Blockchain and the Labor Force

What is a Blockchain?

Blockchain, otherwise called Distributed Ledger Technology (DTL), is a decentralized, distributed and usually public virtual record of information housed in “blocks”. No single owner of information exists in a blockchain meaning that everyone has access to verify and audit transactions from the comfort of their home. Importantly, alterations to the information stored in a blockchain cannot be made discreetly.

How Does a Blockchain Work?

Every block in a blockchain is made up of a cryptographic hash of the preceding block, a timestamp, and the transaction data. A hash is a mathematical function that converts or maps a defined set of data into a “hash value” i.e. a bit string with a defined size. A cryptographic hash is basically a hash function with added security detail that protects the content of the information being passed along the chain.

Each block in the chain has a limited amount of data it can hold. As a result, new blocks are constantly created along the chain to preserve the information. Each newly created block is closed when it reaches its memory capacity and is added to the chain in a repetitive linear process. The timestamp is evidence of the block’s transaction data existence at the time of the publication. 

The continued linkage of blocks and dissemination of information along the chain makes the alteration of an independent block without changing the preceding blocks impossible.

Importance of Blockchain Technology

Blockchain technology is highly regarded for its security and transparency. With blockchain, 3rd party interventions are eliminated and cost-reduction of transactions can be ensured. The absence of human element serves to improve the accuracy of the chain.

These advantages explain why blockchain is central to bitcoin operations and other related digital currencies.

Economic Significance of Blockchain

The World Economic Forum projects that an estimated 10% of the world’s Gross Domestic Product (GDP) will originate from blockchain-based systems by 2025.

According to a PwC report, blockchain could add $1.76 trillion to the global economy by 2030 and improve 40 million jobs worldwide within the same time frame.

The report identifies 5 primary use cases across which this economic impact is set to be spread:

i. Product tracking: This is expected to contribute $926bn to the overall market share

ii. Payments and financial services (including digital currencies) which is projected to yield $433bn

iii. Identity management (personal IDs, certificates) with an expected input of $224bn

iv. Dispute resolution and contracts which will provide $73bn 

v. Customer engagement ($54bn)

How Blockchain Will Change the Labor Force

As outlined in the preceding section, blockchain use cases are spread across 5 main areas. These areas are all possible fields for transforming the labor force and the nature of work as we know it. Some of the ways blockchain can enhance the labor sector are outlined below:

Smart Contracts: Blockchain can usher in a new era of employer/employee agreements through smart contracts. A smart contract is a self-executing contract written in code that encompasses the terms of agreement between two parties. On blockchain, this agreement is immutable and trackable. Once the terms of the agreement are fulfilled, the smart contract executes the agreed terms. This can help to protect both parties. The rights of the worker are protected as payment is guaranteed for service delivery while the employer is also not cheated out by paying for undelivered service.

Record Verification: The hiring process is fraught with many imperfections. Employee records can be housed in a blockchain and linked to verifiable sources, e.g. universities and former workplaces. This information can be used in several ways. Firstly, it can help employers be confident of the background information provided by a job applicant. Secondly, the data can be used by relevant government agencies to solve unemployment challenges by matching aspiring job candidates with the right jobs based on their employee records.

Payments: Blockchain can be used to make the world an even more pronounced global village. Already, international transactions can be made with the use of digital currencies operation on blockchain. Payment of international employees can become an increasing feature of the labor sector of the future, eliminating the inefficiencies of traditional 3rd party banking systems.

It is noteworthy that AI can be used in conjunction with blockchain. The synergistic action of both technologies can drive immense value. AI techniques such as machine learning and reinforcement learning can be used to extract valuable insights from the validated records stored on blockchain. The findings of this analysis can be used to solved innumerable challenges facing the labor sector.

Resources:

https://www.eib.org/attachments/thematic/artificial_intelligence_blockchain_and_the_future_of_europe_report_en.pdf

https://cisomag.eccouncil.org/how-blockchain-and-ai-will-promote-industrial-growth-an-overview/

Blockchain’s Role In Reshaping The Future Of Work (forbes.com)

https://www.investopedia.com/news/cryptographic-hash-functions/

https://www.pwc.com/timefortrust

https://chaise-blockchainskills.eu/wp-content/uploads/2021/05/D2.2.1-Study-on-Blockchain-labour-market-characteristics.pdf




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