Crypto HR: Three ways the Web3 is redefining work and careers

The internet has transformed business and society by allowing the free, instant and global spread of information. Web3 protocols like Ethereum now enable similar distribution mechanisms for value. This allows for exciting new means of collaboration and challenges the traditional, siloed organizations most of us are employed by.

The impact on established models of work, career and leadership will be profound. Let me share three key trends with the potential to shape future HR practices.

I: New ownership & reward models attract top talent no longer seeking traditional employment

Pioneered by Bitcoin and extended by smart contract platforms, blockchain technology is moving from hype to real-life application at breakneck pace. 

Ingrained in their DNA is decentralization - there is no CEO of Ethereum or Bitcoin and teams working on building and maintaining the protocols are global communities eschewing central leadership. The same applies to the applications built on top of the protocols. Decentralized Finance platforms or market places for digital collectibles are gradually shifting towards autonomous organization models, where team and users merge into a collective of contributors: „See something that’s broken? Fix it. Don’t ask for permission.“

This might sound vaguely familiar from agile work concepts. The key differentiator in a Web3 environment is that bottom-up delivery by anyone on the globe is natively associated with financial incentive. E.g. through tokens representing both financial value and company equity, granting access to fully digital governance processes. The contributor becomes a co-owner with skin in the game. No employment contract needed, no admin nightmares when allocating stock options to that great developer talent located in Almaty, Kazakhstan. In fact, there are no barriers to that Kazakh high potential working ten projects in parallel, owning shares in each and freely shifting focus between them.

II: Future HR customers will be individuals & communities, gradually replacing legacy organizations

HR gurus have been preaching for some time that career as a concept of linear progression in vertical hierarchies is no longer appealing to young, highly qualified individuals. Instead, they yearn for self-fulfillment & purpose. However, everyone needs to make ends meet. And the safest way to ensure that still is climbing the corporate ladder.

Enter Web3 – it brings a whole new toolbox to make the sovereign individual a reality. Take social tokens as an example, with pioneers already marketing themselves to investors through issuing personalized crypto currencies. Potential application models are limitless - holders of personal tokens may be eligible to a share of the income the issuer generates, to exclusive content or simply to personal interactions. The success of onlyfans demonstrates that there are alternatives to creators providing free content to dominant platforms. With Web3, this trend will likely accelerate and expand to new target groups.

Community funding presents another emerging source of revenue. Gitcoin grants is a glimpse of the future. It employs quadratic funding to match small contributions from community members with those of institutions & high-net worth individuals. Anyone can apply for a grant with a few clicks – making the case that provided services contribute to the public good of Ethereum and beyond. Illustrating the opportunities for individuals, an anon Ethereum social media evangelist was able to raise more than 25.000 Dollars from hundreds of contributors via Gitcoin so far.

III: The Web3 impact will be felt across the HR process map

With individual talent and communities decoupling from traditional organizations, a new customer group for tailored HR services is emerging. A wealth of applications is being built to cater to this audience. And the ways they redefine HR processes will echo beyond their target demographic to general HR practices. Let’s look at some key developments.

In transactional HR, payroll is the most obvious application area of blockchain technology. Instant global transfers of crypto currency hold an edge over legacy bank transfers, with an internet connection the only prerequisite to acquiring a digital wallet for receiving payments. Dollar-pegged stablecoins remove the volatility that makes direct compensation via crypto currencies Bitcoin or Ether an overly thrilling experience.

Even more importantly, digital identity might make large parts of current corporate HR Services obsolete and help mitigate bias. With all my encrypted master data safely stored on the blockchain, I can provide a unique digital ID to anyone I do business with. No need for my counterparts to obtain – or, god forbid, store in their data base - information on my location, sex, race or age. All I really want and need to share with them are the skills & experience I bring to the table.

Talking about skills, there are blockchain initiatives supported by large players in the HCM market to pool talent data and make it available across company silos. Key to the success of such projects will be that they are not designed as walled gardens, but built on public blockchain protocols like Ethereum. Only then can services be combined, e.g. a set of digital credentials with a decentral ID solution that may also be used to yield a credit score for lending applications. This concept of interoperable applications is referred to as composability and it is a key ingredient to Web3 magic.

By now, you are probably shouting at your screen: What about legal? What about data protection? Obviously, this will be another HR service area facing a new set of challenges and opportunities. A fine line needs to be walked between an overly restrictive approach – “this will never work” – and hazardous laissez-faire. 

Conclusion

Admittedly, this has been a wild ride. The bottom line is that HR and digital transformation leaders should become familiar with Web3 terminology and applications to prepare for the coming disruption. Founders in the space will benefit from a structured approach to talent and organization, taking into account the unique environment they find themselves in.

Thoughts or questions on this? Feel free to get in touch – tts is constantly adding expertise in this emerging space. We are ready to guide you through opportunities and risks.

I will follow up on this article with an overview of the current Web3 HR application landscape.