Blockchain Definition & Why HR Should Invest in Blockchain

June 25, 20192:31 pm
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Cybercrime is on the rise from time to time. Statistics by IT Governance showed that in 2010, 3.8 million records were breached. While in 2016, it significantly rose up to 3.1 billion data breached. The future prediction of cybercrime will hit up to US$6 trillion by 2021 and it would make it the greatest transfer of economic wealth in history. Suffering from data leaked due to cybercrime will affect your company’s bottom line as it will risk your credibility and trust from employees, clients, and executives. Owing to this reason, you should consider investing in a secured system called blockchain.

But what is blockchain technology?

The Cambridge dictionary defines blockchain as a system used to make a digital record of all the occasions a cryptocurrency is bought or sold, and that is constantly growing as more blocks are added. To put it simpler, blockchain is an immutable database (called block) which is stored in a public database (called chain). As cited in Mango research, Blockchain was first introduced in 2008, when Satoshi Nakamoto released Bitcoin Whitepaper. It is the combination of traditional ledger system, computer distributed around the world, and cryptography to enforce security.

See also: The Future of the Workforce: AI Investment Can Boost Profits and Employment

What makes blockchain unique is that blockchain will not only secure your data by keeping it in one place like a traditional ledger book, but rather the database is shared across a network of computers. Blockchain allows you to not only copy the data which will be risky to be changed by “third irresponsible party”, but also allows you to distribute data you have with people you trust. Additionally, the network can encompass hundreds, if not thousands, of users and create a long list of transactions or database which makes the data stored in a secure and unbreakable system. 

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” – Don & Alex Tapscott, authors of Blockchain Revolution (2016)

Why you should invest in blockchain technology

Nothing recorded in a blockchain can be changed which makes it a secure way to conduct transaction or data saving and tracking. On a blockchain, once a transaction is sent it will be sealed and cannot be reversed unless all parties are aware and agree to update the database. Therefore, it will not be easy for one person to secretly add certain inputs to change a value to his own advantage. For example, your collaborator cannot add an amount of money in the blockchain system without your concern, making it a win-win data security for every party involved. 

Other than that, R.R Hauxley, the author of Stolen Wallets and Where to Buy Them, mentioned some other benefits of investing in a blockchain.

1.  You will have your own digital ownership

Blockchain, said Hauxley, is a proof and it can also be more than a proof. For example, when you invest in blockchain, it allows you to take digital good, asset, and data. With blockchain, you can own your own money without involving the third party like a bank, improve your social media functionalities, and keep your identity and personal information secure.

2.  You will have a digital freedom

Blockchain is decentralised. Decentralised means there will be no central authority who can manipulate your data. In a decentralised system, the information you have is not stored by one single entity. Everyone in the network owns the information. Then, how can it be called freedom if everyone owns it?

Here is an example, when you want to send money to your friend, you need to go to an ATM or login to your mobile-banking to transfer the money, right? But with blockchain, you can cut the third party which is your bank account, and directly transfer the money to your friend. Additionally, blockchain transaction allows you to create a system which is running without concerns, making a transaction “trust-free”, once it is settled as an agreement in the blockchain. Therefore, only you are in charge of your money system. You do not need to rely anymore upon any third party.

3.  Blockchain ensures your digital security

How much do you know about your own digital security? Every time you do a transaction in a bank or buy a phone credit in counter, they can track your identity and sell the information to insurance companies and credit agencies who, Hauxley said, judges you if you are worth advertising or not.

Blockchain, in this context, can secure your data as it blockchain technology is a decentralising system which makes it possible, private, and trustless. According to Hauxley, you can protect your privacy by using the privacy-focused cryptocurrencies in the blockchain.

Why HR should invest in or use the blockchain technology

Report from PwC suggested that blockchain has the potential to transform business so human resources should adopt the technology. HR, the report mentioned, need to focus on the benefits blockchain delivers rather than on the intricacies of the technology itself. How blockchain works is not actually that important. What matters is that it brings the ability to establish trust between two machines, people, or entities, and then transfer value securely and transparently between them.

Blockchain can cut costs and change the way HR secure their data. Commonly, HR uses data collection with third-party verification that is expensive, slow, and labour-intensive. But by adopting blockchain, the team can do better in a more inexpensive and effective way. 

According to the PwC, blockchain in the HR industry is useful for:

  1. verifying and assessing education, skills, and performance background of candidates to place them in very appropriate roles;
  2. giving accurate data of their candidate’s education, skills, training, and workplace performance;
  3. managing cross-border payments and employee mobility with the potential for organisations to create corporate currencies;
  4. boosting productivity by automating and reducing the burden of routine, data-heavy processes like payroll or administration;
  5. enhancing fraud prevention and cybersecurity in HR, including employees and contractors.

Read also: This is Where to Start the HR Tech Innovation