Blockchain and the future of work

By | 6 minute read | February 18, 2021

In 2018, in an article entitled “Technology and the Transformation of Talent; Beginning with Blockchain” I tackled the challenges inherent in leveraging human resources as part of the talent transformation process during the digital age. While this article uncovered insights that helped set the foundation for the future evolution of Blockchain in the people arena, no one could have predicted the unprecedented events of 2020. Based on what we have recently experienced, the potential impact of Blockchain will be magnified and start becoming the foundation of how work gets done.

Early days

I am often asked why Blockchain is important. In reply, I often use the analogy of the Internet and how it evolved with adoption and changed everything. When the World Wide Web was first invented, people didn’t really understand how they could use it to benefit themselves. They were intimidated by it and unaware of how it could impact their daily lives.

Fast forward 27 years and look how the internet has changed everything. In the early days, the precursor networks and intranets were used by small groups with common interests, bound by mutually agreed upon rules of usage and guidelines on exchange of information. The real magic happened when use increased and we figured out how to connect these networks. More people adopted the technology and we moved outside our trusted networks and into that big, open online world.

As we figured out how to manage security and maintain data integrity, people began sharing more information about themselves. In the early days online purchasing  was seen as risky due to the sharing of credit card information, and financial data; but now it’s ubiquitous. There are of course risks and security breaches, but that has not prevented adoption.

Similarly, we are in the early days of Blockchain. Today, we have small groups of power users who have found tremendous value in using Blockchain to transact and exchange information within their trusted networks. Eventually, we will be able connect across these individual blockchains and networks to transact and engage in transformative ways. Its power will come from its connectivity and subsequent ubiquity.

Digital identity

The first change is the recognition of the emergence and criticality of digital identities. Digital identity is defined as the electronic identity and footprint that defines a stakeholder (not just a person) in the digital arena. A digital identity is not dependent on a specific technology but, instead, can include many tools, “which could range from the use of biometric data to passwords, PINs, or smart devices and security tokens.”

Digital identity is a way to verify and authenticate identity with a much higher level of assurance. It is a truly unique identity that is only established through individual consent. This type of identity is also important because it protects user privacy and ensures control over personal data in a way that’s not been previously possible.

Although most organizations and individuals were aware of the concept of a digital identity a few years ago, it is now a focal point for what’s changed with digital use and engagement. The need to secure digital identities has intensified. As a leader in this area, IBM has been working with the Sovrin Foundation on the connection between digital identities and digital passports.

The Sovrin Network was designed to develop a lifetime portable digital identity solution that does not rely on a central authority. This network provides governance, scalability, and accessibility. IBM became a Sovrin Steward because of the shared commitment the company has to decentralized identity and the need for identity owners to control their own identities. It was important to IBM to be part of a project that was intent on building the missing layer of identity on the Internet through a global public utility to enable identity for all.

Since that relationship formed, digital identities have become a key thread across employment journeys and jobs. It is a tool that can potentially be linked to an individual’s external, non-professional identity, based on the information typically found in background checks and credit reports. It’s these markers that often impact hiring decisions related to certain candidates.  The Digital Identity will enable, and become even more critical as the adoption of Blockchain increases.

The journeyman and the “wanderbuch”

When we lived in small communities, everyone knew who to turn to for the expertise they need, whether it be a doctor, a craftsman, or any other profession. However as we became more mobile and our networks expanded, we needed a way to prove our expertise to new groups and those farther from our home. For example, carpenters, also known as journeyman, would travel from town to town, offering their expertise. They carried a traveling book where they would collect stamps from other master craftsmen they worked with along the way as evidence of their skills and experience. These books are how individuals were able to trust the journeyman to do work for them.

The journeyman was responsible for tracking his own credentials. This log of experience was called a “wanderbuch,” or traveling book. Today, we have our own wanderbuchs in the form of resumes.

Adding blockchain to the HR equation may potentially craft a more effective digital identity and passport for talent. A resume tracks where a person has worked, how they transitioned, and how their career has progressed. Candidates provide recommendations, qualifications, background checks, and a list of connections. The data provided about that person is based on many publicly available and private records. However, it’s not 100 percent accurate because it’s user-maintained.

Blockchain can essentially capture pieces of information about an individual, much like that resume or a credit report, but at a much more factual, verifiable level. Think of it as a technology trail of everything an individual has done. When Blockchain is applied to an individual in the HR space, it collects pieces of data about that person over time. From a background check to college verification, blockchain can add details to each candidate’s digital identity in a way that helps both the candidate and HR.

How blockchain will transform the “wanderbuch”

There are three key pain points that blockchain can alleviate for both the candidate and the employer.

Provenance: In terms of data control, third parties hold candidate data. But, candidates want control over their data so they can share it when they want without having to deal with a slow request process. Plus, they want to be in control of where the data goes and ensure that it won’t be misused.

Immutability: In terms of recruitment, for example, employers need to request transcripts from universities, which takes time and sometimes costs a fee. There isn’t a solid system for validating data about individual’s credentials, which increases the risk of fraud.

Decentralization: On average, there are 27 digital identities per person. With no single version of the truth, it is difficult for employers and candidates to maintain accurate and up-to-date identity records.

As a distributed ledger used to securely transfer value and information, blockchain encrypts data and validates transactions through the process of consensus, distributing a copy of the exchange to each individual who has a copy of the ledger. The immutable quality of blockchain is indispensable to HR practices like recruitment, payroll, and employee data. In recruitment, the credentials of an applicant will be instantly verifiable; in payroll, disputes will be automatically settled by the historical records stored on the blockchain; and in employee data, there will be accurate, reliable historical records of a candidate’s employment history. The promise is enormous.