Blockchains and Recruiting. Transformative Technology or Just a Buzzword?

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Mar 21, 2018

Every so often some new technology comes along that gets the recruiting world buzzing — AI, VR, AR, to name a few. Blockchains are the most recent entrant. With the proliferation of cryptocurrencies like Bitcoin and Ethereum, the underlying technology is becoming a topic of interest. We need new things to talk about. One can only listen to so many discourses on diversity and social media.

What Is a Blockchain?

Wikipedia defines blockchain as “… a continuously growing list of records, called blocks, which are linked and secured using cryptography.” And … “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.” The key words here are “open” and “distributed.” The idea being that data is stored in a secure database replicated on thousands of computers, so that no changes can be made until everyone who maintains the network makes them. Changes are governed by a strict set of rules and include a digital signature for authenticity across the network. This is supposed to create trust in the data because the records created cannot be tampered with. Users of the data know that information included in a blockchain is reliable and immutable.

Bitcoin is the best example of this. The value is determined by transactions on the network and cannot be changed by someone like a central bank.

So blockchain technology can be applied to create tamper-proof versions of resumes and academic credentials. MIT recently started issuing digital diplomas based on the technology. Chronobank has developed a platform for employers to find workers by having secure records of work and for workers to be assured of payment. Appii has built a system for creating resumes and having them verified by employers.

Are Blockchains Reliable?

The concept of a blockchain, as described above, refers to one created and run as a public network, where no single person or entity has control over the network. However, anyone can create a private blockchain, controlled by a few or just one entity. In this case believing that the records are reliable depends on how much trust is placed in the parties that control the blockchain.

Blockchains are also not as secure as some would like to believe. Both Bitcoin and Ethereum have been hacked multiple times. In one case an error in the software led to the creation of 92 billion bitcoins which the network had to roll back, essentially making a lie of the claim that a blockchain record is immutable and trustworthy.

Another problem is that the European Union’s upcoming General Data Protection Regulation, which goes into effect in May 2018, is forcing developers to find a way to delete data from blockchains. The EU law includes provisions that allow people to demand that their personal data is changed or deleted under many circumstances. Blockchain technology is incompatible with EU regulations as currently written. Those may change, but it’s not likely anytime soon.

A Transformative Technology?

A blockchain is essentially a shared database that, while not completely secure, is not easily altered. That concept behind it is sound, and may transform a wide range of industries. Walmart is developing blockchain based systems to ensure food safety, and DeBeers is developing one to verify the authenticity of diamonds and ensure they are ethically sourced. But what is the need in recruiting that would be addressed by using blockchains?

Having a trusted diploma and resume has some value, but it would be an incremental improvement over what is available today. There are plenty of vendors that will verify these at low cost and in little time. When it comes to resumes, the value of having an immutable record is debatable. Outside of titles and dates of employment, a resume is a record of skills and abilities demonstrated by accomplishments and responsibilities held. But skills decay quickly and usually can only be verified by an assessment. Accomplishments often cannot be verified. No employer keeps a detailed record of every employee’s accomplishments, and whatever records are kept of performance are rarely, if ever, shared with others. Those in a position to provide verification may be restricted by their employers or not reachable. And even if some employer was willing to share information, then how would any disputes between a candidate’s version of accomplishments and those of the employer be resolved?

Blockchain-based systems in recruiting may have more to offer where contracts are important, such as between gig workers and employers. A “smart contract” using blockchains can increase efficiency in getting workers paid by eliminating third parties. It can also reduce disputes since one cannot be easily changed.

While not just a buzzword, blockchain technology is not transformative in of itself. It has been compared to TCP/IP — the technology that defines how data is transmitted across the internet. It may become the basis for applications that transform business processes, but it will require large investments and widespread adoption. And the question remains as to what problems will be solved as a result. But just as no one could predict what all would emerge because of the Internet, we may be surprised as to what blockchains do for recruitment.

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