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Blockchain, is it a future tool at the service of the working world?

Find out in our analysis

While blockchain technology (or blockchain) has been especially well-known and recognised in French financial law since the publication of Ordinance N° 2016-520 on 28 April 2016 which is related to cash vouchers, and is defined as “a shared electronic recording device” (DEEP) in the Monetary and Financial Code, it seems to have difficulties in establishing itself within the French working world.

Such an observation may seem surprising as blockchain offers so many possibilities, whether it be for employees, companies or management.

In order to understand these difficulties, it is first necessary to define blockchain technology while proposing, as a result, the hypotheses allowing an adapted use in the working world.

What is blockchain technology?

Just like the Internet a few years ago, blockchain technology is designed to revolutionise the way information is exchanged. This system allows the storage and safe exchange of information without intervention of a central control body.

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Blockchain

Safe and transparent storage and exchange of data, without intervention of a control body.

In fact, blockchain is a ledger, formed by a set of information registered in the form of blocks, linked by a digital signature which creates a chain of blocks previously validated by its users to ensure their authenticity.

One of the main strengths of blockchain lies in the fact that all stored data is time-stamped in order to guarantee its immutability as well as the integrity of the registry. Besides that, since this information is shared among the community members who use this registry, only altering more than 50% of the members’ data would allow for a change to be effective. Therefore, it is not possible to modify or delete blocks (or, more specifically, data) without altering the chain in its entirety.

The blockchain storage function

It is therefore easy to understand that blockchain technology enables the safe storage of information which will be validated and can no longer be removed from the chain in order to avoid any risk of fraud.

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Blockchain

The stored information is verified and can't be removed, preventing all risks of fraud.

This information can then be viewed in full transparency by the blockchain users according to their accessibility. In fact, we can distinguish between private protocols where access is reserved for a specific group of people, and open blockchains where the conditions of access are defined by the protocol. Thus, while it is true that initially a blockchain is open to everyone, it is also quite possible to create a semi-private or private blockchain where only people who have been invited will be able to join in.

The choice of accessibility will therefore depend on the stakeholders targeted by the blockchain and the data to be shared.

Thus, as an example of the system open to the public, it is possible to imagine the blockchain as a registry in which the CVs of workers are found, with their consent, whose information (diploma, professional experience, etc.) will be validated and updated by the relevant bodies (state, previous employers, etc.). 1 1 It should be noted that blockchain is already in use in Malta to certify all the country’s diplomas. In addition, diplomas are also stored on blockchain which allows their owners to access them at any time (where there is a device with internet connection), and this is possible even in the event of the closure of the school that issued them or physical loss thereof.

The result would be that companies, with access to CVs that are fraud resistant, have more possibilities to find a candidate whose profile best matches with the proposed position, optimising the search for the ideal profile. 

On the contrary, the implementation of a private blockchain would be done mainly for companies that do not, quite rightly, want the information on the blockchain to be accessed by third parties. Although such a system is very similar to a company's intranet or any other closed network, the fact remains that it has certain advantages regarding the principle of time-stamping attached to the blocks of the chain. So, it is easy to imagine a new employee information system that would go through blockchain, allowing exchanged data to be time-stamped, providing proof of the existing information, its date of transmission and its content.

It should be noted, however, that this storage system faces two main difficulties: 1) compliance with the requirements of the European regulation 910/2014 (also called « eIDAS ») to constitute a qualified time-stamping system 2 The European eIDAS regulation has created two types of time-stamping: a simple one and a qualified one. The first one verfies the existence of the data at a certain time while the second aims to exclude any possibility of undetectable modification of the data that has been time-stamped, subject to compliance of several conditions. and 2) compliance with a time-limited retention of data, defined by the GDPR.

  1. According to European eIDAS regulation, in order for blockchain to be a qualified time-stamping system, ensuring the integrity of data, it is important that the data contained therein is subject to electronic signature and linked to a date and time, according to the Coordinated Universal Time. 3 Article 42 of the eIDAS regulation However, blockchain technology alone doesn´t offer the possibility of fulfilling these conditions. If the blockchain technology could link data to such a time system, its accuracy and reliability would not, for the time being, be enough to fulfill the requirements of European eIDAS Regulation to ensure the integrity of the data, which are listed there. 
  2. With regard to the GDPR, it is required, on the one hand, that the storage of data is done for a limited period, to then be deleted, and on the other hand, that the data subject has a right to the deletion of their data (right to be forgotten). However, apparently, it is difficult to reconcile these requirements with the blockchain technology since the blockchain has as its first principle the immutability of the registered information within the blocks and, therefore, the impossibility of deleting it. In this regard, the CNL could consider that cutting off the accessibility of the data could be a satisfactory solution to overcome the flaw that prevents the deletion of data.

The alliance of blockchain and smart contract 

In addition to the “storage” function, this technology can take on a new whole dimension if coupled to a smart contract. A smart contract is made up of a set of algorithms which is intended to run automatically, if the previously defined conditions are met.

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Smart Contract

A set of algorithms which is intended to run automatically if the previously defined conditions are met.

So, by means of such of a process, it would be possible to automate procedures which initially required the intervention of an employee.

In this way, we could think about automatic payments once requirements are met. This may be the case for variable compensation when the achievement of objectives, registered within the blockchain, automatically result in the payment of the bonus due to the employee. 

The same applies to the payment of an employee´s severance pay on a fixed-term contract (bonus for insecurity of employment, compensatory leave) which would be automatic at the end of the contract, also registered within blockchain.

It should be noted that even if it is possible to provide smart contracts within a blockchain, it is still true that current legal provisions don´t always offer them the legal status of an electronic contract. Indeed, according to the provisions related to contracts concluded by electronic means (article 1125 and following the Civil Code), it is particularly necessary be able to identify its signatories.

Nowadays, even with at least one identification device associated to the registry, the blockchain does not allow such identification and limits the use of the smart contracts to the simple realisation of clauses from a contract concluded outside the blockchain.

Difficulties associated with the implementation of blockchain technology

The blockchain technology could enable the optimisation of information exchanges among its different users, as well as the automation of certain tasks, however few companies have chosen to use this technology.

One can easily assume that one of the reasons for this low usage lies in the fact that the blockchain can still appear abstract, both in terms of its possibilities and in its practical terms of use.

In addition, the lack of a universal protocol also hinders the use of such technology and limits it to a reduced number of companies (startups, companies with a dedicated service and specialized companies).

Thus, to allow a more widespread use within the working world, blockchain technology must be demystified in order to make full use of the possibilities it can offer.

 

Article published in Les Echos Executives on June 17, 2020.