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Deloitte’s 2020 Global Blockchain SurveyFrom promise to re.docx
- 1. Deloitte’s 2020 Global Blockchain Survey From promise to reality DELOITTE BLOCKCHAIN At Deloitte, our people collaborate globally with clients, regulators, and policymakers on how blockchain and digital assets are changing the face of business and government today. New ecosystems are developing blockchain-based infrastructure and solutions to create innovative business models and disrupt traditional ones. This is occurring in every industry and in most jurisdictions globally. Our deep business acumen and global industry-leading audit, consulting, tax, risk, and financial advisory services help organizations across industries achieve their varying blockchain aspirations. Reach out to our leaders to discuss the evolving momentum of blockchain and digital assets, prioritizing initiatives, and managing the opportunities and pain points associated with blockchain adoption efforts. To learn more, let's talk. https://www2.deloitte.com/us/en/pages/consulting/solutions/blo ckchain-solutions-and-services.html Introduction: The evolution of blockchain 2
- 2. A more “real” reality for blockchain 4 Digital assets today and tomorrow 9 Cybersecurity 13 Global digital identity 15 Regulatory considerations 17 Governance in blockchain consortia 19 Regional analysis 21 Concluding thoughts: The road taken 24 Appendix 25 Endnotes 36 Contents 2 Introduction: The evolution of blockchain MORE THAN A decade has passed since the introduction of what we know today as blockchain technology. Over that time, the promise of what the technology could offer businesses and industries has evolved from a cryptocurrency payment platform to something bigger, game-changing, and truly disruptive. In
- 3. recent years, we have seen sentiment about blockchain’s potential similarly evolving, along with companies directing actual investment dollars toward applications. In Deloitte’s 2019 Global Blockchain Survey, we observed this continuing trend in thinking and investment, even if some vestiges of doubt and old-school thinking remained about the technology’s promise.1 This year’s survey suggests that those doubts are fading further, and that blockchain is solidly entrenched in the strategic thinking of organizations across industries, sectors, and applications. There are more substantive examples in the marketplace of how both startups and mature businesses are deploying blockchain. Organizations appear to be more committed than ever to blockchain and are demonstrating this by implementing it as part of their normal course of business. That’s the key takeaway from our 2020 Global Blockchain Survey, which finds that leaders no longer consider the technology groundbreaking and merely promising—they now see it as integral to organizational innovation. This year, the C-suite is putting money and resources behind blockchain as a strategic solution in more meaningful and tangible ways—in projects big and not so big— putting into motion more widespread blockchain processes, controls, and even new business models. As with any business solution, there are still real- world challenges to overcome. Still, in 2020, both
- 4. bold and modest in-production proof points across a wide variety of implementation scenarios demonstrate that blockchain technology works— and can work—for many different organizations, businesses, and industries. A SPECIAL NOTE During the period in which we fielded this survey, the COVID- 19 virus was only beginning to emerge as a global health crisis. In most nations that we surveyed, few understood the coronavirus’s full impact until after we closed the survey on March 3, 2020. We are confident that our survey data— and our analysis—accurately reflect the state of blockchain technology, but only time will tell, of course, what long-term effect, if any, the current global health crisis will have on blockchain and digital asset adoption practices. Deloitte’s 2020 Global Blockchain Survey https://www2.deloitte.com/us/en/insights/topics/understanding- blockchain-potential/global-blockchain-survey.html 3 OVERVIEW AND METHODOLOGY STATEMENT Deloitte conducted this survey between February 6 and March 3, 2020, primarily as a research vehicle to gain greater insights into the overall attitudes and investments in blockchain as a technology. The release of the survey highlights in this article reflects those opinions and perceptions around blockchain and the potential impact of the technology in the future. The information shared
- 5. provides summaries of a subset of the overall data and insights collected. The survey polled a sample of 1,488 senior executives and practitioners in 14 countries (Brazil, Canada, China, Germany, Hong Kong, Ireland, Israel, Mexico, Singapore, South Africa, Switzerland, the United Arab Emirates, the United Kingdom, and the United States). Respondents had at least a broad understanding of blockchain, digital assets, and distributed ledger technology (DLT) and were familiar with and able to comment on their organizations’ blockchain and digital asset investment plans and perceptions, among other metrics. In order to expand the diversity of our respondent pool in this year’s survey, we identified a group of 100 respondents who are specifically and directly engaged in blockchain technology development projects and also have received a minimum of US$3 million in venture funding in the past year. These 100 respondents took the same survey as the other respondents and are counted among the 1,488 overall respondents in the analysis. From promise to reality 4 A more “real” reality for blockchain OUR 2019 SURVEY results suggested that organizations had moved away from the concept of “blockchain tourism” and were
- 6. defining and developing more permanent implementations. In 2020, an increasing number of leaders have expressed this sentiment, saying that they see blockchain as a top-five strategic priority, and are increasing their investments in staffing and blockchain technologies. Our latest survey data suggests that organizations clearly view blockchain as a top priority, edging up to 55% of respondents (versus 53% in 2019 and 43% in 2018). Notes: N= 1,488 (2020 global survey); N=1,386 (2019 global survey); N=1,053 (2018 global survey). Some totals may not add up to 100% due to rounding. Sources: Deloitte’s Global Blockchain Survey, 2018, 2019, and 2020. Deloitte Insights | deloitte.com/insights FIGURE 1 Changing views of blockchain’s relevance within organizations Blockchain’s standing as a top-five strategic priority continued in 2020 with a clear majority of respondents. Q. Which of the following best describes how you currently view the relevance of blockchain to your organization or project in the coming 24 months? 2020 2019 2018 55% 53% 43%
- 7. 26% 27% 29% 14% 14% 21% 3% It will be critical and in our top-five strategic priorities It will be important but not in our top-five strategic priorities It will be relevant, but it’s not a strategic priority We haven’t reached a conclusion It will not be relevant 3% 4% 2% 3% 4% Deloitte’s 2020 Global Blockchain Survey 5
- 8. A key takeaway emerged, as we noted ever more positive thinking around current blockchain applications, continuing the acceptance of blockchain that we observed in our prior surveys. Consider figures 1 and 2, which demonstrate this evolved thinking. The number of respondents who strongly or somewhat see blockchain as broadly scalable ticked up to 88%, compared to 86% last year and 84% in 2018. Those who said their company will lose competitive advantage if they don’t adopt blockchain also improved to 83%, up from 77% last year and 68% in 2018. Some 86% of respondents strongly or somewhat said that blockchain offers a compelling business case, versus 83% last year and 74% in 2018. Respondents across regions offered strong positive sentiment. On the issue of blockchain’s scalability, for example, respondents from countries such as Hong Kong, Brazil, Israel, and the United Arab Emirates registered above-average sentiment. On the issue that organizations would sacrifice competitive advantage by not adopting blockchain, respondents from China, Ireland, and Canada Notes: Figures represent the percentage of respondents who strongly or somewhat agree with each statement. N= 1,488 (2020 global survey); N=1,386 (2019 global survey); N=1,053 (2018 global survey). Sources: Deloitte’s Global Blockchain Survey, 2018, 2019, and 2020.
- 9. Deloitte Insights | deloitte.com/insights FIGURE 2 Survey respondents’ changing attitudes on blockchain and its adoption Blockchain sentiment follows a pattern of general improvement even against a backdrop of heightened introspection. Q. What is your level of agreement or disagreement with each of the following statements regarding blockchain technology? 2020 2019 2018 88% 86% 84% Blockchain technology is broadly scalable and will eventually achieve mainstream adoption Our executive team believes there is a compelling business case for the use of blockchain technology within my organization or project Our suppliers, customers, and/or competitors are discussing or working on blockchain solutions to current challenges in the value chain that serves my organization My organization or project will lose a competitive advantage if we don’t adopt blockchain technology
- 10. Blockchain is overhyped 68% 77% 83% 39% 43% 54% 86% 83% 74% 85% 82% 77% From promise to reality 6 showed above-average sentiment. Each metric revealed an eclectic mix of regional leaders, reflecting the globally diverse character of the technology. (Later in this article, we will discuss in greater depth regional differences in blockchain adoption.) Of course, attitude alone doesn’t drive blockchain
- 11. adoption. But sentiment matters, because it leads to investment and confidence. To that end, our survey reveals that companies continue to put hard-earned dollars into blockchain initiatives. For example, 82% of respondents said that they are hiring staff with blockchain expertise or plan to do so within the next 12 months (versus 73% last year). That number jumps to 89% when considering only the same kinds of companies we considered last year (revenue >US$100 million). APAC (China, Singapore, Hong Kong) served as a leading region in hiring, with some 89% of all respondents saying that they are hiring staff with blockchain expertise or plan to within the next year. Other metrics from the survey also point to steady or increasing blockchain investment levels. To be sure, as companies adopt and implement blockchain solutions—and as leaders increasingly accept blockchain as a fact rather than a future breakthrough, there remains an underlying level of uncertainty about current and future applications of blockchain technologies. And we don’t expect that organizations will sort this all out right away— this process will continue to take time, depending on industry, maturity, risk tolerance, and budgets. Some remain skeptical: While our survey respondents generally expressed positive sentiments, several data points indicate that sentiment is not unanimous. For example, the number of respondents who consider blockchain to be “overhyped” actually rose significantly this year, hitting 54% versus 43% in 2019 and 39% in 2018. Additionally, we found that those who think blockchain offers more security than conventional
- 12. IT systems fell to 64% from 71% in 2019. But notwithstanding such cautionary notes, new blockchain implementations seem to find expression on a nearly daily basis. These production proof points are the clearest signs yet that blockchain is making a tangible difference in how business gets done across regions and industries. Certainly, we see the advancement of large-scale initiatives that have the potential to be transformational across an array of domains. Libra, for example, represents a new blockchain-based financial infrastructure that aims to simplify global money movement and commerce, and to foster financial inclusion among those on the periphery of the banking system.2 As another example, a Hong Kong–based DLT solution for trade finance focuses on demonstrating the application of DLT through smart contracts, reducing the risk of fraudulent trade and duplicate financing, while improving the industry’s transparency and productivity.3 Yet other examples range from a DLT platform to improve transparency and productivity on behalf of Southeast Asian bancassurance players to a prospective blockchain-enabled track-and-trace platform to increase transparency, trust, and communication across stakeholders in a large North American port.4 Still another example represents the first blockchain solution in the certification industry that Deloitte helped develop on behalf of a leading Nordic quality assurance organization.5
- 13. These types of large-scale projects are, understandably, the ones gaining media attention. But we are also monitoring smaller-scale examples of blockchain adoption that are proving to be just as transformational in the way people live and the way work gets done, affecting a variety of areas Deloitte’s 2020 Global Blockchain Survey 7 Note: N=1,488 (2020 global survey); N=1,386 (2019 global survey). Sources: Deloitte’s Global Blockchain Survey, 2019 and 2020. Deloitte Insights | deloitte.com/insights FIGURE 3 To what extent have organizations brought blockchain into production compared to last year? This year’s survey shows a substantial jump in blockchain adoption. Percentage of respondents citing they have already brought blockchain into production in 2019 Percentage of respondents citing they have already brought blockchain into production in 2020 Percentage of respondents citing they have already brought blockchain into production in 2020 per different revenue categories
- 14. 23% 39% 41% 46% Overall 2019 Overall 2020 Revenue >US$100 million Revenue >US$1 billion such as title transfer and protection, patient data storage and retrieval systems, platforms to make voting easier and more secure, and tracking food sourcing. These and other real-world implementations serve as nuanced but tangible proof that blockchain is finding its footing in the stream of global commerce. In this regard, our survey clearly brings to light an important perspective: It affirms that such heightened production is here to stay, with 39% of global respondents saying they have already incorporated blockchain into production (41% of respondents from companies with greater than US$100 million in revenue), a significant increase from 23% last year, as figure 3 shows. However, we are noting some key differences in the broader adoption figure, with, for example, 31% of US respondents saying that blockchain is already in production—which starkly contrasts with China, where the figure was nearly double, at 59%. The APAC region, more generally, stood at 53%. Meanwhile, Ireland (48%) and United Arab Emirates (43%) were also drivers of
- 15. this push, with TMT, financial services, and retail/wholesale/logistics/distribution serving as leading industries. For these regions, industries, and sectors, especially, the future of blockchain is very much happening right now. But there is a reality at play that extends far beyond use cases and deployment initiatives. Put simply, while blockchain was once classified as a technology experiment, it now represents a true agent of change that is affecting the entire While blockchain was once classified as a technology experiment, it now represents a true agent of change that is affecting the entire organization. From promise to reality 8 organization. Blockchain long ago made the leap from theoretical to practical, and many organizations today recognize the need to address related accountability challenges, particularly as those challenges relate to customers, suppliers, investors, governmental and regulatory agencies, and society at large. Related issues of pressing concern include areas such as cybersecurity, global digital identity, compliance with established accounting, audit, internal control, tax and financial reporting frameworks, governance, and
- 16. the full implications of an ever-increasing digital asset development. Relevant parties, including regulators and standard-setters, have been working to understand, monitor, and address these concerns as they emerge; those organizations and nations that don’t find a clear path could risk losing market share to others that have addressed these challenges. It is also worth noting an even larger point: When an organization integrates a blockchain platform into its core operations, virtually everyone who supports those core operations becomes a stakeholder: the C-suite; the board of directors; internal and external auditors; legal, compliance, and financial professionals; and of course everyone directly involved in the blockchain system itself. The story of blockchain in 2020 is a story of tangible, real-world implementations across large and small scales. But it is also a story about how blockchain affects the entire organization and makes everyone a participant in its success. Deloitte’s 2020 Global Blockchain Survey 9 Digital assets today and tomorrow A SIGNIFICANT PART OF blockchain’s appeal and enduring sustainability as both a tool and a platform is inherent in its use of
- 17. digital assets and the role those assets will play in the future of commerce. While most commonly associated with cryptocurrencies such as bitcoin and Ether, digital assets are much more diverse and can be used for a variety of purposes. We define a digital asset as “something represented in a digital form that has intrinsic or acquired value.” In recent years, the term has come to include those assets that are represented, held, and transacted on a blockchain or blockchain-like network. Aside from cryptocurrencies, examples of digital assets may include everything from digital representations of land, commodities or fiat currency, to tokenized debt or equity, to a financial instrument, and beyond.6 Digital assets offer their users many benefits, including the tokenization of physical asset facilities, allowing for easier, more frictionless trading on secondary markets. They provide a heightened degree of historical transparency and record of provenance. And because digital assets allow for larger, more indivisible assets to become divisible, they can help create a more inclusive, accessible trading ecosystem.7 In light of these and other benefits, it’s no surprise that our survey respondents view digital assets very favorably. Nearly 89% said they believe that digital assets will be very or somewhat important to their industries in the next three years. An outright majority (53%) report that digital assets will be very important. Both figures affirm the potential of
- 18. digital assets and are significant considering blockchain’s growing overall importance. Further bolstering the perceived importance of digital assets is the fact that 83% of survey respondents said they strongly or somewhat believe they will serve as an alternative to, or outright replacement for, fiat currency in the next five to 10 years. In China, that figure rises to 94%. While our survey revealed great faith in digital assets’ future importance, it shows no clear or specific consensus about exactly how those assets will be used or the specific role they will play—a kind of incoherence that we have seen in blockchain use cases in the past and today. But their importance is nonetheless manifest across an array of use cases, from IP rights management to facilitating track-and-trace to virtual representation of an equity instrument and beyond. While this likely won’t shake out A fundamental question remains: Are those who adopt still-evolving digital assets fully aware of the cross-border regulatory compliance and professional guidance challenges that continue to emerge? From promise to reality 10
- 19. immediately, we expect more use cases to develop as organizations gain additional experience and increased comfort levels with blockchain in general and digital assets more specifically. Despite their many benefits, digital assets’ growing adoption raises potential issues regarding new tax and regulatory compliance for both businesses and regulators. Even so, a vast majority of survey respondents expressed confidence that they will meet their regulatory burdens. Some 80% claimed to be very or somewhat prepared to deal with the regulatory aspects of digital assets: Know Your Customer, tax, GAAP/FAS, etc. However, it is unclear from our data whether organizations are fully prepared for the considerable compliance challenges looming in the future, including process, policy, and alignment of governance.8 A fundamental question remains: Are those who adopt still-evolving digital assets fully aware of the cross-border regulatory compliance and professional guidance challenges that continue to emerge? This may not be an easy question to answer, as individuals and organizations evolve their own thinking about—and tolerance for— adopting blockchain and digital assets. Following the technology continuum Today, we are witnessing new and significant changes across all facets of society, including how
- 20. we shop, the way we pay for things, how we bank, how we access and disseminate information, how we travel, and how we manufacture—from assembly lines to automated processes. Artificial intelligence (AI) is now a leading contributor to that change, making machines smarter and processes more efficient through technologies such as robotics and 3D printing. Of course, what we are seeing with digital assets is just another waypoint on this technology continuum, with each major change delivering great promise and great disruption. As always, the change process takes time and often takes place without most people even realizing it’s happening. Businesses—and eventually, customers and end users—learn to adapt to the latest technologies and solve the other issues that accompany assimilation of change, such as regulatory and use case priorities. We expect that the adoption of digital assets will follow a similar path. Even as these technologies rapidly advance, we have a long way to go in the full adoption cycle, which will take time and a change in thinking about digital assets. Accountability challenges must be appropriately managed, and people will need to develop realistic ideas about what digital assets are and what they are not. While digital assets may be the future, there remains an important, immediate need for organizations to become more comfortable with them, especially in terms of barriers to adoption and regulatory hurdles.
- 21. Deloitte’s 2020 Global Blockchain Survey 11 Note: N=1,488. Source: Deloitte’s 2020 Global Blockchain Survey. Deloitte Insights | deloitte.com/insights FIGURE 4 Which digital assets are most under consideration? Respondents are open to using an array of digital assets in their business models. Q. Are you considering the use of the following digital assets in your business model? Percentage of respondents who considered using the digital assets in their business models Enterprise controlled General asset backed (basket of assets, currencies, etc.) Decentralized cryptocurrencies (BTC, ETH, EOS, etc.) Equity tokens Specific asset backed (gold, diamonds, precious metals, etc.) Fiat currency backed Algorithm-driven stablecoins
- 22. Utility tokens Other security tokens (debt, financial instrument, derivative, etc.) 64% 63% 59% 56% 55% 54% 54% 54% 48% From promise to reality 12 Note: N=1,488. Source: Deloitte’s 2020 Global Blockchain Survey. Deloitte Insights | deloitte.com/insights FIGURE 5
- 23. Digital assets as alternative to or replacement for fiat currencies, by country Brazil, China, and UAE lead the countries that consider digital assets a promising alternative to or replacement for fiat currencies. Percentage of respondents who strongly or somewhat agree that digital assets will be an alternative to or replacement for fiat currencies in the next five to 10 years. China Brazil United Arab Emirates Singapore Ireland Israel Overall United Kingdom United States Germany Mexico Hong Kong Canada
- 24. Switzerland South Africa 94% 94% 90% 86% 85% 84% 83% 81% 81% 81% 80% 79% 76% 75% 71% Deloitte’s 2020 Global Blockchain Survey
- 25. 13 Cybersecurity IN ADDITION TO the tax and regulatory concerns surrounding the increased use and adoption of digital assets, 66% of survey respondents also expressed concern that cybersecurity issues may be further hampering the widespread acceptance and use of these tools, more than any other source of concern. A majority (58%) said that cybersecurity is one of several issues that affects their overall blockchain- or digital assets–related strategy. Somewhat surprisingly, only 21% of respondents said that cybersecurity issues are, in themselves, enough to prevent progress in their blockchain or digital assets strategies. In the real world, this means that organizations might be concerned about cybersecurity but that they may not fully recognize the importance of preparedness measures they should take to alleviate cyber threats. This dichotomy is further borne out in a simple search of the latest news, which shows what often appear to be monthly—if not weekly—reports on data breaches at large organizations that result in the theft of valuable private financial, health, and other personal information. As a result, there is growing concern—not only about how to best protect systems from being attacked but about who owns and is, ultimately, responsible for the information being sought. And, in the process it
- 26. seems, people are trying to figure out the difference between cyber myth and reality. The split between myth and reality is also intrinsic to the blockchain story and its ability to deter cyberattacks. On the one hand, blockchain’s inherently cryptographic character offers at least some measure of assurance that the foundational blockchain platform is safe from cyberattack. And the distributed nature of blockchain suggests a From promise to reality 14 Note: N=1,488. Source: Deloitte’s 2020 Global Blockchain Survey. Deloitte Insights | deloitte.com/insights FIGURE 6 How cybersecurity is affecting blockchain or digital assets strategy Cybersecurity issues figure in most organizations’ blockchain or digital assets strategy; however, only around one-fifth see cybersecurity concerns alone preventing them from advancing that strategy, suggesting some balancing of concerns. Q. How do cybersecurity issues affect your organization’s blockchain or digital assets strategy? Concerns over cybersecurity, alone, prevent any advancement in our blockchain or digital
- 27. assets strategy Cybersecurity issues are among several kinds of issues that figure into our blockchain or digital assets strategy Cybersecurity issues do not figure prominently in our blockchain or digital assets strategy Not sure/not applicable 21% 58% 18% 3% degree of transparency that would allow for quick detection of an attack. But even a system designed to provide protective assurance is at least potentially vulnerable to the kinds of attacks that have burdened legacy systems in industry and government in recent years. For one thing, attacks can emanate from anywhere at key access points to the blockchain system. And advancements in quantum computing may one day challenge and possibly overcome existing methods of cryptography that are inherent to blockchain security platforms. Other examples abound. Unfortunately, organizations’ efforts to solve these issues remain a work in progress, and cybersecurity remains a problem in search of a viable solution at
- 28. the moment. Of course, progress in this area could help allay fears around increasing cybersecurity threats and the relative safety of blockchain- enabled systems. Vigilance remains very much a part of the equation. Deloitte’s 2020 Global Blockchain Survey 15 Global digital identity OUR SURVEY DATA underscores the importance that a global digital identity will play in the future. Some 90% of survey respondents believe that such an identity will be very or somewhat important in their blockchain and digital assets strategy moving forward. Nearly two-thirds of respondents (63%) said that a global digital identity will be very important. And a majority of respondents see a global digital identity as having its greatest impact in global financial transactions (29%) and data privacy/ ownership (27%). Somewhat surprisingly, respondents attached far less importance to areas such as law enforcement (5%), health care/patient identity (9%), international travel (7%), and regulatory compliance (7%). Eventually, we believe these areas may take on greater …
- 29. HR TECHNOLOGY HR TECHNOLOGY IS HR READY FOR BLOCKCHAIN? The tamper-proof technolog} 7 could improve recruiting and payroll distribution. By Dave Zielinski R ecruiters would be thrilled to find a more efficient way to verify job candidates’ creden tials, including education, certifica- tions, work experience and skills. And payroll managers would wel- come a technology that makes their jobs less complex and costly, allow- ing for timelier payments to global employees. Those are just two of the potential applications of blockchain that are likely to impact HR soon, experts say. Best known as the backbone technol- ogy for the digital currency bitcoin, blockchain is an encrypted digital ledger of public records organized into groups of data called blocks and distributed over networks. In other words, it is a decentralized digital database that allows everyone in a “chain” to see and verify the details of every record in the network, says
- 30. Kevin Wheeler, founder and presi- dent of Global Learning Resources, a talent strategy consulting firm in Fremont, Calif. A GROWING CHAIN More than 40 top financial insti- tutions and a growing number of companies across industries are already adopting blockchain, and Microsoft and IBM have made huge investments in the technology. Organizations are using the platform for financial transactions and supply chain management and to create legal contracts. One of blockchain’s advantages is that the data it holds cannot be delet- ed or changed, Wheeler says, and the system requires everyone connected to each block to agree to allow infor- mation to be added. Job candidates or companies are assigned a digital ID enabling them to introduce new data—such as an individual’s grades or degrees. “Blockchain has the potential of helping recruiters verify candidate credentials in a highly secure way and reducing chances of credentials being altered or faked,” says Stacey Harris, vice president of research and analytics at IT consulting firm
- 31. Sierra-Cedar, which conducts an annual HR Systems Survey. The pro- tocol could also prove valuable when applied to the gig economy. Quickly confirming the skills, knowledge and past assignments of contingent workers can be challenging. “I think we could one day see [its use] expand within HR to the full contingent workforce,” Harris says. The technology is also attracting the interest of job seekers. In employ- ment searches, mentions of the words “blockchain,” “bitcoin” or “cryptocur rency” are growing at a staggering pace, according to the employ- ment website Indeed, which reported an increase of more than 1,000 percent in queries using those terms since IL LU S TR A TI
- 33. Z IN E SHRM.ORG/HRMAGAZINE November 2015. Employers looking for or contacting candidates who have bitcoin or blockchain skills in the past two years include Allstate, Capital One, ESPN, GEICO, Uber and eBay, according to Indeed. HOW BLOCKCHAIN WORKS 1 Alice wants to send money to Brad. 2 The transaction is represented as a “block” of online data. 3 The block is shared with every party in the network. B ETTER DATA IN T E G R IT Y “It is early, both in terms of its maturity and the creation of the kind of large consortiums needed to gain alignment on how blockchain systems will work,” says Daniel Rod dy, a senior manager with Deloitte Consulting in New York City who specializes in human capital. “But there is considerable potential for human resources.”
- 34. For example, the systems could make the concept of a “self-sovereign identity” for employees a reality. “It’s the idea of individuals being able to fully control data about themselves,” Roddy says. The networks would re- duce the chances of third-party com- panies providing inaccurate historical data about an applicant or employee. For a recruiter to verify an individ- ual’s claim of achieving a certification, for example., the job seeker would first have to release access to an entry cross-signed by the certifying body, Roddy says. Once the credential is confirmed within the blockchain, the candidate decides who can access it. Similarly, job seekers would have the power to share university-verified data on the degrees they’ve earned or classes they 've taken, eliminating the need for employers to track down that information. The Massachusetts Institute of Technology is piloting a diploma system that can be accessed using a digital key, allowing students to “own” a digital diploma in addition to the standard physical document. Last year, Recruit Technologies and Ascribe announced a partnership
- 35. to develop a prototype platform for resume authentication. The two com- panies claim the effort would stream- line that process and allow recruiters to handle confidential records safely and without worry of fraud. 4 People in the network verify the transaction as valid. Once verified, each transaction is collected in blocks that are added to the chain, creating a secure and transparent record. The money is transferred from Alice to Brad. S ource: SHRM research. PAYRO LL A N D O TH E R A P P L IC A T IO N S Blockchain could also have advantag- es for payroll, particularly for interna- tional payments, which can be costly and delayed because of the many intermediary banks and third parties involved. For example, San Francisco-based Bitwage uses the technology to facilitate cross-border payments with bitcoin. The company allows employ-
- 36. ees and contractors around the world to be paid in their preferred currency, handling the conversion of bitcoin to local funds. Workers can choose to receive their wages from among 25 currencies, and Bitwage promises to pay out within 48 hours. Australian company Chrono- bank also uses a blockchain-type technology to allow employers to pay contract workers without going through banks. Another emerging application of blockchain is the safeguarding of medical information. “These systems have the potential to keep employees’ health records and make them avail- able to anyone with permission, while keeping that data secure,” Wheeler says. Moreover, the technology could be used to capture employee learning- records or other information stored in HR databases. Some vendors in the learning and development space are exploring its potential for verifying workers’ skills, Harris says. “There are some current challenges but, once the network effect kicks in, the growth of blockchain technology could be exponential,” says Jeff Mike,
- 37. vice president and HR research leader for New York City-based consulting firm Bersin by Deloitte. GD Dave Zielinski is a freelance business writer in Minneapolis. MARCH 2018 HR MAGAZINE 63 Copyright of HR Magazine is the property of Society for Human Resource Management and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.