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Why Incumbent Companies Should ‘Pre-Decentralize’

Legacy companies threatened by decentralized protocols have the potential to secure their business units and services by “pre-decentralizing,” creating a research and development (R&D) spinout of a decentralized, blockchain-based version of their product. In the future, should decentralized companies truly pose as threats to their business models, legacy companies can go public with these secret, decentralized spinoffs.

LinkedIn, for example, has the opportunity to serve as the base-level infrastructure for the future workforce. But it will be challenged by decentralized startups. By pre-decentralizing, LinkedIn can prepare itself for a future in which consumers value the benefits of decentralized protocols over traditional businesses.

The Future “Gig Economy”

A study by PwC predicted that by 2030, the number of U.S. workers in “full-time” employment will drop to 9 percent, meaning that the other 91 percent of U.S. workers will be searching for independent contractor employment in what has become known as the “gig economy.”

Gig economy contracting includes any temporary or impermanent arrangement between two parties that doesn’t involve the traditional full-workday commitment, like driving for Uber or freelancing on UpWork. As of this year, 35 percent of the U.S. workforce, or roughly 55 million people, already participate in the gig economy as independent contractors.

LinkedIn, as an incumbent social network for the professional world, is well positioned to serve this economy. LinkedIn already serves as a portal for a network of 500 million employers and employees and boasts more than 10 million active job posts. People already “LinkedIn” each other. Similar to Uber or Google, LinkedIn has achieved verb status with business professionals worldwide.

However, as U.S. workers transition from full-time employment to the gig economy, blockchain-based startups will vie for the lucrative chance to serve as the base layer of the economy.

Gig Economy Requirements

Because the gig economy requires an underlying layer of trust, it is a fantastic place for decentralized startups to innovate and create “trustless” (trust enforced through code) environments. After all, contractors and clients will be in a constant search for one another.

In the context of the gig economy, there are two key features that contractors (employees) and the clients (employers) will look for: 


  1. Verified work history: To stand out from their competition, contractors need to highlight prior relevant working experience, showcase their education and highlight relevant awards and achievements.
  2. Fair compensation: If contractors use a service such as LinkedIn ProFinder, or UpWork to match with a client, they need to be certain that the client will pay upon the work’s successful completion.


  1. Verified work history: Clients must validate their prospective contractor’s work history, educational background and awards. If the contractor boasts an impressive 4.0 GPA from Harvard, a Ph.D. from Stanford and five years of work at Google, the client still needs to verify these claims before hiring the candidate for a computer science role.
  2. Fair compensation: Clients pay contractors to deliver the excellent product or service the contractor advertised. Thus, they only want to pay when contractors successfully execute on their deliverables. Regardless of whether these deliverables are paid with key milestones or in one lump sum, clients don’t want to get scammed by fraudulent contractors.

Blockchain-Based Solutions

By utilizing blockchain-based protocols, startups will help connect gig economy contractors with clients while verifying workers’ resumes, protecting personal data and utilizing smart contracts for fair compensation.

Verified Work History

By utilizing a blockchain-based data storage solution, employees could store verified employment history, resumes, references and educational background in an unchangeable, transparent ledger.

For example, consider Karen, a recent computer science graduate from the University of Pennsylvania working as an independent contractor, and Martha, a client from London looking to hire Karen to develop a website. 

On her blockchain-based jobs database profile, Karen lists her degree and 3.8 GPA from the University of Pennsylvania, a recommendation submitted by her boss during a Facebook internship, a national award for student leadership and three five-star reviews from other clients Karen has built websites for. 

Before allowing Karen to submit her profile, the blockchain-based jobs database compared Karen’s submissions to certify authenticity (for this example, assume that there are other mechanisms in place to ensure the validity of data entered onto the blockchain and that all information added into the blockchain is 100 percent accurate). Once the blockchain-based jobs database authenticates Karen’s profile, her information is permanently added to the blockchain.  

When Martha opens Karen’s profile, she can be sure of Karen’s claims because they are guaranteed to be unchangeable due to blockchain technology’s immutability.

Martha saves the cumbersome time it would take her to do a deep-dive background search on Karen because she trusts that all information uploaded to the blockchain is preverified and cannot be tampered with. Therefore, she is able to trust the five-star recommendations and recommendation by Karen’s boss at Facebook.

Fair Compensation

Blockchain-enabled “smart contracts” (contracts converted to computer code) enable contractors and clients to engage in “trustless” agreements, meaning that no mutual trust is required because computer code automatically enforces their agreement.

Consider the Karen and Martha engagement from the previous example. After reviewing Karen’s verified, immutable profile on the blockchain-based jobs database, Martha decides to hire her to develop a website for $900.

Martha and Karen agree to break the engagement down into three key milestones. At each milestone, Martha is required to pay Karen for her work only if she successfully completes it to Martha’s specifications. This agreement is translated into a “smart contract” and entered into the blockchain. Once entered, both parties can rest assured knowing that it cannot be changed (unless there is a mutual agreement to end the current smart contract and agree on a new one).

Decentralizing LinkedIn

To become the base-layer infrastructure of the gig economy, LinkedIn can pre-decentralize, leveraging already existing blockchain projects tied to an internal API. LinkedIn can develop this blockchain-based infrastructure for the “gig economy” in a secret R&D spinout that is compliant with Microsoft shareholders’ regimes and only reveals the database if the company is challenged by decentralized startups in the future.

To verify an individual’s work history on LinkedIn, blockchain-based protocols already in the works can be leveraged, such as the Civic identity protocol to verify self-sovereign identity and the Factom blockchain to secure immutable digital copies of transcripts or employment verifications. 

Similarly, (assuming scalability issues are solved) LinkedIn can build its smart contract compensation system on top of Ethereum, instead of creating its own private blockchain.

Should LinkedIn choose to optimize its aforementioned services for the gig economy with blockchain technology, it could successfully address the needs of both contractors and clients and position its portal as the bedrock of the future gig economy. In other words, the company has the potential to resist startups and capture 91 percent of future U.S. labor transactions, as well as cross-border employment.


Companies such as LinkedIn that might pre-decentralize and create blockchain-based R&D spinoffs of their product for future use (if necessary) have an advantage over current blockchain-based startups and could use this tactic to survive in a future in which consumers value decentralization.

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