As blockchain and the crypto sector have evolved, it has become ever clearer that these will be among the foundational technologies of Web3.0. New decentralised services are now being launched that leverage blockchain’s advantages for mainstream use cases.
The HR sector has been one of the earliest beneficiaries of this movement, offering one of the first examples of how blockchain and crypto can offer a more efficient and effective basis for building online applications.
Blockchain technologies share a number of features that offer intrinsic benefits to the HR industry. As decentralised, shared ledgers, public blockchains like Ethereum, Binance Smart Chain and Tron are:
- Open. Anyone can use these platforms and interact with decentralised applications (dApps) built on them. By contrast, the centralised applications of Web2 are permissioned by default, and controlled by administrators.
- Transparent. Anyone can view the contents of the ledger, check any and all transactions, and audit the code that powers dApps, enabling greater confidence in the fairness and integrity of a platform.
- Immutable. Once a transaction has been confirmed on the blockchain, it cannot be reversed.
- Trustless. Because there are no middlemen and no single points of failure, blockchain-based applications do not require trust in any third parties, whether companies or individuals. All transactions are enforced on the blockchain by the entire network of validators or miners.
- Borderless. Blockchain networks are distributed all over the world, and all members of the network share the same rules and benefits.
This combination of features enables the creation of software with functionality ideally suited to HR applications:
- Recruiting software that is accessible by anyone, no matter where they are in the world, with no gatekeepers.
- Applications that organise work via smart contracts – code that runs trustlessly on the blockchain – and that pay freelancers or employees automatically upon completion of a task.
- Fast, secure, global payments in a wide range of currencies.
- Use of cryptocurrencies and tokens that are not issued by any government or central bank, but that may be linked to specific industries or use cases.
Over the last two years, blockchain and cryptocurrency have rapidly gained traction as means of organising work and accepting payment. This adoption has largely been driven by the coronavirus pandemic, which saw not only a change in working patterns due to lockdown and furlough measures, but an interest in alternative assets prompted by skepticism about conventional economic policy, as central banks embarked on large-scale money printing.
As more people sought freelance opportunities, and realised they did not have to work for businesses in the same country as they live, cryptocurrencies met a demand for efficient, global payment systems. The traditional banking and money transfer industry is poorly-suited to moving cash around the world. Long delays and high costs are the norm, making smaller payments uneconomical. Many people are excluded from using these services due to a lack of banking facilities, or policies that prevent access by people in certain countries, through no fault of their own. Crypto payments neatly circumvent these problems, enabling fast, low-cost payments to anybody, no matter where they live.
As crypto gained popularity and the threat of inflation grew, an increasing number of high-profile figures opted to receive payment in crypto, further boosting the legitimacy of this new asset class:
- In a landmark deal in December 2020, Russell Okung, the offensive lineman for the Carolina Panthers, agreed to have around $6 million of his salary converted to bitcoin via mobile payment company Strike.
- In April 2021, Trevor Lawrence, quarterback for the Jacksonville Jaguars, partnered with Blockfolio and converted his $24 million signing bonus into bitcoin.
- Citing concerns about inflation, in July 2021 New York Giants running back Saquon Barkley said he would be holding over $10 million per year in bitcoin from endorsements, marketing and sponsorship deals.
- In November 2021, Odell Beckham Jr, a wide receiver for the Los Angeles Rams, announced a partnership with the Cash App that would see his base salary of $750,000 converted to bitcoin.
Many other NFL and NBA athletes have followed suit, but it’s not just sports personalities who are taking an interest in crypto.
- Francis Suarez, the mayor of Miami, wants to make South Florida a hub for blockchain and crypto companies. In November 2021 he put his money where his mouth was, saying he’d take his first month’s pay in bitcoin. Not to be outdone, Eric Adams, the new mayor of New York City, announced he’d be taking his first three months’ salary in BTC.
- A number of Congressmen and women have come out as pro-crypto, and disclosed they have invested significant sums in bitcoin and other cryptocurrencies. Top of the list are Tennessee State Senator Mark Green, and Senator Cynthia Lummis of Wyoming. Lummis purchased around $75,000 in BTC in 2021.
- Several politicians including Andrew Yang and Darren Soto have welcomed crypto donations for their election campaigns.
New software platforms are coming online to cater to this new demand for crypto salary payments and blockchain HR processes. Notable examples include:
Bitwage provides crypto HR and payroll services. The service enables individuals to receive part of their wages as crypto, and for companies to settle invoices in crypto – ideal for organisations working with freelancers around the world.
Ispolink is an AI-powered platform that uses blockchain to connect prospective job candidates with employers, collecting and filtering information to match open positions with the most suitable applicants, with no third parties involved. The solution is primarily used to source talent across the Web3 and DeFi space.
Chrono.Tech is a Sydney-based company that uses blockchain to address the inefficiencies of the HR sector. Its freelancer platform, LaborX, uses smart contracts to enable employers to hire freelancers for an off-the-peg ‘Gig’ or custom job, paying the agreed amount automatically in cryptocurrency when tasks are completed. The company also developed PaymentX, a payroll solution that integrates with accounting processes, enabling businesses to settle invoices in crypto automatically, avoiding human error.
As the so-called gig economy grows, and crypto assets become more popular, it’s reasonable to expect a significant proportion of HR activity to move onto these and other blockchain-based platforms.