Blockchain is not just about cryptocurrencies but it can be applied in businesses. In this article, we shall explore its application in human resource management. HR Blockchain use cases have started to emerge and have the potential to disrupt traditional HR systems. Among them are ChronoBank.io, PEACOUNTS,and bitWAGE
Let’s examine each one of them.
ChronoBank.io
This is an HR blockchain platform designed to improve the recruitment process as well as payroll. It claimed that it will disrupt the HR industry similar to how Uber has disrupted the taxi industry.
ChronoBank ecosystem comprises a hiring platform(LaborX), a decentralized exchange(TimeX), a multi-signature wallet(Chronowallet) and a cryptocurrency that is pegged to labor hours(Labor Hour token).
LaborX is their flagship global hiring platform that connects candidates to the companies. It features an industry first immutable reputation system and a crypto payment system based on smart contract. The reputation system allows faster screening of candidates therefore save time and cost in hiring the right candidates. In addition, the crypto payment system enables candidates to get paid on time.
Furthermore, it plans to use a stable coin as the crypto payment to eliminate volatility common in most cryptocurrencies. This coin is known as Labour-Hour tokens. These tokens are linked to average hourly wages in the host country and are backed by a real labor force from big recruitment and labor-hire companies. Labor is considered a tradeable resource so ChronoBank will tokenise this resource into the LH-Tokens.
PeaCounts
PeaCounts is a blockchain-based payroll system. PeaCounts claimed that their payroll system will revolutionize the way employees are paid by using blockchain to remove the trust-based elements of the payroll process. It ensures the employees will get paid as soon as the work is completed. On the other hand, the employer will pay just for the work completed.
It features a smart contract that can track an employee location and time spent on certain tasks. It also holds the PEA Tokens and release them to the employee upon completion of the tasks. This system ensures that the employee gets paid efficiently and fairly.
The PeaCount payroll system is a private blockchain created as a fork off the Bitcoin. It also implements the zk-Snarks protocol and a multi-access wallet to ensure security in payroll transactions.
bitWage
bitWage is a payroll and HR services platform designed for the digital age. Basically it is a global outsourcing platform that serves the freelancers who wish to seek jobs worldwide and employers who wish to hire remote workers .
The bitWage payroll system allows employers to pay their remote employees rapidly with low transactions. The employees have the option to receive their wages and salaries in any of twenty four fiat currencies, four cryptocurrencies , and four precious metals.
Human resource management has undergone tremendous changes in recent years particularly with regards to digitalization of human resource. The emergence of blockchain technology could further transform the world of HR.
According to Griffiths(cited in Gale, 2018), blockchain has the potential to streamline a lot of inefficient work related to employee data verification. Blockchain can store a candidate education, certifications and work history in a single ledger, therefore it would take just minutes rather than days to verify the data. Besides that, the data cannot be modified or hacked once they are stored in the blockchain, thus guarantee data security and trustworthiness.
In addition, blockchain has the potential impact on HR by allowing personal data to be owned by the individual rather than the organization(Mike, cited in Gale 2018). Consequently, every employee could maintain control over their entire employment data, including educational background, training, and work history. It also means that an individual work identity is more portable, it moves with the individual rather than stuck inside the former organization when an employee changes job.
Besides that, blockchain could disrupt conventional HR processes with respect to financial transactions. Blockchain could streamline payroll function significantly by allowing automated and direct payment based on smart contarcts, without the need of a third party such as a bank or other intermediaries.
Recently, PWC (2018)has identified a few areas where we can apply the blockchain technology in HR. The areas include talent sourcing and management, targeting productivity gains, cross-border payment and mobility and Fraud prevention, and cybersecurity and data protection.
Talent sourcing and management
Blockchain could have a major impact on talent sourcing and management. It allows employees to maintain and control access to a comprehensive, trustworthy blockchain-based record of their education, skills, training and workplace performance. By providing potential employers with access to their blockchain-based employment data, companies would be able to match individuals to roles much more accurately and effectively.
Targeting productivity gains
Blockchain has the ability to better match people’s skills and performance to jobs. Finding and recruiting the right talent is always problematic for business organizations, therefore by helping them do this more effectively and efficiently will surely boost their productivity. Besides that, blockchain can help to reduce the burden of data-intensive processes like payroll and VAT , allowing companies to focus more on their core businesses.
Cross-border payments and mobility
Multinational companies could create their own blockchain-based corporate cryptocurrencies that they can use for cross-border payment across their global supply chains, without the need of third-parties for settlement and reconciliation. In the future, central banks may legalize this type of cryptocurrency and support convertibility into fiat currencies. In addition, blockchain could facilitate employees mobility across the border with respect to payroll adjustment, international expenses, and taxes.
Fraud prevention, cybersecurity and data protection
HR department usually needs to handle high-volume financial transactions and sensitive personal data, therefore it is utmost important to prevent frauds as well as to safeguard the data. This is the area where blockchain could be extremely useful. Blockchain’s use of consensus to authenticate data can help to eliminate frauds.
Another issue that blockchain can help to overcome is cyber threats. Many SMEs are ill-prepared for cyber attacks and the results could be detrimental to their businesses. Blockchain could help ensure cybersecurity as the data are immutable and tamper-proof because it uses SHA-256 hashing cryptography.
Blockchain always faces the trade-off issue between security and scalability. Though their PoW consensus protocol guarantees near perfect security, it also slows down the processing speed significantly. Currently, the Ethereum processing speed is 15 transactions per second while Bitcoin is 7 transactions per second. Both platform’s processing capacities are nowhere near Visa’s processing speed of 45,000 transactions per second. Furthermore, the increase in the number of dapps deployed on the main Ethereum main chain has caused congestion and slows down transactions tremendously. One of the most famous cases is Cryptokitties, it clogged up the Ethereum network in just a few weeks of deployment due to its unprecedented popularity.
In seeking a viable solution to the scalability issue, Vitalik Buterin and Joseph Poon have joined hands in conceptualizing and developing Plasma, a framework that can scale Ethereum processing power. Joseph is also the co-founder of the Lightning network, a framework that has greatly increase Bitcoin processing speed. Both plasma and Lightning network are trustless multilayered blockchain networks.
Plasma
Plasma is a system that comprises the main blockchain and the ‘child blockchains’ that branch out from the main blockchain(aka parent blockchain or root blockchain). The child blockchains can co-exist but function independently from the parent chain and each other.
The Plasma system allows anyone to create their own child blockchains a.k.a plasma chains with their own smart contracts. Therefore, the Plasma system enables the creation of all kinds of use cases based on different business logic in their smart contracts. To ensure security, the root chain monitor and enforces the state in all the plasma chains and penalize the bad actors if there is proof of frauds. In this way, the Plasma system makes off-chain transactions possible while relying on the Ethereum main blockchain to maintain its security.
The Plasma Structure
Actually, the Plasma architecture is like a tree structure with the main Ethereum blockchain as the root. The child blockchains then branch out from the root blockchain, similar to branches grown out from the root of a tree. Every child chain, in turn, can spawn new child chains, the process can go on. Therefore, the plasma structure constitute a hierarchy of blockchains, as shown below:
Plasma Blockchain Structure
How does Plasma Works?
Plasma can greatly increase processing speed and throughput on the Ethereum blockchain because it allows off-chain transactions, similar to the payment channels of the Lightning network and other off-chain technologies. All the off-chain techniques take operations away from the main Ethereum blockchain.
State Channels
The concept of Plasma was derived from State Channels but improved on the latter. State channel works by creating an off-chain communication channel (a.k.a state channel )where transactions are not sent to the smart contract on the main chain, instead, they are sent through the Internet without touching the main blockchain. It is only after all the transactions have been completed (for example, a crypto game has finished) that the final state is sent to the smart contract on the main chain, closing the channel in the process. The smart contract will check the legitimacy of the transactions and release the asset (such as some ETH or a prize) to the recipient.
The state channel technique can improve scalability because it can reduce the number of transactions on the main blockchain. For example, a crypto chess game played between two players may involve hundreds of moves, which means hundreds of transactions will be executed on the Ethereum blockchain. However, if we use the state channel, we need to execute only 3 transactions that include registration of the players to initiate the game, submission of the final state to the blockchain and closing the channel.
Steps in Implementing Plasma
Plasma works in a similar way but with a different approach. Instead of creating the channels, it creates the child blockchains, as illustrated earlier. Smart contracts are created on the main Ethereum blockchain(The root chain) and they define the rules in the child blockchains. In other words, the smart contract serves as the root of the child blockchains. The child blockchains can employ their own consensus algorithm, such as proof of stake. The blocks validator will submit the state of the child chain to the Root Chain smart contract periodically. The smart contract will register the state of each Child Chain in the form of block hashes of the Child Chain.
We can illustrate how Plasma works by examining a crypto game such as crytant crab or cryptokitties. The smart contract on the main chain will set the rules of the game, then deploy the actual game application smart contracts on the child-chain, which contains all of the game logic and rules. The game assets such as characters or collectibles are created on the Ethereum main chain and then transferred onto the child-chain using the plasma root. When the players play the games, all the executions are confined to the child chain, without interacting with the root chain.
Plasma Exits
Plasma Exits is a security mechanism behind Plasma that allows users in a Plasma Chain to stop participating in the chain, and move their funds or assets back to the root chain. When a user wishes to exit a particular child chain, he or she needs to submit an exit application. The application is not immediately approved because a proof is required. This waiting period is called the challenge period, which means anyone can challenge the user’s claim by submitting a fraud proof. If the challenge is not valid or there is no challenge, the application will be approved and the user can exit and collect back his assets or funds.
Plasma is still evolving and now the Plasma team has come out with the improved version of Plasma known as Plasma cash. We shall discuss this new version in coming articles.
The meetup was at HelloGold office , KL on Friday 23, Nov.
Speakers:
Petar Tsankov-Chief Scientist/co-founder of ChainSecurity AG & Senior Researcher at the ICE center. ETH Zurich.
Andras Kristof- Founder and Advisor of Akomba Labs
Lai Ying Tong- Researcher at Ethereum Foundation
Ken Chan
The session began with Ken Chan introducing the audience about Zero-Knowledge Proofs. I was sure many developers among the audience understand what it is but the concept sounds strange to me. Fortunately, Ken was good in demonstrating the concept by using the scenario of the American presidential election involving Trump and Clinton as well as a “live demo” with Harith of HelloGold as the co-actor.
Apparently, the Zero-knowledge proof method, or more exactly zk_SNARKS, is a consensus protocol used by Zcash to validate its shielded transactions that are fully encrypted on its blockchain. According to Zcash(https://z.cash/technology/zksnarks/), the acronym zk-SNARK stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” and refers to a proof construction where one can prove possession of certain information, e.g. a secret key, without revealing that information, and without any interaction between the prover and the verifier.
Zcash further pointed out that “Zero-knowledge” proofs allow one party (the prover) to prove to another (the verifier) that a statement is true, without revealing any information beyond the validity of the statement itself. For example, given the hash of a random number, the prover could convince the verifier that there indeed exists a number with this hash value, without revealing what it is.
Ken illustrated the process of Succinct and Non-interactive using a diagram, where the prover begins by generating a proof string and then the verifier needs to verify the proof string, as shown below:
The above process is actually more complex than illustrated in the diagram. According to Zcash, zk-SNARKs work by first turning what you want to prove into an equivalent form about knowing a solution to an algebraic equation, as follows:
Here is an example of what an arithmetic circuit looks like for computing the expression (a+b)*(b*c) :
Diagram Adapted from Zcash
The output is then verified by the verifier. However, Ken pointed out that the process might be compromised by some malicious codes which he called toxic waste that produce false proofs. Ken concluded with the following points:
Why ZK SNARKs?
Strong cryptography research by Zcash team
Math-based- not coin joining
Short proofs
Why not ZK SNARKS?
Trusted setup for every contract
No transparency for counterfeiting
Computationally expensive
Next, Dr.Petar from ChainSecurity discussed the importance of security audit. His topic was “How Not to get Hacked”. ChainSecurity is a smart contract auditing platform. They can identify security vulnerabilities and certify the functional correctness of smart contracts and blockchain projects.
ChainSecuity has developed an Audit platform that can perform Automated Security Check on smart contracts. This platform can test and audit both Ethereum smart contracts (Security Scanner)and the Hyperledger Fabric chaincode(Chaincode Scanner).
According to Dr.Petar, more USD$1 billion have been stolen this year due to crypto hacks. He stressed that writing secure smart contracts is difficult. Developers might fail to see bugs and security flaws, therefore we need to audit the smart contracts. However, currently, most audits are done manually and tend to miss many issues. Furthermore, in the post-development stage, most anomalies are invisible.
To work around the aforementioned issues, ChainSecurity has developed some AI-based automated tools to help in every stage of smart contract lifeline. At the developmental stage, the automated tools will assist in certifying the correctness of the code. At code audit stage, the machine-checked audit will generate the audit report by committing the smart contract onto the Audit platform which runs security auditing using the security scanner, the symbolic verifier and the AI-based Tester. Finally, in the post development stage, there are monitoring tools to help track the smart contract health.
More information on security audit can be found on ChainSecurity website.
The final topic was scaling presented by Andras Kristof and Lai Ying Tong. This is a topic where all Ethereum enthusiasts are concerned about. According to the speakers, the solution is to develop a two-layer architecture. Layer 1 is called serenity which comprises sharding, casper, random beacon, and p2p networking. Layer 2 comprises payment channels, state channels, sidechains, and plasma. The solution also comprises succinct proofs using snarks and starks. Furthermore, there are more integrations that include swarm, light clients and client optimizations.
In more details, the layer 1(serenity) structure includes the Main Chain(provides staking and PoW), the Beacon Chain((provides random number and PoS), the Shard Chain(provides data) and VM(provides state execution result).
For the payment channels, there are two channels, the Open Channel and the Close Channel. The transactions include blockchain transactions and Off-chain payments. Besides that, Lai also spoke on payment channels on the lightning network. The layer2 solutions are to move state-modifying operations off-chain, which include payment channels and state channels.
Besides that, Lai also covered topics on sidechains, plasma mvp, morevp, swarm, light clients and more. These are heavy topics and I shall discuss them in future articles.
I am trying to summarize a bit of the Blockchain and Cryptocurrency conference 2018 (from 13th to 15th Nov 2018) but it is far from comprehensive as I missed out the first day programmes. Besides that, I couldn’t capture all the mind-boggling stuff delivered by the elite speakers, all of them are crypto experts! I am sure all the participants benefited immensely in one way or another unless they slept through the sessions.
The conference was co-organized by Twinintel, QF4 Tech Asia and Blueshare. The venue was at the impressive five-star Sheraton Imperial Hotel located at Jalan Sultan Ismail, Kuala Lumpur. The event was very well organized and the speakers’ line-up is simply overwhelming, kudos to the organizers!
The topics were very comprehensive and catered for everyone needs, be them crypto investors, tech-savvy nerds, govt officials, regulators(maybe hiding among us), academicians, and students etc. I would say there were not much marketing hypes about ICO, mostly educational. The topics covered ICO, ISTO, Crypto analytics, Blockchain training, Blockchain standards, Blockchain smart cities , fundamentals and more.
I was particularly impressed by the cool topic “Predicting Cryptocurrency Exchange Rate with AI and social media” delivered by Dr.Tim Frey. I like forecasting the future as it is my personal interest , that was why I watched all the back to future and time machine movies. I learned how Dr.Tim used Twitter’ tweets (or rather gossips) as the data for his forecasting model, which gives an impressive level of 70%-90% accuracy. Maybe One day we can develop a forecasting model that can deliver 99% accuracy. I believe by using AI machine learning we can achieve that goal. I managed to catch up with Dr.Tim at tea time to get more insights from him. According to him, it seemed 90% of the audience couldn’t grasp the concepts, I am not too sure. I myself don’t understand much too. For example, I don’t know what the heck is Kappa Architecture, I am sure our computer science experts can understand better.
Dr.Sindhu illustration of Crypto banking was an eye-opener. I like the diagram that showed clearly how various components from KYC, front-end app, ledger, and the blockchain’s bank wallet are connected to the bank’s backend. It showcases a banking model for the future crypto transaction. we also learned about the Microsoft, Ethereum and R3 11 banks experiment on simulation an exchange of value on the blockchain. The banks involved were HSBC, Credit Suisse, Barclays, Wells Fargo and more. Very useful for a case study. In addition, he also highlighted the advantages of using Blockchain in the banking industry:
Transparency
Less Labour intensive
Disintermediation
Tamper-proof
Nearly instantaneous
However, there are also some key challenges , as follows:
Privacy
Integration
Threat of Rivalry
Energy Consumption
I couldn’t remember who spoke on steps in launching an ICO but the points given were super good. According to him, the steps in doing an ICO are as follows:
Decide if an ICO is suitable for your business
Adviser reach out and on-boarding
Get legal opinion
Create a light paper/whitepaper/deck for your ICO
Private sale or an angel investment to develop the MVP
Create the product
Create a token
Create a community and buzz
Getting your token out on an exchange
He further showed us the shocking statistics that 81% of the ICO projects were found to be a scam scheme. Out of the genuine ICO projects, 6% failed, another 5% gone dead and only a meagre 8% proceed to trade. Therefore the ICO projects are not as rosy as what people claim.
Another speaker spoke on potential blockchain applications. He subdivided the potential applications into four areas, smart contracts, digital currency, securities and record keeping.
The speaker from Cryptology gave advice for those who intend to start an ICO project. First of all, he reminded that blockchain is not a get rich quick scheme. It is about the distribution of trust. Secondly, do not just explore blockchain technology just because it is hot or trendy. Think in terms of how the product or services can benefit from it. Finally, bear in mind that the most successful companies are those who can accept and adapt to constant changes.
Miss Daphne Chong, the CTO from Logistics Worldwide Express and a director of Woman Who Code KL explained how blockchain could disrupts the supply chain and logistics industry. She emphasized on the advantages of implementing blockchain in supply chain and logistics in terms of
Efficiency-less paperwork, elimination of the intermediaries
Transparency-price, ownership, location
Inventory tracking, quality control
Disputes settlement, reduction in cost of regulations and compliance
Last but not least, Mr. Fattah, the chairman of Malaysia’s National Standards Committee on Blockchain and Distributed Ledger Technologies told the audience about the development of Blockchain and DLT standards in Malaysia. He spearheaded the formation of the national committee and played a key role in putting Malaysia on the international scene. You can follow his blog https://fattahyatim.wordpress.com/ to learn more about the subject.
This is all about the conference that I can recollect, I welcome your valuable inputs if I have missed out anything important.
