As the analyst firm Forrester states, Distributed Ledger Technology (DLT) is a "concept of technology or architectural principle that can be implemented in many ways".
While companies are now experimenting with it, there is no single blockchain application. This means that you need to carefully evaluate the market to understand the DLTs that are available and how these applications can be used in solutions.
Seeing through the hype
Blockchain is a bit of a hype. As read in Wired: "At this time, few business trends can compete with the magic of blockchain technology."
They are right to the point where adding the word "blockchain" to the name of a company shows immediate gains in share prices (for example, the announcement of a KodakOne blockchain network has more than doubled the EastmanKodak share price).
But we still do not understand or apply the technology well enough to fully grasp its implications and benefits.
The World Economic Forum published a white paper called Blockchain Beyond the Hype which includes a practical framework and a decision tree. It can help you determine if blockchain is the correct approach to your business problem or not.
The high cost of energy
Blockchain transactions are verified using extremely complex algorithms. This provides us with greater security, but also has an energy cost.
The first blockchain networks, like Bitcoin, do not require permissions. So anyone can join the algorithm, but the compromise is that when the process becomes increasingly complex, the network requires large amounts of computing power and therefore more energy.
Not all applications require the same type of security as a cryptocurrency network.
With the arrival of new DLTs on the market, companies are changing the characteristics of the platform in order to maintain safety while energy consumption levels are reduced.
Despite these alternatives, blockchains remain computationally intense compared to traditional databases.
How will the regulation be?
At the moment, regulatory efforts seem to focus on cryptocurrencies, but they expect governments to look closely at what is happening with the blockchain, especially in relation to identities (of companies and people) and payments.
The European Parliament hosted a "Spotlight on Blockchain" session in May 2018 to answer the question: "When and how should governments intervene?"
Some states in the United States are advancing with the regulation and implementation of the blockchain, e.g. Arizona (recognition of smart contracts) and Vermont (blockchain as proof).
And, during an April meeting of ASEAN (Association of Southeast Asian Nations), we focused on the DLT for economic and safe transactions to promote financial inclusion for the under-service and under-bank segments.
We could go the same way.
What should you do now?
We can not provide you with an exact roadmap on how blockchain technology will evolve over the next few years, but we're sure you'll see that it will become more mainstream when suppliers, including NGA HR, start marketing DLT-based applications.
It continues to separate the blockchain from the bitcoin: there are many speculations about cryptocurrencies that have nothing to do with the benefits of blockchain applications in corporate environments.
DLT-based applications offer important advantages when it comes to transactions involving personal and payment data: increased security, faster transactions and limited data disclosure for a predetermined purpose.
The developments of blockchain and DLT are very rapid and there are many experiments and real applications. Educate yourself by following the news and reading about which projects are good and which are going to roll, then apply this knowledge to the human resources space and salaries.
All major technology providers explore cases of use for DLT in their solutions. It could be equally interesting to follow what niche sellers are doing, as they are generally not tied to a segment or industry, are more agile and move quickly into other applications.
The cases of use outside the human resource domain provide the perfect inspiration and encourage you to lengthen your thinking beyond the obvious.
Reach your human resources and payroll providers and ask what use cases they are currently pursuing. NGA HR is happy to tell you about our blockchain innovations and will keep you updated as we bring HR and Payroll applications to market.
Anita Lettink is responsible for strategy and alliances at the NGA.