Blockchain as a technology of future employment

The feasibility of implementation of blockchain technology in Kazakhstan. The study in field of employment and career history verification potential candidate’s. Advantages of blockchain technology the in exposure of the truth of job applications.

Рубрика Экономика и экономическая теория
Вид статья
Язык английский
Дата добавления 08.12.2016
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Blockchain as a technology of future employment

Yerlen Aitkulov

Faculty of Information Technologies

Abstract

As one of the most developing modern technology, blockchain can really change established understanding about how data can be stored and accessed. Implementation of blockchain technology is going to create the world, where there is no need to employers to check potential candidate's CV: making calls to his previous companies and doing so much extra work. As blockchain is a new technology, especially in Kazakhstan, there wasn't deep research on how blockchain can help useful in field of employment and career history verification. Using such public ledger database, every employer would have an opportunity to search for candidates and know for sure, that his career history is real. In this research, we investigate the feasibility of implementation of blockchain technology in the field of employment in Kazakhstan. After the problems of existing system were identified, the discussion and analysis methods had been used to provide advantages of blockchain technology in career history verification. According to recent study, 67% of job applications and resumes in US contain misrepresentations.

Keywords--blockchain; CV; career; employment; security

Introduction

Problem Statement

Many job applicants and employees provide false education history, credentials, and employment history to appear more qualified. Unfortunately, companies may rely on this false information to provide compensation packages, promotions, and job responsibilities. Offering these benefits to an unqualified individual could waste time and money on training, negatively affect your company productivity, and increase your turnover rate. The best way to prevent these problems is to perform full resume verification, but this process could take a lot of time and money (if it is verified by special organization). Falsifying information on resumes has become so commonplace that numerous websites have sprung up offering tips and guides on how to create fake CVs. Discerning fact from fiction on an applicant's resume can be a problem for managers and business owners. Successful resume verification can identify fraudulent degrees, incorrect employment and graduation dates, inflated salary histories and false job titles--issues that may help you determine a candidate is not the right person. Implementation of blockchain technology is going to create the world, where there is no need to employers to check potential candidate's CV by: making calls to his previous companies and doing so much extra work. As a definition of blockchain states: it is a public distributed database, where information cannot be rogue. So using blockchain technology, there could be a database, which is going to store information about each potential employee's job history.

There are a lot problems in existing systems. First is usage of employment history book, because if you lose it, you have to restore it and it could take a lot of time. The second problem is time, as it takes a lot of time to check potential employee's CV. Also there are vulnerabilities in employee's CV verification, because when employer call to candidate's previous job, he cannot be sure, that he is calling to candidate's previous company. The next problem occurs, because each employer has its own database for potential workers. And finally, poor CV verification results in hiring unsuitable employee.

Importance

CV verification process is not easy process, because by the statistics, 40% of information on a resume is misrepresented [8]. Many employers call CV “false mirror” by the reason of employees. Information in CV is the information that is profitable to the employee, not for an employer. In this case, employer has to validate potential candidate's CV using a lot of methods, including phone calls to companies, prepare test for a candidate, communication with candidate, interviewing and so on. But this process of validation takes a lot time, by the statistics, it takes 3 days on average to check candidate's CV. According to recent study, 67% of job applications and resumes in US contain misrepresentations. In Kazakhstan, situation is worse, because the process of CV verification is not correct and usually verification is made by the interview [8].

The interaction mechanism starts when employee provides his career history information in CV to the system, which is using blockchain technology to store and provide information to each participant of the system. Then employee sends his information to the companies, where he or she worked at, to verify provided information. If the information is not verified by the company, his/her CV will not be valid, so potential employers wouldn't consider this CV, while searching for a candidate. In case, when CV is verified by each involved company, employee's CV become valid and is available to be searched and viewed by the companies, recruitment agencies. Each employee will go through such process of verification to create a valid database of CVs. So, companies and recruitment agencies can start searching potential candidates for a job and they can be confident that candidate's CV is valid. blockchain kazakhstan employment career

As our database will consist of some personal data, which is distributed and have to be available to companies and recruitment agencies, the laws of Republic of Kazakhstan should be observed. By the “law of personal data and their security” of Kazakhstan from 24.11.2015, personal data is divided to public available data and data of limited access. As in our system, we will use personal data, which is public available, we have to be follows some rules of its usage [9]. First of all, when an employee provides his career history and personal information to the system, by the laws of Kazakhstan, he must be informed, that this data will be available to that participants of the system, to which he will give permission. Also employee should be informed, that system is using distributed blockchain database, so that each participant of the system, can have whole copy of database on his device, but will not have an access to the information that restricted by the user. As each participant of the system will have his public key, by which they can give a permission to view his information. By this, we won't break the law of personal data and their security of Kazakhstan Republic.

Research questions

After analyzing current situation in the area of CV verification and job appliance, some research questions were derived.

Firstly, we should ask, how can blockchain improve CV verification process? And if it can, so how can we measure this improvement? And finally, will blockchain eliminate a possibility of fake CV occurrence.

From these research questions, we can define our project objectives. Main objectives of our research are to improve CV verification process, measure in qualitative and quantitative terms the advantages of blockchain implementation and block an opportunity of fake CV creation.

1. Blockchain tecnhology

Blockchain Technology

Blockchain is some kind of distributed database, where all transactions are stored and processed by each participant of the blockchain. This database can be considered as a public ledger and represents a database without central authority. When users put information into blockchain database, it will never be erased. This database is observed by each participant, so they can view all the changes that have been made to the blocks. Blockchain uses hashing to provide security mechanisms to the system [7]. Many job applicants and employees provide false education history, credentials, and employment history to appear more qualified. Unfortunately, companies may rely on this false information to provide compensation packages, promotions, and job responsibilities. Offering these benefits to an unqualified individual could waste time and money on training, negatively affect your company productivity, and increase your turnover rate. The best way to prevent these problems is to perform full resume verification, but this process could take a lot of time and money (if it is verified by special organization). Falsifying information on resumes has become so commonplace that numerous websites have sprung up offering tips and guides on how to create fake CVs [6]. Discerning fact from fiction on an applicant's resume can be a problem for managers and business owners. Successful resume verification can identify fraudulent degrees, incorrect employment and graduation dates, inflated salary histories and false job titles--issues that may help you determine a candidate is not the right person. Goal of this research is to make a research on blockchain usage in the field of employment [5].

Blockchain Usage

Almost a year after first releasing MultiChain, we've learned a huge amount about how blockchains, in a private and non-crypto currency sense, can and cannot be applied to real-world problems. The first idea that we (and many others) started with, appears to be wrong. This idea, inspired by bitcoin directly, was that private blockchains (or "shared ledgers") could be used to directly settle the majority of payment and exchange transactions in the finance sector, using on-chain tokens to represent cash, stocks, bonds and more. This is perfectly workable on a technical level, but the problem is confidentiality. If multiple institutions are using a shared ledger, then every institution sees every transaction on that ledger, even if they don't immediately know the real-world identities of the parties involved. This turns out to be a huge issue, both in terms of regulation and the commercial realities of inter-bank competition. While various strategies are available or in-development for mitigating this problem, none can match the simplicity and efficiency of a centralized database managed by a trusted intermediary, which maintains full control over who can see what. For now, at least, it seems that large financial institutions prefer to keep most transactions hidden in these intermediary databases, despite the costs involved [10]. I base this conclusion not only on our own experience, but also on the direction taken by several prominent startups whose initial goal was to develop shared ledgers for banks. For example, both R3CEV and Digital Asset are now working on "contract description languages”, in Corda and DAML respectively [10].

Let's start with the class of blockchain applications that will be most familiar, in which a group of entities wishes to set up a financial system. Within this system, one or more scarce assets are transacted and exchanged between those entities.

In order for any asset to remain scarce, two related problems must be solved. First, we must ensure that the same unit of the asset cannot be sent to more than one place (a "double spend"). Second, it must be impossible for anyone to create new units of the asset on a whim ("forgery"). Any entity which could do either of these things could steal unlimited value from the system. A common solution to these problems is physical tokens, such as metal coins or securely printed paper. These tokens trivially solve the problem of double spending, because the rules of physics (literally) prevent one token from being in two places at the same time. The problem of forgery is solved by making the token extremely difficult to manufacture. Still, physical tokens suffer from several shortcomings which can render them impractical: as pure bearer assets, physical tokens can be stolen with no recourse, it is hard and expensive to create physical tokens that can't be forged, they are slow and costly to move in large numbers or over distances.

These shortcomings can be avoided by leaving physical tokens behind, and redefining asset ownership in terms of a ledger managed by a trusted intermediary. In the past, these ledgers were based on paper records, and today they tend to run on regular databases. Either way, the intermediary enacts a transfer of ownership by modifying the ledger's content, in response to an authenticated request. Unlike settlement with physical tokens, questionable transactions can quickly and easily be reversed.

By putting so much power in one place, we create a significant security challenge, in both technical and human terms. If someone external can hack into the database, they can change the ledger at will, stealing funds or destroying its contents completely. Even worse, someone on the inside could corrupt the ledger, and this kind of attack is hard to detect or prove. As a result, wherever we have a centralized ledger, we must invest significant time and money in mechanisms to maintain that ledger's integrity. And in many cases, we require ongoing verification using batch-based reconciliation between the central ledger and those of each of the transacting parties. Enter the blockchain (or "shared ledger"). This provides the benefits of ledgers without suffering from the problem of concentration. Instead, each entity runs a “node” holding a copy of the ledger and maintains full control over its own assets, which are protected by private keys. Transactions propagate between nodes in a peer-to-peer fashion, with the blockchain ensuring that consensus is maintained. This architecture leaves no central attack point through which a hacker or insider could corrupt the ledger's contents. As a result, a digital financial system can be deployed more quickly and cheaply, with the added benefit of automatic reconciliation in real time.

Here's a second class of use case that we repeatedly hear from MultiChain's users: tracking the origin and movement of high-value items across a supply chain, such as luxury goods, pharmaceuticals, cosmetics and electronics.

In supply chains, stretching across time and distance, all of these items suffer from counterfeiting and theft.The problem can be addressed using blockchains in the following way: when the high-value item is created, a corresponding digital token is issued by a trusted entity, which acts to authenticate its point of origin. Then, every time the physical item changes hands, the digital token is moved in parallel, so that the real-world chain of custody is precisely mirrored by a chain of transactions on the blockchain. If you like, the token is acting as a virtual "certificate of authenticity", which is far harder to steal or forge than a piece of paper. Upon receiving the digital token, the final recipient of the physical item, whether a bank, distributor, retailer or customer, can verify the chain of custody all the way back to the point of origin. Indeed, in the case of documentation such as bills of lading, we can do away with the physical item altogether.

While all of this makes sense, the astute reader will notice that a regular database, managed (say) by an item's manufacturer, can accomplish the same task. This database would store a record of the current owner of each item, accepting signed transactions representing each change of ownership, and respond to incoming requests regarding the current state of play.

So why use a blockchain instead? The answer is that, for this type of application, there's a benefit to distributed trust.

No matter where a centralized database is held, there will be people in that place who have the ability (and can be bribed) to corrupt its contents, marking forged or stolen items as legitimate. By contrast, if provenance is tracked on a blockchain belonging collectively to a supply chain's participants, no individual entity or small group of entities can corrupt the chain of custody, and end users can have more confidence in the answers they receive.

As a bonus, different tokens (say for some goods and the corresponding bill of lading) can be safely and directly exchanged, with a two-way swap guaranteed at the lowest blockchain level.

What about the problem of confidentiality? The suitability of blockchains for supply chain provenance is a happy result of this application's simple pattern of transactions. In contrast to financial marketplaces, most tokens move in a single direction, from origin to endpoint, without being repeatedly traded back-and-forth between the blockchain's participants.

If competitors rarely transact with each other (e.g., toy manufacturer to toy manufacturer, or retailer to retailer), they cannot learn each others' blockchain "addresses" and connect those to real-world identities.

Furthermore, the activity can be easily partitioned into multiple ledgers, each representing a different order or type of good.

Both of the previous use cases are based on tokenized assets, i.e. on-chain representations of an item of value transferred between participants.

However, there is a second group of blockchain use cases that is not related to assets. Instead, the blockchain acts as a mechanism for collectively recording and notarizing any type of data, the meaning of which can be financial or otherwise.

One such example is an audit trail of critical communications between two or more organizations, say in the healthcare or legal sectors. No individual organization in the group can be trusted with maintaining this archive of records, because falsified or deleted information would significantly damage the others. Nonetheless, it is vital that all agree on the archive's contents in order to prevent disputes.

To solve this problem, we need a shared database into which all of the records are written, with each record accompanied by a timestamp and proof of origin. The standard solution would be to create a trusted intermediary, whose role is to collect and store the records centrally.

But blockchains offer a different approach. They give the organizations a way to jointly manage this archive, while preventing individual participants (or small groups thereof) from corrupting it.

One of the most enlightening conversations I've had in the past two years was with Michael Mainelli of Z/Yen. For 20 years, his company has been building systems in which multiple entities collectively manage a shared digital audit trail, using time stamping, digital signatures and a round-robin consensus scheme.

As he explained the technical details of these systems, it became clear that they are permissioned blockchains in every respect. In other words, there is nothing new about using a blockchain for inter organizational recordkeeping - it's just that the world has finally become aware of the possibility.

Literature Review

There's a lot of hype in the air about blockchain technology at the moment. A recent World Economic Forum report predicts that by 2025 10% of GDP will be stored on blockchains or blockchain related technology [1]. This means it's probably something which everyone involved in business should take notice of. However, there's still a lack of understanding about what it is, and what it does. We have become used to sharing information through a decentralized online platform (the internet). But when it comes to transferring value - for example money - we are usually forced to fall back on old fashioned, centralized financial establishments such as banks [2]. Even online payment methods which have sprung into existence since the birth of the internet - PayPal being the most obvious example - generally require integration with a bank account or credit card to be useful [2]. Blockchain technology offers the intriguing possibility of eliminating this “middle man”. It does this by filling three important roles - recording transactions, establishing identity and establishing contracts - traditionally carried out by the financial services sector. Worldwide, the financial services market is the largest sector of industry by market capitalization. If blockchain technology can replace just a fraction of that by enabling peer-to-peer transactions in other sectors then it clearly has the potential to create huge efficiencies, suggests Bernard Marr, Forbes magazine. There is a lot of book and researches conducted in the area of potential blockchain technology implementation. As it is written in a “Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World” by Don Tapscott, Alex Tapscott, technology of distributed registry can influence not only development of financial system, it also can help to grow your own business. One of the best books, which describe how blockchain works and can be implemented in real life is “Blockchain: Blueprint for a New Economy” (2015) by Melanie Swan. Chris Skinner in his book “Value Web” (2014) tried to imagine the world of future, where blockchain can be used to make monetary and non-monetary transactions. Most of the books, researches and articles consist of ideas about how to blockchain technology can change the existing world.

Literature review table

Literature

Author

Date

Topic

Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World

Don Tapscott, Alex Tapscott

2016

This book describes scenario of blockchain implementation in daily life.

Blockchain: Blueprint for a New Economy

Melanie Swan

2015

Author writes about decentralized digital registry and describes 3 generation of blockchain (1.0, 2.0, 3.0).

Value Web

Chris Skinner

2016

Chris Skinner talks about next generation of internet cannot work without ValueWeb. ValueWeb is a network, that stores whole information about monetary and non-monetary values.

The Business Blockchain: A Primer on the Promise, Practice and Application of the Next Internet Technology

William Mougayar

2016

His book presents the technology as a "catalyst" for changes. The author describes future that is shaped by the fundamental changes, which are tempted by blockchain technology development, future in which all processes are transferred to blockchain.

The Science of the Blockchain

Roger Wattenhofer

2016

The book presents the basic techniques of building fault-tolerant distributed systems, as well as a variety of protocols and algorithms to perform stable to errors operations. The author gives an overview of several systems, which is using such techniques.

Blockchain Contracts and Cyberlaw

Pavan Duggal

2015

The book describes the concept of "smart" contracts, their nature and potential risks of working with blockchain. There are a number of legal, policy and regulatory issues related to the "smart" contacts.

How blockchain Technology could change the world. Article, Forbs Magazine.

Bernard Marr

May 27, 2016

The advantages of blockchain implementation in real world.

2. Analysis of Potential Use Case

Starting analyzing current business process of CV verification in Kazakhstan, I came to conclusion, that there is no standard or rules that many companies follow. Most of the companies are not pay much attention to this process, but in some cases it can cause them a lot of problems in future. The reason is that company is represented by its employees and HR department of the company should be aware of their personnel and staff. From my own experience, I derived some roles in the area of CV verification and job appliance and have created RACI Matrix.

RACI Matrix

Task/Role

Employer

Recruitment agency

Employee

Provide information about career history

A

I

R

Verify CV information

R

I

C

Search potential employee

R

R

I

The interaction mechanism starts when employee provides his career history information in CV to the system, which is using blockchain technology to store and provide information to each participant of the system (Fig. 1). Then employee sends his information to the companies, where he or she worked at, to verify provided information. If the information is not verified by the company, his/her CV will not be valid, so potential employers wouldn't consider this CV, while searching for a candidate. In case, when CV is verified by each involved company, employee's CV become valid and is available to be searched and viewed by the companies, recruitment agencies. Each employee will go through such process of verification to create a valid database of CVs. So, companies and recruitment agencies can start searching potential candidates for a job and they can be confident that candidate's CV is valid.

Current situation

Let's first assume that there will be blockchain system, which consider 3 types of participants: employee, employer and recruitment agency (Fig.2). The interaction mechanism starts when employee provides his career history information in CV to the system, which is using blockchain technology to store and provide information to each participant of the system. Then the system sends his information to the companies, where he or she worked at, to verify provided information. If the information is not verified by the company, his/her CV will not be valid, so potential employers and recruitments agencies wouldn't consider this CV, while searching for a candidate. In case, when CV is verified by each involved company, employee's CV become valid and is available to be searched and viewed by other participants. Each employee will go through such process of verification to create a valid database of CVs. So, companies and recruitment agencies can start searching potential candidates for a job and they can be confident that candidate's CV is valid.

Conservative Blockchain Solution

In the case of disruptive solution (Fig. 3), we can extend our blockchain solution to create a system, which contains full information about the potential candidate.

It means that, when employer or recruitment agency search for a job candidate, they can get information not only about his/her career history, but also his/her full personal information (like in social networks), which will be verified by government. Implementation of such a disruptive solution would certainly require a long time frame, and providing personal information can be an issue, since with traditional blockchain every legal entity node would have access to other participants' records. This may represent a problem for compliance with the privacy legal framework.

Disruptive Blockchain Solution

Discussion

So, implementation of blockchain technology in this field of business could be important in development of current system of employment. First advantage of the blockchain implementation in employment sphere is that companies now can be sure, that they are hiring appropriate employee and his CV is not falsified. It results in cost saving, because if you hire a person, that cannot do what he or she wrote in CV, then it will cost you additional money. This is because then you have to teach your employee and while he or she is learning, employee cannot earn money for your company. The second benefit is that there will be a huge blockchain system, that will have a distributed database of all CV's on the market, so it will much more easier to find a proper person for your company. The next benefit is time saving. During this research, the analysis has been made to consider how much time it takes for a company to verify CV of potential candidate. The results weren't so good. My practice showed me, that it take about a week to verify candidate's CV. Blockchain implementation will carry responsibility of CV verification to employee, and not for employer and it will take much less time.

References

1. Raval, Siraj (2016). Decentralized Applications: Harnessing Bitcoin's Blockchain Technology. O'Reilly Media, Inc. pp. 1, 2. ISBN 1491924527.

2. The future of blockchain in 8 charts". Raconteur. Raconteur Media. 27 June 2016.

3. Don Tapscott; Alex Tapscott (8 May 2016). "Here's Why Blockchains Will Change the World". Fortune

4. Bhaskar, Nirupama Devi; David LEE Kuo Chuen (2015). "3 - Bitcoin Mining Technology". Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Academic Press. p. 47-51

5. Franco, Pedro (2014). Understanding Bitcoin: Cryptography, Engineering and Economics. John Wiley & Sons. p. 95.

6. Swan, Melanie (2015). Blockchain: Blueprint for a New Economy. O'Reilly Media, Inc. p. 16.

7. Chuen, David Lee Kuo (2015). Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Academic Press. p. 319

8. Employment Screening Services https://esswny.com/index.php/resources/statistics/

9. Law of personal data and their security http://online.zakon.kz/Document/?doc_id=31396226

10. Gideon Greenspan (2017). "Four geniune blockchain use cases" Article on coindesk.com. http://www.coindesk.com/four-genuine-blockchain-use-cases/

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