Why Crypto Will Be The Future Of Freelancing
The Gig economy is borderless and global. It makes sense that its money should be too.
Online freelancing was gaining in popularity even before the coronavirus pandemic struck, forcing many people to work from home and seek new employment in the Gig economy.
But remote freelancing as it stands is barely fit for purpose. Now, a new generation of blockchain platforms enable freelancers and employers to connect, peer-to-peer, without any of the disadvantages inherent in the large, centralised players that currently dominate the space. As well as enabling direct interaction, they pay in cryptocurrency – generally bitcoin, ether or stablecoins, which avoid crypto’s notorious volatility but retain its benefits.
The drawbacks of conventional online freelancing
Freelancing offers various benefits, not least the flexibility of choosing your own hours and working from wherever you want. But most freelancers who work in the Gig economy experience certain problems – especially if they rely on the big freelancer portals. While these can supply a steady stream of opportunities, they do so at a cost:
- High commission fees. Since these big platforms attract so many employers, they can charge freelancers whatever they want for access to this market. The fees they demand on each Gig can be extremely high as a result.
- Problems working across countries. Organising work with an employer in a different country can be difficult and complex. It might involve intrusive verification, and settlement of invoices between different banking jurisdictions may be slow and/or costly, as different middlemen take their cuts.
- Limited markets. Alternatively, the platforms may ‘avoid’ this issue by restricting their operations to a single country, or a handful of locations – missing out on the global jobs market that the internet would otherwise make available.
- Unfair dispute resolution processes. Disagreements about work quality inevitably arise, but freelancers often find themselves penalised unfairly because the platform owners take the employer’s side by default. After all, the employers are the ones who bring the money.
- Unnecessary gatekeepers. It’s not unusual for freelancers to be banned from a platform for minor issues, or to be denied access entirely – some sites vet each candidate and even competent and highly qualified applicants can be arbitrarily refused membership.
Of course, completely open platforms without any restrictions also pose a number of challenges. Without middlemen, who will police abuses and carry out administrative functions?
With the new era of blockchain-based freelancing, the answer is – no one. The latest platforms require no middlemen, offering complete freedom to freelancers and employers, while also providing vital protections for both parties.
Blockchain: the future of freelancing
Almost all online services, from social networking platforms to jobs websites, are centralised: they rely on a company or other organisation to run them. Implicitly or explicitly, users trust the organisation to hold personal data, maintain the servers that host the platform, and carry out administrative functions.
Sometimes, inevitably, that trust is misplaced. These parties may charge high fees, enact unfair policies, exclude certain users without proper cause, and fail to maintain proper security, leading to personal information being hacked or sold to third parties.
Blockchain works without any centralised parties or single points of failure. It therefore provides the ideal infrastructure for platforms like freelancer portals, where peer-to-peer interactions would otherwise be facilitated intermediaries.
LaborX is one such blockchain platform. The recruitment website features a user experience much like conventional freelancer sites, but behind the scenes most of its functionality is built on the blockchain. Smart contracts – code that runs on the blockchain – replaces centralised infrastructure and the company’s employees in carrying out administrative operations and enforcing the rules.
For example, the scope of work is agreed in a digital contract before the job starts, and funds held in escrow to be released upon completion. (In the event of a dispute, independent arbitration by a third party based on a transparent record of interactions is undertaken.) A decentralised reputation system that takes into account payments made on the blockchain means that users can see how trustworthy other parties are, and the ratings are far harder to game than on regular freelancer platforms – where this problem is widespread.
Finally, by using cryptocurrency, payments can be embedded in the same infrastructure that the platform runs on, instead of having to plug into costly external systems. As programmable money, crypto payments can be seamlessly automated as part of the conditions of completing a task.
The outlook post-COVID
While coronavirus may have forced many people into remote freelance work, there are indications the outlook remains favourable for the sector once the pandemic finally ends. The last year has given people time to think and reassess their working patterns and work/life balance. A proportion of people will choose to continue working from home and in the Gig economy. Meanwhile, freelance hourly rates remain stable.
As the sector matures, greater competition between the major players in the space should force freelancer websites to reduce their fees and enact fairer policies towards freelancers, who have until now been forced to accept whatever they demand as the price of gaining work.
The popularity of cryptocurrency and the development of the blockchain sector will also lead to more and better decentralised platforms, which do not rely on trusted intermediaries at all. As more freelancers explore this alternative, these platforms will also start offering more advanced features.
For example, it will soon be possible to put together whole remote teams, picked by algorithms from a list of freelancer profiles to complete a complex and bespoke project for a company. In fact, the business logic and processes for whole companies themselves will move onto the blockchain, removing the need for many expensive third party services; instead, back office functionality will be executed by smart contracts. Similarly, freelancers will be able to carry out their accounting automatically, saving money and earmarking funds for taxes as they are paid, rather than spending time doing this manually.
Crypto and blockchain are here to stay, and the Gig economy is one of the clearest and most compelling use cases for both.