Challenges and opportunities of a technology that promises to change the way we relate and question trust.

By Martin Padulla for staffingamericalatina

The word Blockchain instantly makes us think about cryptocurrency, particularly bitcoins. However, the famous bitcoin is only one of the consequences of a technology characterized by security and backup.

Blockchain eliminates intermediaries in transactions, registers servers’ information in a synchronized way and enables users to block possible data losses or hacks. It works as a mega data base that allows you to add information but makes it impossible to modify or change the information previously saved.

There are different Blockchains. They can be interconnected and be used for different purposes, basically for any transaction. There are public and private, as well as hybrid Blockchains. Public Blockchains are, for instance, those on which bitcoin or ethereum work, which can be accessed by anyone. Private Blockchains can only be accessed by those authorized by the owners.

We are facing a technology that provides a transactional platform that does not demand the trust variable among those who participate in it. How can this concept, which has been addressed by different thinkers from the Greeks to the current day, be dodged? The key of this technology is consensus: if we all share the same information, this information is real. And that’s the end of the story. I find it hard to imagine that a technological solution will solve every trust problem, even if we validate the hypothesis that states that we are going through a structural decline of interpersonal trust. Is there really such a problem when it comes to transactions? Let’s move forward.

This huge data base is distributed among several participants. It is an unchanging ledger that has every transaction that has ever been done in the network. Every participant is called a node, and they are connected to a decentralized network, where there is not a main arranger. These P2P networks interact among themselves using the same language (protocol). The message they send is called token, and represents the information held in the network. It may represent any kind of asset, good, or service, bitcoins, the rental of a house, grades obtained in a course, or the strategic purchase done for a State.

As the information is encrypted, it can be distributed without disclosing the content. Tokens’ transactions are grouped in blocks. When the blocks’ capacity ran out, new transactions are grouped in the following block, which will be linked to the previous one, generating the blockchain.

Clearly, like in every other technology, results will depend on whether it is properly used by individuals and societies or not. The development is closely linked to digitalization processes and the updating of regulatory frameworks.

It is both, a new system of economic interaction, and a disruptive tool for social interaction.

What is the impact of this technology in Latin America? The answer seems to have several levels. The macro level could show the possible efficient and transparent contribution it makes to a sustainable and inclusive integration among our countries. The trade blocks of the region could become an actual reality in a shorter period of time thanks to the implementation of Blockchains.

Another level that interests me is education. A revolution is coming and it will have an impact on every sharing process. Certificates, degrees, diplomas, and every item that demands integrity and validity will become decentralized. These applications seem to aim at providing higher levels of certainty and efficiency to the processes that exist today. However, multiple disruptive initiatives are being developed. Tutellus, the largest collaborative learning platform of the Spanish speaking market, is based on this technology. As I write down this column, they have over 3 million users in 160 countries.

In the Blockchain world, rules evolve from a distributed interaction process. Maybe, collaboration shall promote the modernization of regulatory frameworks and the transparency of different forms of work.

The third level, in my opinion, is the future of work. Any social actor that has the chance of creating work can use blockchain at a very low cost when compared to the existing systems. Disruptive players start to emerge. Global Jobcoin has the goal of enabling the movement of people and offer access to the labour market of qualified talent in Europe. It uses blockchain technology to offer a decentralized, autonomous, and flexible platform where it is also possible to pay for services.  Using smart contracts, the company matches small and medium companies with autonomous workers and job offers are published in a multilingual platform. An autonomous workers is selected and once the job is done, the system releases the token and the workers gets paid. HireMatch is another player that offers a different service: it uses a system to rent tokens.

Both companies are more efficient than the traditional players of the sector, and can be very competitive from a commercial perspective. In addition, these organizations seem to have developed new eyes, minding the gap.

As regards the temporary staffing industry, we seem to be heading towards a system that make the hiring processes simpler and promotes relationships based on the concept of decent work. Smart contracts force labour relationships to be transparent and tackle disloyal competition from informal players who use undeclared work.

A very dynamic outline where the employer sets the workday, wage and the job description, transfers digital assets to guarantee wages in a smart contract, and this is done, a decentralized and automatic system sends the job offer out. Then, workers apply for the job, having all this information, and once the job is done, they get paid the amount stipulated.

For entrepreneurs, who are responsible for the largest share of employment creation in the region, this technology provides access to credit. Blockchain based platforms can connect them with foreign investors and provide easy access to capital. In addition, blockchain provides transparency for investors, as they can check information and operations’ flows.

Major questions arise in terms of representation, as this technology enables transactions directly among individuals. Not only does it contribute to workers’ formality, but can also undermine the collective dimension of work, as we know it today. Probably, unions will have to use blockchain to benefit workers, training them is skills based on the demand.

According to an article written by Christian Guijosa and published by the Observatory of Educational Innovation of the ITESM, recently, Deloitte surveyed over one thousand business executives from countries such as China, the United States, Mexico, Canada, the United Kingdom, and Germany. Generally, companies think that blockchain will change the way in which transactions are done. However, they think it is necessary to connect it with other technologies, such as artificial intelligence or cloud services. Around 84% think that this technology can be broadly scalable, and that in a short period of time it will play a key role in companies. About 69% expects to replace their current recording systems (such as financial books, CRM modules or inventory systems) with blockchain. Over 60% think that it will transform the automotive, oil and gas, life sciences, and financial services industries. 84% thinks that blockchain is safer than current systems.

If the internet changed our lives, Blockchain seems to be called to produce substantial changes. It will probably be a key element of technological convergence that will change the way we relate, educate and develop professionally forever.

Clearly, this is a phenomenon with two faces: one filled with opportunities and another one filled with challenges.

About Martin Padulla

Founder and Managing Director of staffingamericalatina. Martin Padulla is Sociologist (USAL), MBA (UCA) and labour markets expert. He published “Flexible Work in South America” and “Regulatory framework for private employment agencies in Latin America” two books about the new realities of work in Latin America.

Follow Martín Padulla on Twitter: @MartinPadulla

mpadulla@staffingamericalatina.com

About staffingamericalatina

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