This is article 8 of 10 forming the eighth part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both Blockchain and Cryptocurrencies could have on the future of Payroll & HR.
To view the earlier article in the series – click here:
- Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR
- Article 2: Will companies start to payroll its employees in Cryptocurrency?
- Article 3: How will Blockchain affect HR Recruitment Processes?
- Article 4: What are smart contracts and how will they affect payroll and HR?
- Article 5: What benefits could Blockchain bring to the payroll industry
- Article 6: Are Blockchain Payroll Companies the Payroll Future?
- Article 7: How t build a Blockchain payroll system
Also, check out The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts
When should businesses start planning for Blockchain?
We will no doubt hear much more about blockchain in the coming months and years.
Institutions and governments appear to be more interested in Distributed Ledger Technology (DLT) than blockchain, although the terms are beginning to be used interchangeably.
In Parliament on 6 June 2018 Prime Minister Theresa May revealed that several government departments were working on proofs of concept for how DLT could be integrated into the civil service (link: https://www.theyworkforyou.com/debates/?id=2018-06-06b.297.5&s=distributed+ledger+technology#g300.2]
Sentiment appears to be shifting towards DLT for banks, too.
For example, in a 21 June speech at Mansion House in London, the head of the Bank of England Mark Carney told attendees that the English central bank would be one of the world’s first institutions to build DLT into their payment systems (https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/new-economy-new-finance-new-bank-speech-by-mark-carney.pdf).
Mark Carney said:
“The Bank of England is in the midst of an ambitious rebuild of the Real Time Gross Settlement (RTGS) system – the backbone of every payment in the UK. There are three ways the Bank’s new RTGS will provide a platform for private innovation. Each will make it easier for people to plug in and pay, even across borders. First, RTGS is being re-built so that new private payment systems, including those using distributed ledger, can simply plug into our system.”
Current research on DLT and blockchain in HR and payroll tends to claim that these new systems are faster than current applications, and transaction fees are much lower.
We should therefore ask:
- How much lower?
- How much have businesses who have adopted blockchain in their HR and payroll saved, on average?
- When will blockchain adoption be reflected in savings on a company’s balance sheet?
- When do we move from ‘this is what the technology can do in theory’ to ‘this is what the technology has done in practice’?
Transaction fees tend to increase over time on a blockchain-based system. This is down to the ‘miners fee’, or the amount of time it takes a mining node to verify a correct transaction. Included in this amount is the cost of electricity and bandwidth.
And yet, feedback from business is that DLT is not really suitable for real-time, high frequency payments systems (https://www.longfinance.net/LongFinance/DLTCoursePDF2.pdf).
This is because the cost per DLT transaction is significantly higher than through a centralised database, and the consensus mechanism – requiring all parties to agree on changes to the ledger – slows down the system
As the DLT grows in size – as the audit trail is continuously added to, it creates an ever-increasing ledger which makes computer storage a serious issue, especially for smaller firms who are not ready to splash out on new hard drives every time they want to update their payroll!
What do you think? Please share and comment – I will try to interact with as many as possible!
Future articles in the series will include:
- Risks and costs
- Conclusion – is blockchain and crypto the future?
As always, whether you love payroll or HR, love what you do, work smart and work hard – just be careful not to overdo it!
This article was written by Nick Day, CEO of JGA Recruitment – the leading Payroll, HR & Reward Recruitment Specialists.
Nick Day | CEO
JGA Recruitment Group
Payroll, HR & Reward Specialist Recruiters
Email: [email protected]
Tel: 01727 800 377