Tired of reading about blockchain? Don’t give up just yet: the technology is creating opportunities to fundamentally rethink how we work, what we do, and where we do it. Hannah Hudson explores its potentially disruptive impact, and what it means for flexible working
Blockchain is more than just a buzzword. There’s a growing interest in how the technology underpinning bitcoin can shape the way we think about and do business. From banking to digital rights management, it could transform processes across all industry sectors, changing how businesses interact with their customers, how individuals transact and how Internet of Things (IoT) devices operate.
What is blockchain?
In a nutshell, blockchain technology allows businesses to simplify and optimise complex transactions by making data-sharing fast and transparent, yet completely secure. Blockchain records every online transaction – be it value, goods, services, or private data – exactly as it occurs in multiple internet locations. These records are called blocks, and each one contains an encrypted history of the blocks that came before it – the chain.
Why does it matter?
Blockchain has the potential to help businesses work smarter and faster. Currently, it’s being used or considered for applications as diverse as interbank payments, container tracking, verifying diamond ownership and authenticity, and validating academic credentials.
Global corporates are paying attention. A Deloitte survey released in December 2016 polled senior executives at organisations with $500m or more in annual revenue. Twenty-eight per cent reported that their companies have already invested $5m or more in blockchain technology, with 10 per cent investing $10m or more(1).
So what’s driving this enthusiasm? More than a third of the executives said they thought blockchain could improve systems operations, either by reducing costs or increasing speed. More than a third (37 per cent) cited blockchain’s superior security features as the main advantage of the technology. And almost a quarter (24 per cent) highlighted the potential for blockchain to enable new business models and revenue streams.
How will it change how we do business?
To understand blockchain’s potential, you need to know about ‘smart contracts’. These are required to set the rules that govern how each blockchain code-triggered agreement works and to execute the data exchanges.
“The humble vending machine is the original form of a smart contract,” writes blockchain pioneer Nick Szabo in a recent white paper for The Chamber of Digital Commerce. “At its core, a vending machine is a security mechanism: the amount in the till should be less than the cost of breaching the till. Additionally, the machinery reflects the nature of the deal: it computes and dispenses change as well as the customer’s choice of product(2)”.
He adds: “Smart contracts can reduce the costs of people having to calculate complicated outcomes, and thereby make possible new kinds of contracts that weren’t possible before(3)”. If you’re an organisation with lots of commercial transaction records, for example, smart contracts can digitise Uniform Commercial Code filing, and automate the renewal and release processes.
If your business handles the international transfer of goods, blockchain can facilitate this through faster Letter of Credit and trade payment initiation, while enabling higher liquidity of financial assets.
Financial organisations can leverage smart contracts for accurate, transparent recording of financial data across organisations, leading to improved financial reporting and reduced auditing and assurance costs.
And smart contracts can provide visibility at every step of a supply chain. Through the IoT, devices can write to a smart contract as a product moves from the factory floor to the store shelves, providing real-time visibility of an enterprise’s entire supply chain.
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Will it impact jobs?
“Blockchain could be the great economic leveller,” predict Don and Alex Tapscott in their book, Blockchain Revolution – suggesting that it could strip out the middlemen from our economy, rewarding the makers and doers who create true value.
Yet, while this could reduce reliance on some types of third-party intermediaries, such as banks, lawyers, and brokers, it wouldn’t necessarily wipe out manual labour. “Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the centre,” the founder of blockchain platform Ethereum, Vitalik Buterin, has said. “Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer.”
Blockchain will also be the catalyst for new roles in cryptocurrency and other related businesses. A 2017 survey of financial services executives highlighted where competition for blockchain talent is most pronounced. Fifty-one per cent of respondents are looking for talent in trading technology, while 47 per cent are looking for programmers, and 44 per cent are looking for staff skilled in analytics(4).
Will we hire and train differently?
“Blockchain will soon be able to help managers and HR create permanent transferable records of an individual’s training history,” say Alexandra Whittington and Rohit Talwar, editors at professional foresight firm, Fast Future(5). “With employees distributed across multiple workspaces, a blockchain-based learning management system could ensure an employer is up to date with all learning and development activities undertaken by employees, from compulsory company webinars to wellness counselling.”
Hiring, too, could be simplified, through identity verification mechanisms – managed by individuals and authenticated by independent agencies. “While our data is currently owned and monetised by centralised platforms such as LinkedIn, eventually blockchain ledgers might replace CVs as the best representation of one’s professional and educational history,” says Talwar.
He points to startup APPII, which has launched blockchain-verified CVs. These allow recruiters, prospective hiring companies and other third parties to confirm whether the applicant has a degree, professional qualification and position at a relevant sector company.
How will blockchain help remote workers?
“There are some inherent features of blockchain technology that could help us build the next generation of work platforms that are fairer and more effective,” writes strategic workforce advisor Andy Spence for the RSA. Recruitment problems include “prejudice and bias, lack of visibility of available workers, low levels of trust in centralised social networks, spam and high fees to intermediaries… Blockchain could help us to improve the way we match work with suitable and willing workers(6)”.
Spence points to the benefits of more secure and quicker payments to workers being delivered using digital smart contracts between client and worker. “This can reduce cash-flow problems caused by delayed payments to workers and reliance on payday loans,” he says. “Using blockchain [and other technologies] would also allow workers to share wages earned with family, including those overseas, with low remittance fees.”
The technology will also let employees access remote data more securely. Enigma, a startup from MIT Media Lab, takes the blockchain’s privacy and security advantages and rolls them into a decentralised cloud platform that guarantees privacy. Enigma encrypts and protects data even when you share it with others, allowing data to be stored, shared and analysed without ever being fully revealed to any party.
What will the workplace look like?
“With blockchain automating and streamlining work processes, there could be a reduction in corporate headcounts and office space requirements,” says Fast Future’s Whittington. “This may lead firms to close their office buildings and make use of flexible working and co-working spaces closer to residential areas or their customers’ locations.”
“A next stage might be the emergence of co-working spaces operating as distributed autonomous organisations (DAOs),” adds Talwar. “These employee-less organisations would use a combination of smart IoT sensors, AI and blockchain to manage working environments, issue tenant contracts and automatically invoice and collect tenant fees via pre-agreed conditions enabled with a smart contract.”
Hannah Hudson is the editor of Regus magazine