Today’s workforce is as centralized as it can possibly be. According to a report by census.gov, 51.6 percent of the US population works at large enterprises. In order to increase efficiency as far as possible, these corporations often have large headquarters and rigid lines of command. However, with the advent of the internet, there has been a strong shift away from this model, towards freelancing.

This semi-decentralized type of work has made it possible to complete certain tasks much more efficiently. It also enabled businesses to massively cut costs by centralizing only key operations. Companies like Uber and Airbnb have already effectively applied this model and disrupted entire industries in the process. Recent advances in Blockchain and Smart Contracts now make it possible to push freelancing to the next level by building truly decentralized workforce networks.

Decentralized workforce

A decentralized workforce is a network of workers that isn’t managed by a central authority and thus has no point of failure. This is different from traditional freelancing where freelancers submit their work to an employer who needs to approve the job before disbursing payment.

Smart Contracts and Cryptocurrencies enable us to build decentralized and self governing workforce networks. In these ecosystems, employers post tasks and any worker can complete them. A completed task would then be verified by some other workers in the network who then decide if a payment is disbursed or not. The payment should follow automatically, either being paid out directly by the Blockchain or by a smart contract.

The most efficient compensation model is one where workers are paid for the completion of highly specific tasks. This system is similar in many ways to bounty posters in the Old West; The government posts a ‘Wanted’ bounty for a criminal and sets a reward, bounty hunters catch the criminal and the sheriff confirms the completion of the bounty.

It is important to note that decentralizing workforce may not be the appropriate option for every job. Decentralization is especially powerful for tasks that can be easily checked or that would benefit from crowd wisdom. Online marketing, consulting and software development are some of the industries that would hugely benefit from decentralized workforce.

Some big challenges

The biggest challenge in a decentralized workforce network is reviewing the submitted work. The only way to make such a review system work is by incentivizing other users to check the work of their peers and to notify a smart contract if payment should be disbursed or not. A critical problem that might arise from such a system is honesty; users that review submissions need to be incentivized to do so correctly. Otherwise, if low quality work keeps being released, the employer’s reputation might suffer.

One such platform already exists, allowing anyone to post and complete bounties, and automatically sending submissions to be reviewed by other users. These ‘job reviewers’ need to stake some of the platform’s tokens for performing verification. If their review doesn’t match the one made by the majority of verifiers, a portion of the staked tokens are burned. This has some similarities with the Proof of Stake algorithm proposed by Ethereum.

It can also be a challenge to setup a proper rewards structure. A system will have to be created where the money flows automatically from the employer to workers and reviewers, in a decentralized and trustless way. Traditional fiat money might never be ready to be integrated in such a system. However, currencies like Ethereum or Bitcoin already are.

A bright future

The popularity of online freelance work has exploded in the past years due to the advantages it offers both to workers and employers. The next step is to completely decentralize this industry in order to remove all of its points of failure. At the moment, roughly 40 percent of the world’s population has an internet access. As the remaining 3.5 bln people come online, the Blockchain will play a crucial role in coordinating this emerging workforce.