Full Disclosure of Your Salary: Blockchain Remuneration Models

Full Disclosure of Your Salary:
Blockchain Remuneration Models

  

All systems that preserve user privacy are alike; each system that violates user privacy does so in its own way. As more people earn income in Blockchain-based currency the social norm of salary confidentiality is challenged.

Salt wage

Consider the modern word salary, derived from the Latin salarium, the root of which means salt, an ancient medium of exchange. To be “worth one’s salt” is an expression meaning that one contributes value in proportion to the amount one is paid. Under a regime of wages dispensed in salt, there are doubtless a considerable set of challenges to overcome in the implementation and management of an efficient remuneration system. What are the problems we’re confronted with in designing such systems with Blockchain-based cryptocurrencies like Bitcoin?

Transparent salary

Information pertaining to the amount of compensation awarded to different individuals is often considered sensitive, commanding a certain degree of privacy. As Bitcoin and similarly designed cryptocurrencies evolve into a recognized medium of exchange for larger swaths of the world economy, an increasing number of people will earn income in the form of Blockchain-based payments. The nature of these transactions is such that the minute details of an affected individual's compensation package and spending habits will be exposed to public scrutiny.

In some cases, this violates cultural norms which respect the confidentiality of salaries, yet in other cases, it could be regarded as providing the benefits associated with greater transparency. For instance, a policy of treating salary data as openly available can preempt compensation differences between similarly skilled workers based on spurious criteria like gender.

Unimagined business models

The practice of compensating employees via Blockchain-based cryptocurrencies has made possible the realization of heretofore unimagined business models. Bitcoin facilitates the compensation of contributing individuals across the world regardless of whether or not they have a consistent home address or a bank account.

The practice of paying salaries with this contemporary medium of exchange is growing in, if not popularity, at least notoriety, as indicated by corporations ranging from machine learning focused hedge funds to small start-ups proclaiming their affinity for remunerating their workers using Bitcoin.

Alice’s payments

Let’s examine the public Blockchain of Bitcoin for evidence of this new paradigm. Consider a particular live address, hereafter referred to as Alice, which receives regular payments for goods and services rendered from an institution. This is a real case study of a real-world company that pays its employees in Bitcoin, although the names have been changed.

Histogram of the 50 most recent transactions emanating from Bob & Company. The y-axis represents the number of contributors, colleagues of Alice. The x-axis represents calendar days. The regular periodicity of payments to approximately the same number of addresses indicates behavior characteristic of remuneration.

The tendency for payments to accrue to Alice at regular intervals from the same address serves as a strong indicator that these transactions constitute remuneration. The single address associated with Alice formed the initial basis of our analysis.

Blockchain salary detection

By exploring the transaction profile associated with Bob & Company we can generate the histogram in Figure 1, this information yields insight into (at least) a consistent subset of the number of accounts payable (presumably employees) with whom Bob & Company has regularly interacted over the course of the time period depicted. Based on the behavior exhibited by Bob & Company as described by Figure 1 we can catalog a rule of thumb for the identification of organizations compensating employees over the Bitcoin Blockchain.

    

The proportion of transactions partitioned according to the number of times transmitted Bitcoin to the address in question.

Bitcoin price influence

In November 2014, when the Bitcoin price was approximately $340.00, the average compensation was 0.25 Bitcoin per transaction. In December of 2016, when one Bitcoin typically sold for a price of approximately $930.00, the average compensation from Bob & Company was 0.05 Bitcoin per transaction. Therefore, from the period during which data is first available until the time of writing, the Bitcoin price has increased and the amount of remuneration has decreased in proportion to each other.

The median transaction value in Bitcoin sent over the lifetime of the address. Note that as the Bitcoin price increases relative to the United States, the dollar value of transactions emanating from Bob & Company is decreasing in rough proportion.

In this Blog, we have demonstrated the substantive privacy concerns raised by the practice of awarding salaries using cryptocurrencies with design principles similar to those of Bitcoin by the meticulous analysis of live Blockchain data. In this section, we explore some of the implications of the possibilities unleashed by this mechanism of disseminating personal salaries.

Industrial espionage

In this Blog, we were able to track the growth. If this analysis were undertaken by a competitor, it could erode their competitive advantage by divulging information relating directly to the economic viability, growth patterns, and trajectory of businesses.

Endangering employees

The Women’s Annex Foundation (WAF) encourages girls in Afghanistan to engage in blog writing, software development, video production and social media marketing, paying them for their efforts in Bitcoin. The heuristics described in this article could be used to identify organizations on the Blockchain, organizations like the WAF. Business models with similar objectives do well to consider whether compensating workers via the Blockchain is consistent with promoting the well-being of their contributors and if decided in the affirmative, to take all necessary precautions to sufficiently anonymize their transaction profile.

Corporate governance

While doubtless there are ills associated with increased transparency there are also considerable benefits. Increased oversight, transparency and participation on behalf of stakeholders is realizable as never before through the deployment of public ledger-based value transmission systems. This could herald a new ethos in corporate governance.

Open budget initiative

There are at the moment projects underway from various governments and civic institutions – e.g. the World Bank Institute – to promote the kind of budget transparency that can decrease corruption and improve living standards, the kind of transparency detailed in this article.

Obfuscation techniques

The poor privacy profile of Blockchain-based currencies with design principles analogous to those of Bitcoin is well established. The most common mitigation to the risk posed by de-anonymization is to utilize a mix to shuffle Bitcoins between different users. There are several of such services operating commercially and while specifics of the remedial measures vary slightly according to the provider there are some common drawbacks. These include the propensity of anonymity service providers to misappropriate funds, either explicitly or by going out of business.

For those willing to consider cryptocurrencies other than Bitcoin, two alternative approaches for the compensation of workers are Zerocoin and Zcash, both of which are Blockchain-based cryptocurrencies that preserve the integrity of personal data in ways orthogonal to Bitcoin while posing their own unique set of risks.

What does it all mean?

In the early days of Bitcoin, the perceived anonymity of this value transfer technology was one of it’s most attractive features, helping to fuel its adoption on marketplaces such as the Silk Road. Today it is clear that the anonymity guarantees of Bitcoin are tenuous. This Blog provides a foundation for the creation of mechanisms that might search the Blockchain for evidence of remuneration behavior taking place using cryptocurrencies. In consideration of the ethics of anonymity, we do well not to overlook the multitude of important reasons for anonymity that we might take for granted with traditional currencies. It is still the case that many people are uncomfortable divulging the details of their salaries with friends or coworkers.

The relative ease with which individual addresses in the Bitcoin Blockchain can be associated with a salary through the heuristics herein presented demonstrates a host of new challenges and opportunities. This article presents the first step in the determination of what this paradigm shift will ultimately have in store for the way we relate and interact with one another through one of the oldest social technologies, money.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Some of the Most Successful Cryptocurrency ICOs to Date

Some of the Most Successful
Cryptocurrency
ICOs to Date

World of Cryptocurrency

One of the most popular trends in the world of cryptocurrency comes in the form of companies raising funds through an ICO. Several of these projects have proven to be quite successful in the process, raising millions of dollars from investors all over the world. The list below highlights some of the successful crypto ICOs.

ICONOMI

The ICONOMI project has attracted a lot of interest from cryptocurrency investors during their crowd sale. The company aims to provide a connection to the distributed economy by allowing anyone to create their own Digital Asset Arrays. This digital asset management platform allows anyone in the world to create their own DAA and manages it accordingly. However, the project should not be looked at as just a marketplace for value tokens.

During the ICONOMI ICO, the team hoped to raise around US$10m in funding. It was quite an ambitious goal at that time, yet the investors helped the team reach that goal with relative ease. Even though US$10.5m sounds like a lot of money, it pales in comparison to some of the other recent successful ICOs. The company reported nearly 4,000 investors from all over the world partook in this ICO, which is quite intriguing.

WAVES

The year 2016 was quite a positive one for cryptocurrency projects looking to raise a lot of money. WAVES made quite an impact, as the team raised the US$16m worth of bitcoin in the end. That is quite a significant amount, although some other projects raised more funds in the process. Unfortunately, the WAVES ICO turned into a very controversial topic later on, as allegations were filed of how the company successfully scammed investors. The thread on bitcoin talk is worth reading through, that much is certain. Despite these allegations, new projects are still built on top of WAVES, indicating some of these rumors might be overstating things.

Lisk

The Lisk platform has seen its fair share of success, especially during the ICO phase. With US$5.8m raises in a short amount of time, investors were more than excited to invest in this new crypto-based project. Ever since launching the platform in Q2 of 2016, the team has been actively working on adding improvements to the project and its wallet. The team also liquidates some of their bitcoin raised during the ICO as part of their liquidation plan. A total of 101,000 BTC remains under their control, according to a recent Twitter update.

Golem Project

Raising US$8.6m in mere minutes is quite an amazing feat, and most people will always remember the Golem Project for achieving that goal. This significant amount of interest was not entirely unexpected, considering Golem is a decentralized global market for computing power. It is evident these types of ICOs will always see great interest from investors all over the world. Being able to rent computer resources from other people in exchange for Golem Network Tokens is something to look forward to.

Ethereum

The Ethereum ICO was one of the first of its kind to put this concept of an initial coin offering on the map. The team successfully raised US$18m over the course of 42 days, making it the number one most funded ICO in cryptocurrency. Ever since receiving that amount of funding, Ethereum has quickly grown and successfully became the second-most valuable cryptocurrency ecosystem in the world today. Although it is not the most successful ICO – The DAO raised US$150m but the project had to be abandoned – Ethereum has proven to be very successful in its own right.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Millennials using the blockchain could lead to local currencies

Say farewell to the Pound:
Millennials using the blockchain could lead to local currencies

For Generation Y, ATM's were the right technology at the right time. Now, millenials are turning to blockchainx

Successful ideas have as much to do with good timing as they do with great technology. For Generation Y, ATMs were the right technology at the right time, offering quick cash on demand and changing our relationship with money. For millennials, what's the next big thing in managing their hard-earned wages?

Move over Bitcoin, the blockchain is only just getting started

It may just be local currencies. These can be used in certain cities or neighbourhoods to shop in local stores, buy local goods and even pay bills for rent and local utilities. The timing is right for such a paradigm shift in the way we pay. Why? Because of the confluence of three key phenomena.The first is urbanisation. According to the United Nations Population Fund (UNFPA), the world is undergoing the largest wave of urban growth in history. More than half of the world's population lives in cities. By 2030 the number of urban dwellers worldwide will swell to around five billion. That means cities will increasingly become primary drivers of economic growth. And as the municipal hub becomes the global nexus for financial progress, so will demand growth for unique currencies that reflect this shift.

But there's another reason to expect a rise in local currencies, one that's more in line with the social and cultural norms which characterise the coming of age of the millennial generation: ironically, the denser living that comes with urbanisation does not usually engender community. As cities grow and we live in closer proximity, we feel less connected to each another. That's one reason that city living is linked to increased rates of depression.

But millennials famously need to feel connected, to feel a sense of community and belonging. Just look at the booming phenomenon of shared living – not just spaces such as WeLive and Common, but also the tendency of millennials to choose to live with room-mates rather than on their own. Yes, part of this is economic, but it also has to do with millennials' well-documented desire to reclaim a sense of the "social" that social media alone has failed to provide.

               

Why expensive security alarms could actually be putting your valuables at risk

That is exactly what local currencies are doing – building urban communities from the wallet up. Local currencies create this sense of community that millennials crave by giving city residents the chance to support local merchants and vice versa. Rather than seeing hard-earned cash go into invisible pockets, it stays within the locality of the spender. When money is kept within the confines of the community, it expands opportunities within, adding value to every dollar spent. Consider the American Independent Business Alliance study that found that for every dollar spent at a locally-owned business, 48 % stayed in the community as opposed to 14% of every dollar spent at a chain. In other words, we can use money itself in the form of local currencies to help create community in an otherwise alienating and lonely urban landscape, turning the city itself into a driver of economic growth and change while revitalising the way people feel about spending their money.

Take two successful examples: the Brixton Pound, a currency in south London "designed to support Brixton businesses and encourage local trade… for use by independent local shops and traders", and Tel Aviv's Pishpesh, used by 300 local merchants in the city. Again, cash in the service of a community.

But such currencies wouldn't have been the least bit valuable unless there existed the technological underpinnings to make them viable. And that brings us to the third timely phenomena enabling this shift in the way we view our money: the blockchain enables local currencies in a way similar to how high-speed internet enables Spotify and YouTube. Transactions occurring via blockchain are highly secure, corruption-resistant, accessible to anyone with a smartphone and offer real-time economic data that can be used to help meet the needs of local economies. Blockchain technology affords citizens a way to support local businesses, drive economic growth and increase job opportunities by developing and using a local currency.

In short, the confluence of growing urbanisation, the rise of the millennial generation and emerging blockchain technology is what makes the timing for local currencies so ripe. This can lead to a new way of thinking about money – one based not on scarcity and competition, but rather on cooperation. Imagine you were offered a million pounds, but it came in a box that can never be opened. Would you want it? The answer is no because money itself isn't valuable, it's what you can do with it that gives it worth. That's exactly what millennials are beginning to do with localised currencies – make money more meaningful.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member