Blockchain: No Big Deal or Payroll Boon?
Posted: Jan 20, 2018
When blockchain technology was first introduced in 2008, it was intended to provide accounting for digital currencies. Blockchain continues to be the building block that makes cryptocurrencies like Bitcoin and Bitcoin Cash possible, but the technology has since expanded well beyond digital currency. Even the payroll industry is now looking at it as a way to revolutionize cloud-based payroll.
The question is this: will blockchain turn out to be no big deal for payroll, or will it be a payroll boon that powers the industry into its next stage of evolution? The jury is still out, and deliberations are hot and heavy.Introduction to Blockchain
Blockchain is, for all intents and purposes, a digital means of accounting using an electronic ledger that records and authenticates transactions. The beauty of the technology is that it does not have to be limited to financial transactions. A blockchain creator could set up his or her ledger to track any kind of data subject to frequent changes.
The key to the technology is its built-in verification processes that keeps the ledger updated in regular increments, usually every 10 minutes. At the end of each predetermined period, the data added to the ledger during that time is closed off, verified, and added to the end of the ledger as the next block. Data coming in following the closing of a previous block is used to create the next block in the chain.
Blockchain technology could eventually be used by payroll companies like Dallas-based BenefitMall.com for better accounting in the cloud. Indeed, the complex nature of payroll makes it seem like a prime candidate for blockchain. With all the withholding, tax reporting, and processing tasks that go into paying employees, having an easier way to handle ledger functions would be welcome.5 Reasons Blockchain Could Be Big for Payroll
The general consensus within payroll is that blockchain will eventually be adopted as the de facto standard. How long that takes is anyone's guess. Assuming such assumptions prove correct, there are five reasons blockchain could end up being the 'next big thing' for payroll:
- Data Control – A blockchain ledger is distributed to multiple computers, known as 'nodes', located around the world. As such, there is no central authority controlling the data. This feature, combined with how blocks of data are authenticated and verified, makes it extremely difficult for hackers to compromise data.
- Data Integrity – The more copies of a particular ledger in circulation, the more integrity a blockchain has. That is because no single data point can be officially implemented unless and until it has been verified by all the existing nodes in the chain.
- Data Access – Blockchain is similar to cloud computing in one key area: access. Every copy of a blockchain is immediately accessible to users. Different copies are reconciled during the verification process that occurs every 10 minutes or so.
- Cross Border Payroll – Cross border payroll would benefit from blockchain by way of instant payments and seamless conversions from one currency to another.
- Redundancy – Finally, blockchain is naturally redundant by virtue of the fact that multiple copies of the ledger are distributed across the internet.
The one downside to blockchain is public access. By definition, blockchain data is public data. Using it for payroll purposes would mean restricting access to only those people who need the data in question which, unfortunately, runs counter to the original blockchain mentality. However, payroll companies could work around it.
Will blockchain be no big deal or the next big thing for payroll? Time will tell.
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