In 2020, global events caused radical decentralization in the traditional workplace that ironically had nothing to do with Web3. The COVID-19 pandemic caused companies to implement remote work almost overnight.
More recently, chatGPT has caused a second major wave of change for workers. Artificial intelligence (AI) continues to make headlines for causing layoffs and disrupting traditional job roles in industries like real estate, media, technology, and financial services.
World events and technological innovations are redefining industries and employment as well as shaping the future of work in the modern era.
So what about Web3? While blockchain hasn’t been as disruptive as a global pandemic or generative AI at scale, decentralized ledger tech is like the steady Eddie cousin to flashy AI, quietly humming along behind the scenes. Blockchain is building on use cases in sectors such as supply chain management and decentralized finance to emerge as a transformative force in the employment market.
Let’s look at a few swirling trends related to Web3 and the future of work.
Artificial Intelligence and the Employment Market
AI is transforming the employment market by automating repetitive tasks and creating new roles in tech-focused industries. While traditional AI consolidates control within centralized systems, blockchain offers a different disruption.
Blockchain redistributes ownership and control, giving individuals more agency over their assets and work. You can also use Blockchain to provide transparency and verification into AI’s processes. As these technologies converge, they will reshape job roles and skill requirements, paving the way for a decentralized future of work governed by blockchain protocols.
Web3 and the Shift in Traditional Employment
The decentralized nature of Web3, the next generation of the internet built on blockchain technology, will fundamentally alter traditional employment structures by transforming HR, recruiting, benefits, and payment processes. For example, Estonia uses blockchain-based system X-Road to manage employee data and enable access to government services.
In recruiting, Web3 can streamline the hiring process through blockchain-based credentials, enabling faster and more secure verification of skills and experience. For HR and benefits, smart contracts could automate and customize benefits packages directly on the blockchain, making benefits more accessible and tailored to individual needs.
Additionally, payments in a Web3 environment can occur instantly and globally via cryptocurrency, removing intermediaries and reducing transaction costs while ensuring that workers are paid in real time upon completing tasks.
The (Possible) Rise of DAOs
One model for working together that some Web3 enthusiasts are developing is the Decentralized Autonomous Organizations (DAOs). In a DAO, employees or contributors become stakeholders and can participate in decision-making, often owning tokens that give them a direct stake in the organization’s success.
Does the DAO model remind you of anything? It should. The traditional worker cooperative, or “co-op”, business model has been with us since the mid-1800s, if not before. Yet, it has not transformed mainstream business into a more worker-friendly model.
In capitalism, speed of execution is a competitive advantage. One challenge of the co-op model is it is difficult for humans to cooperate efficiently at scale without hierarchy.
This friction translates to the DAO model and it’s one reason that, despite the potential of DAOs, there is growing skepticism about their ability to transition to widespread use. Critics argue that DAOs face governance, scalability, and regulatory compliance challenges, which limit their mainstream adoption at least in the short term.
The Gig Economy: Evolution and Controversies
The gig economy, characterized by short-term contracts and freelance work, is one of the fastest-growing sectors in recent years. Ride-sharing is the most well-known example. Platforms like Uber, TaskRabbit, and Upwork allow workers to take on temporary jobs with flexible hours, often outside traditional employment structures.
While this flexibility appeals to many, the gig economy is controversial due to concerns about job security, lack of benefits, working conditions, and income volatility.
Web3 can potentially address some of these issues by offering a more transparent and fair gig economy model. One example is smart contracts (self-executing blockchain agreements), allowing freelancers and gig workers to enter into secure, trustless employment agreements without intermediaries like HR departments or recruiters.
Tokenized Rewards
As people become more familiar with digital tokens, a blockchain network’s transparency could introduce tokenized rewards and ownership models, allowing workers to earn tokens for their contributions to a platform or project. These tokens could represent shares in the project’s success, providing a long-term stake that traditional gig economy platforms do not offer.
For instance, a decentralized rideshare platform might reward drivers with payment for each ride and digital assets that appreciate value as the platform grows in popularity. This could transform gig workers from temporary contractors into stakeholders, aligning their interests with the long-term success of the platforms they contribute to.
Tokenizing compensation has its challenges. Platform decentralization and tokenized rewards face regulatory issues, particularly in ensuring worker protection, fair labor practices, and tax implications.
Awareness of these potential obstacles is crucial for successfully implementing Web3 in the gig economy.
Blockchain and Wealth Inequality: Can Decentralization Help?
Wealth inequality is one of the most pressing social issues today, exacerbated by centralized financial systems that disproportionately benefit a small group of individuals. With its decentralized model, blockchain has the potential to offer new solutions to this problem, particularly from an employment and ownership perspective.
In traditional employment, wealth accumulation is primarily tied to wages, stock options, or retirement plans that are often only available to a select group of higher-level employees. This system widens the gap between company executives and regular workers.
Blockchain could upend this dynamic by democratizing access to ownership and profits through tokenization and decentralized ownership models. For example, blockchain allows organizations to issue tokens representing ownership stakes, which could be distributed to all contributors, not just executives.
In addition, blockchain can lower barriers to entry for entrepreneurship and new job creation. By enabling peer-to-peer transactions and decentralized funding mechanisms like initial coin offerings (ICOs) or decentralized finance (DeFi), individuals from underserved communities can access capital without needing to go through traditional financial institutions, which often come with high interest rates or discriminatory practices.
The Future of Work in a Web3 World
Blockchain’s impact on traditional employment models will likely create new opportunities, from a more streamlined human resources function to employee wealth creation through tokenized ownership. What do you think? Will blockchain eventually power the relationship between employers and workers?
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The above is for general info purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
