Gigs Gone Wild: Could Blockchain Make Freelancing the Norm?

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By Jasmine Ye Han

If blockchain, the technology behind cryptocurrencies like Bitcoin, takes off, it could move peer-to-peer “employment” to the next level, making it easier for workers and clients to exchange money and credentialing information without a middleman.

The traditional idea of a nine-to-five office job is already being challenged by the increasing number of Americans who are taking up freelancing for companies like Uber, TaskRabbit and Upwork. About 36 percent of the U.S. workforce is freelancing, according to a recent survey by Upwork and Freelancers Union. Even more, 47 percent of millennials report they are freelancing.

The survey predicts that by 2027, the majority of the U.S. workforce will be freelancing. Sources interviewed by Bloomberg Law say blockchain technology will accelerate the change.

“Aided with Smart Contracts to enforce agreements for workers and dispute resolutions, the non-traditional freelancing platforms like CanYa and Blocklancer, enable the freelancers to offer the services directly to the customers. As these new blockchain based marketplaces grow, the new features will add value to gig economy and freelancers and likely contribute to dynamic growth,” Baskaran Ambalavanan told Bloomberg Law in an email. Ambalavanan is a human resources technology consultant with Hila Solutions, and a member of the Society for Human Resource Management’s Special Expertise Panel of Technology and HR Management.

A blockchain is a continuous ledger that keeps a permanent record of all transactions made in chronological order. It’s considered a secure way of storing data because previous records can’t be altered unless a majority of the network approves (it gets technical). Some blockchains have a feature called “smart contract,” which allows coded contracts to execute themselves when predefined conditions are met. Although some people still relate cyptocurrency to illegal activities, the blockchain technology itself has been tapped by many industries and governments, including the U.S. government.

End of the Middlemen?

With the trust issue solved by blockchain, there won’t be a need for gig platforms like Uber and Upwork, which are just third-party trusted intermediaries, said Adam Bridgers, an attorney with Fisher Phillips LLP, a firm specializing in labor and employment.

“We use Uber because we trust that it is properly vetting their drivers, requiring background checks, making sure the transactions are made in a safe way, and we get in a car with them. Because the blockchain replaces that centralized clearing house of data that we’ve come to rely on in the gig economy, you don’t necessarily need that any more,” Bridgers told Bloomberg Law.

Credential verification is an important area where blockchain can create trust, said Soumyasanto Sen, an HR technology consultant based in Germany. “Freelancing jobs happen so fast that background checks often do not happen properly, and blockchain could help that,” Sen told Bloomberg Law.

For example, universities have issued blockchain verified credentials that could save employers the cost of doing the checks or hiring third-party agencies to do them. Such features could be integrated into a job platform, and make a big difference in hiring, Sen said.

Ease of Payment

Blockchain could also transform the way workers are paid. For example, with smart contract, an escrow system can be programmed to ensure on-time payment, Michael Kaiser, CEO of Blocklancer, told Bloomberg Law in an email. Before the gig worker starts, the escrow system receives money from the employer and locks it until the job is done. If the client is satisfied, the system pays the freelancer automatically, he said.

Blockchain could also be used as a dispute resolution took between gig workers and their clients. How would this work? Tokenholders vote to decide which side is right, according to Kaiser. As an incentive for participating, they earn a share of the platform fees set aside for such dispute settlement mechanisms.

Challenges Remain

It’s not all sunshine and rainbows for blockchain and the gig economy.

Smart contracts aren’t always adaptable to the changing, digitized, mobile world where business circumstances change in ways not foreseen by the freelancer and the customer at the time of agreement, according to Ambalavanan. Once the smart contract is set, it will usually run its full course without change, Ambalavanan said.

But Sen sees a bright future for gig workers once there is blockchain technology. “Most people will focus on their own way of working, taking care of their own well-being and their family. This is going to turn people toward the gig economy. It’s happening right now. In the future, with blockchain, it will totally be everywhere,” Sen said.

Ambalavanan agrees that changing workforce demographics with an increased appetite for empowerment, as well as technological changes such as AI and automation, may force more workers to be gig workers, but he doesn’t expect the entire workforce to become freelancers or gig workers.

“Technology is good and complementary if we are prepared enough. The future of work depends on our ability, to keep up with the technology and level of investment in ourselves,” he said.

To contact the reporter on this story: Jasmine Ye Han in Washington at yhan@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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