how their ownership changes over time
· Scalability – Unlimited players may be seamlessly integrated without losing data consistency
· Trust – Shared ledger serving as single source of truth improves monitoring and auditing of transactions
· Privacy – IDs and permissions allow users to specify which details they want other participants to view
For all these reasons, potential blockchain applications in staffing including creating permanent, tamper-proof work histories or CVs, better processes for background checks, faster and easier payments, and more trustworthy referral systems. In these cases, information is the asset, and blockchain provides a sophisticated level of transparency that allows the sharing of relevant information – such as work histories – without sharing proprietary data – such as the precise nature of the work performed by a contractor who is now a candidate for an assignment with a competitor of a previous employer.
Because blockchain enables transactions to be fully documented in a permanent, decentralized record while being monitored securely and transparently, it has the potential to ease friction in the supply chain and greatly reduce inefficiencies, time delays, and human mistakes. By applying blockchain technology to meet many supply chain challenges – including prompt payment on delivery of goods or service, planning and risk management, cost control, provision of end-to-end visibility, and partner-supplier relationship management – software companies hope to be able to offer new supply chain applications that can solve these problems and deliver a competitive edge.
Blockchain, jobs, and innovation
In November 2017, the technology magazine, Computerworld, reported that blockchain developers now rank second among the top 20 fastest growing job skills, behind only robotics specialists, and just ahead of another blockchain-related skillset: bitcoin cryptocurrency developers. Staffing firms that specialize in supplying IT skills should be ramping up quickly to understand blockchain and the growing blockchain talent market.
Those of us who develop technology for talent acquisition and contingent workforce management are paying close attention to blockchain, too. While the lack of generally accepted standards limits blockchain’s ability to integrate with mission-critical enterprise systems, its inherent security, neutrality, transparency, and speed make it an attractive technology for specialized applications.
We are particularly interested in blockchain’s potential in the areas of transactional transparency and reducing program inefficiencies, such as the elimination of intermediaries who do not add significant value. In these areas, we feel blockchain technology can spark disruptive innovations, which we can exploit to make our clients more competitive. As a consequence, we are following blockchain standards development closely, monitoring the blockchain forums and consortia, and engaging in targeted exploration and experimentation to apply blockchain technology in our market space.
Due to the paucity of accepted standards, high energy costs of public blockchain processing, and other limitations, blockchain is not really ready for prime time in the contingent workforce space. But things are changing quickly, and Beeline’s expertise in the contingent labor market and knowledge of the various network players and technologies that touch VMS software position us to build a robust blockchain business network (a network of nodes/peers and logic that defines the essence of blockchain). You can be sure that we are tracking all the developments in this technology space and will let you know when we determine when and how to put blockchain to work for our customers.