Due to the Covid-19 pandemic, working remotely from home has become the norm for most people across the globe. No longer commuting to offices, instead, workers are set up in home offices, dining rooms or wherever they can put a laptop. However, to support this transition it’s likely there will need to be a change in the technology surrounding the workplace.
David Dorr has thoughts on this, and is Co-Founder of Coro Global Inc a fintech company creating a new financial payment system where gold can be used in everyday transactions as easily as fiat currencies by harnessing cutting edge DLT technology.
Here David discusses his views on why the remote revolution needs distributed ledger technology.
The shift to remote work is here to stay. No longer a mere necessity, the majority of employees will want (and expect) their companies to let them work from home more than before the pandemic. However, while remote work at scale will be a game-changer, business leaders have yet to fully recognise that the remote revolution will need an entire technological ecosystem to support workforces, payments, and data protection.
The workplace now has a new set of demands that requires a potentially disruptive technological leap. Distributed Ledger Technology (DLT) has the potential to be the technological backbone for the remote work scenario and in particular its financial system. For a remote work scenario at scale, antiquated methods of sending and receiving payments and data simply won’t work. DLT is a digital system for recording static and dynamic asset transactions. Unlike other databases, DLT has no central store, so transactions and their details are stored in multiple places at one time. Distributed ledgers are made up of nodes that process and verify each transaction item, meaning a consensus is required to approve the veracity of information; for example, when moving ownership of an asset like money. One type of DLT is blockchain – made famous because it’s used by the cryptocurrency Bitcoin – but several other types exist.
As the world experiences a shift to remote work, DLT represents a secure, transparent, flexible, and reactive way to pay employees, protect data, and support workforces globally. It is enabling a huge new market for fintech innovators and startups to generate new software solutions. Here’s why the remote revolution needs DLT.
Facilitating the transition to borderless payments
Remote workforces will lead to an increase in international hires and could boost business’ capacity to penetrate foreign markets. However, the success of this expansion will depend heavily on international salary payments being made efficiently.
Companies can use DLT-based apps, payment platforms or interfaces like LBank, GFT, and Cardona to send salaries to overseas workers faster than via traditional banks (in minutes, as opposed to days), and with lower fees. This is because DLT’s distributed framework makes transactions extremely fast. Hedera Hashgraph – a type of DLT currently being used by several fintech companies – can carry out up to 500,000 transactions per second, versus Visa’s average of 25,000 a second.
Underbanked populations also pose an obstacle for remote hiring, as they have less access to the international financial system. However, fintech solutions using DLT allow employees to access payments without needing a bank account. Using their phone number or ID number, employees are given a unique digital wallet – a place to store digital assets that have interacted with DLT. The DLT then connects with an app or interface where employees can receive and move funds.
Considering two-thirds of adults globally own a mobile phone, phone-based payment networks will dramatically boost financial inclusion and business opportunities in countries with largely underbanked populations.
Accounts at regulated financial institutions supported by DLT are a safer place for remote employees to save money. Especially in countries with unstable economies and high-risk banking, DLT can reduce the risk of users losing money because of reckless banking policies. Likewise, because payments are managed solely through a phone and digital wallet, people in cash-driven countries can withdraw money from ATMs without having a formal bank account.
Companies embracing remote work will also have to consider how to fairly recalibrate salaries based on where employees are based. Facebook has already stated that employees who move location will have to declare it and “may have their compensation adjusted based on their new location.” The company will confirm where employees are based using its own apps and by tracking IP addresses.
DLT can support these sorts of processes with “smart contracts” that allow employers to define rules around remote work. As explained by DLT expert and Product Owner at Talos, Dave Mejia, smart contracts (also known as chain code) contain conditions defined by the people who created the contract – in this case, the employers. For example, employers could set the condition that employees in India are only paid if their VPN access comes from an Indian location – this is programmed into the code and upon confirmation, employees are automatically sent payment.
Working hours, how people are paid, and when people are paid are all likely to become more fluid with remote teams. Companies will have to allow for more flexible work policies, including less rigid payment routines. Already, more than half of Millennials and Gen Xs say they would accept a non-traditional method of payment from their employer. To support this flexibility, though, managers and HR teams will have a higher workload juggling different contractual agreements, employee output, and preferred modes of payments.
With DLT-powered smart contracts, personalised, pre-agreed conditions can be programmed into work-pay cycles. As long as work is completed and submitted through a specified channel like a project management tool or in-house company software, staff receive their pay. The way automated payments are all logged on DLT eliminates the possibility of incorrect or double payments.
DLT allows parties to agree on the code and rules remotely, without having to complete manual triggers to send salaries. That means HR teams wouldn’t have to spend hours on long, tedious administrative tasks, while legal teams would gain greater transparency and auditability of company finances. This kind of preset payment system also allows employers to take a more “hands-off” management approach.
Dave Mejia adds that another perk is that large DLT types aren’t limited to specific technologies – they’re hardware neutral and can integrate with small, inexpensive tech. That means DLT can operate on low-cost tools and is, therefore, cheaper than traditional databases. In the financial industry, estimates suggest that DLT could save $15-20 billion per year.
As remote on scale becomes the norm, and enterprises look to further cut costs and improve efficiency, we are also likely to see a move towards sending and receiving payments via digital currencies. As we advance further into a global recession of unprecedented scale, and inflation rates increase in the US and the rest of the world, global enterprises will likely look to using units of value which are more stable than USD or any other fiat currencies.
Enhancing trust and security
Before Covid-19, in-office employees who weren’t paid, or were paid the wrong amount, could walk to HR departments, discuss the issue, and reach a resolution. Similarly, employees with concerns over their device’s security could speak with IT teams down the hall. But with remote setups, these solutions aren’t as readily available, which risks undermining employee trust as well as digital security.
For employees who fear not being paid on time (or at all), and companies who fear paying for work that they never receive, DLT software can track assignments, facilitate payments, and verify contracts without the need for third-party involvement. This technology automates and removes friction in transactions, so there is less room for forgotten, incorrect or undue payments.
DLT can also be used to strengthen cybersecurity among remote employees who are using both personal and work-issued devices. Fraud, phishing, and account takeovers are all real threats that cost companies billions every year. As more people opt to work remotely, there is a greater need to protect digital transactions.
DLT is more resilient than centralised databases due to its distributed nature – meaning there is no single point of entry possible. If a node goes down due to harmful malware, the network continues to function through the other nodes. A minimum of 33% of network members have to be compromised for the DLT and the information stored on it to be affected. Hashgraph is considered to be one of the most secure DLTs because no single or small group of nodes can prevent a network from reaching consensus, nor can they change the consensus once it has been reached. Unlike other DLTs, Hashgraph is more democratic when it comes to deciding which transactions succeed.
The money that businesses are saving on office space and even salaries by going remote will be well spent on building a technological infrastructure equipped to support this deep reform. As innovative software developers are no doubt learning, DLT will prove to be integral in automating and personalising processes, all the while ensuring efficiency and security. But one of the biggest advantages of DLT is its transparency, which will no doubt also contribute to fairer businesses.
Distributed Ledger Technology is not only necessary to facilitate the remote revolution, but also to ensure that the remote revolution is a better and more sustainable shift. As the technology becomes more familiar, employers and employees alike are set to utilise it for a number of daily activities, thus solidifying the place of DLT in the new normal.