Blockchain-Verified Credentials Could Change the Game of Hiring

by Jasmine Ye Han (feat. Tom Keenan)

Bloomberg BNA
November 3, 2017

Hiring managers, meet blockchain. The technology behind cryptocurrencies such as Bitcoin is being used by universities, businesses, and governments around the world to issue and store verifiable digital credentials. Experts say this could mean reduced costs, increased trust, and more automation in hiring.

New York-based Learning Machine is among those pushing the use of the technology in credentialing. The technology company is working with the Massachusetts Institute of Technology, the U.S. Federation of State Medical Boards, and Malta’s Ministry for Education and Employment on tracking and verifying academic and professional certification using blockchain technology. Indeed, many of the blockchain startups deal in a global market and operate internationally.

A blockchain is a ledger of a continuously growing list of records or transactions shared by every device in a network. It’s considered a secure and reliable way of storing data as previous records in a blockchain can’t be changed unless a majority of the network approves. Blockchain technology is being tapped by many industries and governments around the world.

Some see lots of potential to use blockchain-verified credentials to improve hiring processes.

“The big advantage of having verified candidate qualifications is to reduce the administration of doing background checks, to reduce fraud, and put more trust into the hiring and recruitment market,” said Andrew Spence, a U.K.-based HR technology consultant and a researcher on blockchain’s implications for HR for the Blockchain Research Institute.In MIT’s digital diploma pilot program, after students receive a coded digital certificate, they can add and display it on a mobile app called Blockcerts Wallet. Students can also send the file directly to a potential employer. Blockcerts, the open-source software code used in the pilot program, was developed by MIT Media Lab, an interdisciplinary research lab in MIT, and Learning Machine.

“The digital diploma enables students to access and own a secure and certifiable digital file of their diploma,” Registrar and Senior Associate Dean Mary Callahan told Bloomberg Law in an email.

“As learning is a lifelong endeavor, we see the possible transformative power of delivering stackable credentials as a service to higher education and beyond,” she said.

Chris Jagers, co-founder and CEO of Learning Machine, explained how Blockcerts works as follows: When the institution issues a digital certificate, Blockcerts generates a unique fingerprint of the file—also called a “hash"—using cryptography. It then registers a hash onto the Bitcoin blockchain, currently the largest blockchain and one on which data-tampering is extremely difficult. When a company wants to verify a digital certificate it receives, it can upload the file to a verification portal like MIT’s. Or if the company installs Blockcerts, the software can help generate the hash and compare it with the one on blockchain.

“If the student changed any little piece of the file, the hash would change and wouldn’t match; therefore, it’s a tamper-evident technology,” Jagers said.

Interest in leveraging blockchain technology for credentials is upticking among technology companies and governments. TrueRec, an application built by technology company SAP, also uses blockchain for storing verifiable digital credentials. Hashed Health, a startup based in Tennessee, announced a partnership with the state of Illinois to store and monitor health-care provider registries and medical credentialing on blockchain. Illinois is also testing blockchain uses for streamlining academic transcript tracking and even managing birth certificates, according to Bloomberg Law reporting.

Less Cost, More Efficiency, and More Control

Seventy-five percent of human resources managers report having caught a lie in a resume, according to results of a recent CareerBuilder survey. “It’s a risk for recruiters that the individuals may not be who they say they are,” Spence said.

The traditional approach to background checking can be expensive and repetitive, said Patrick Spens, Blockchain leader with PwC in the U.K. Spens participated in a roundtable discussion at PwC on Blockchain’s implications for HR.

Employers in the U.K. could pay as much as 100 pounds ($133) to an agency to check the degree of a candidate, and candidates will have their degrees checked each time they change jobs, Spens said. If their degrees are secured on blockchain, that would save everybody money, he said.

The workforce’s move toward frequent job changes and the gig economy makes the background check more complex, Spence said. Time delays caused by background checks could also be bad for competition. “In a quick-moving market, you could lose talent; that candidate could work for your competitor,” Spence said.

Issuing credentials on a blockchain could also give the owners more control. Traditionally, when central authorities hosting records collapse in natural disasters like in Puerto Rico or technical disasters like with Equifax, people get hacked, lose the ability to use their important records, and have their identity stolen. But with digital credentials verified on a blockchain, individuals can share their credentials directly as they see fit and prove the authenticity independently, Jagers said.

Vision: A More Automated and Trusted Process

Blockchain-verified credentials and records open up possibilities for a whole new level of automation and trust in the hiring process, Spence and Jagers said.

Spence envisions that in the next few years, each individual will have verified data such as academic certificates, work history, and insurance details stored on a blockchain—and that they will be able to decide with whom to share the information. There might even be universal resumes connected to job platforms, so seamless searching and matching with vacancies can be achieved using artificial intelligence types of systems, he said.

Spence said such automated systems not only could cut out intermediaries and provide better access to talent pools for employers, but also could be good for workers. “It can reduce the bias inherent in recruiting by having automated systems and controls in place to look for bias and discrimination,” he said.

Jagers has a similar vision to Spence. “I think eventually there will be a whole new norm around digital records where across every industry, people can just share official records directly and have them verified as true. It’s an infrastructure that can make it possible for subsequent steps to be taken, such as smart contracts, to kick off certain operations,” Jagers said.

A smart contract includes provisions that can execute automatically when predefined conditions are met. It’s a feature introduced by the Ethereum blockchain, while the Bitcoin blockchain is a distributed ledger system currently limited to transfer of currency.

In the future, HR systems may rely more on the actual verified documents they receive, rather than unverified data candidates put on resumes, because digital certificates could be “data-rich"—they can contain large amounts of detailed information and give better pictures of skills, Jagers said.

Blockchain-Verified LinkedIn?

LinkedIn and Facebook are widely used for sharing credentials and work history, but they rely on endorsements by others, Jagers said. “Because right now, you can create anything on LinkedIn. If they can expand their offering to have official documents that are blockchain-verified, they can be incredibly powerful,” Jagers said.

There could be two scenarios, Spence said. “Microsoft or Google might announce that they will digitally organize all jobs and vacancies and they will absolutely nail it. Or maybe a startup creates a blockchain version of Upwork and creates a network effect that quickly becomes another blockchain version of LinkedIn,” Spence said.

But it would be hard to verify all of the previous work experiences, said Dr. Thomas Keenan, a professor at University of Calgary in Canada. Keenan has presented at blockchain conferences about nonfinancial uses of the technology and was commissioned to write a report on blockchain for the Canadian government.

“What if somebody says I work for companies that don’t exist anymore? There’s the initial problem of going back and verifying it,” Keenan said. Even if they still exist, it would be a lot of work. “It would be like digitizing old New York Times, where they need to be scanned and OCRed,” he said, referring to optical character recognition systems that scan documents for text and convert it into a more usable form.

“Good thing is that it’s possible for millennials starting their first job in 2017. Going forward, if you want to start now and document people’s experiences, that’s fine,” Keenan said.

There’s going to be a messy transition, Spence said, because there will be people on blockchain and those who are not. But Spence is optimistic. “The way I see this is, we’re back in 1993 in the early days of internet. I think what MIT is doing with Blockcerts is helping to build the foundation for future. It could take a decade, but we’re at the starting point,” he said.