what is blockchain?
Blockchain is still a relatively new concept, to the extent that many people may not even know what it is or how it works.
The technology was developed in 2008 to serve as the public transaction ledger for the digital currency bitcoin. Individual blockchains are essentially collections of distinct records – known as blocks – that are linked with cryptography. They can be used to provide a secure, verifiable and permanent ledger of transactions between two parties.
Transparency and resistance to tampering – with no individual allowed to make changes to a block without the agreement of other parties authorised to access the chain – are seen as two of the key advantages of the technology.
According to PwC, blockchain is "revolutionizing the way we exchange value online – in much the same way as the internet itself revolutionized the way we exchange information".
Since it was invented to provide a ledger for bitcoin transactions, blockchain is often viewed as a financial services phenomenon. But it's becoming increasingly clear that the technology has the potential to impact many industries and business functions, including HR and recruitment.
if blockchain impacts HR and recruitment, it could be one of this year's main HR trends.
Like many areas of business, HR and recruitment has witnessed large-scale technological change in recent years, with growth in areas such as cloud computing, process automation and artificial intelligence having a big impact on how employers operate and manage their workforces.
One technology that is often singled out for its potential to influence how companies function is blockchain.
At the moment, many firms are yet to experience blockchain first-hand, but it's possible this could change as businesses and employees become more familiar with the technology and its capabilities.
the biggest opportunity set we can think of over the next decade. – bob grifeld | NASDAQ chief executive
specific uses of blockchain in the world of work.
Companies that are open to integrating blockchain into their daily operations could discover an increasingly broad range of ways to make use of the system in the coming years.
The technology is still in its relative infancy, but as it matures and becomes more widely accepted, the choice of potential applications open to businesses will expand.
Blockchain could prove particularly effective for regular processes that are currently labour intensive and time consuming, with a high need for data collection and third-party verification.
Possible use cases include:
1. candidate verification and assessment.
Verifying a candidate's background and work history can be an onerous task. Blockchain can make it easier by providing a clear record of an individual's education, experience, skills and workplace performance. In an article for Inc magazine, Bill Carmody, CEO of digital marketing firm Trepoint, said he could imagine a future in which blockchain is regularly used to verify job applicants' career history.
2. payroll administration.
Since blockchain was first developed as a platform for financial transactions, it follows that the technology could evolve into a key solution for payroll administration. It could prove particularly useful if employers have overseas operations and frequently have to consider cross-border payments, international expenses and tax compliance.
3. contract management.
Keeping contracts accurate and up to date – for permanent staff as well as temporary or project-based workers – can place a burden on HR departments. A blockchain system could make it easier for firms to manage contracts in a way that combines visibility for all relevant parties with strong security.
4. matching candidates with roles.
Every business today wants to feel confident it has the right people in the right roles, based on their experience and skills. By providing a thorough and verified record of each individual's background, blockchain technology offers the potential for businesses to efficiently deploy or move staff to the position in which they would be most effective.
obstacles to overcome.
Blockchain is a new technology and it's clear there are a number of questions to answer and hurdles to overcome before it is a well-recognised part of HR and recruitment for businesses.
In a 2018 KPMG survey of chief information officers in the UK, only eight per cent of respondents had plans to invest in blockchain. Artificial intelligence was identified as the most common focus of IT spending.
One of the key barriers to adoption of the technology is lack of understanding around how it can be applied to the world of work. Among those who are aware of blockchain, many see it as inextricably linked to bitcoin and the digital currency market.
David Balls, group HR director for the Rank Group, told HR magazine: "I think too many people are fearful of that bitcoin mentality. People haven't quite understood how the technology works and how it could benefit them. And as [due to bitcoin] it has negative connotations to some extent, people are not embracing it as much as they could do."
As examples from the Randstad Innovation Fund have shown, the right financial support can help new ideas and technologies develop into valuable resources for employers.
Investment in blockchain is likely to be a key factor in its ongoing growth, along with recognition and acceptance of the technology from key business stakeholders and decision makers.
With research suggesting the global blockchain market will be worth more than US$16 billion (£12.1 billion) by 2024, it's clear there is major scope for growth in this space.
Firms that engage with the technology now and begin to develop a familiarity with it will be well-placed to succeed in a blockchain-influenced future.