Blockchain technology can be used to create a detailed, indisputable log of payroll-related transactions among many other uses, a payroll practitioner said May 13.
“Most people know of blockchain because of Bitcoin, because of cryptocurrency,” Martin Armstrong, the vice president for payroll shared services at Charter Communications, said.
“But now it’s morphed into other information way above and beyond Bitcoin, cryptocurrency, about data,” Armstrong said, noting that employers in areas as diverse as retail, insurance, and aviation have found uses for the technology.
Armstrong, who is a member of Bloomberg Tax’s Payroll Advisory Board, was speaking at the American Payroll Association’s 40th Payroll Congress in Las Vegas.
A blockchain is a decentralized database containing information that, once included in the chain, cannot easily be modified and must be changed by creating a new entry, Armstrong said.
Transactions are instantaneous and peer-to-peer, with no middlemen, and the decentralized nature means the data is not all stored in one place, Armstrong said.
The global blockchain market is expected to be worth $11.7 billion by the end of 2022 and $20 billion by the end of 2024. A Deloitte survey found 24% of responding businesses were planning to invest from $5 million to $10 million in the technology in 2021, Armstrong said.
Companies such as Apple, Microsoft, Alphabet Inc., Bank of America, and Walmart are exploring blockchain technology, Armstrong said.
“These are tech companies and they’re making huge investments,” he said.
Financial services and banks use blockchain for account reconciliation and faster and more secure transactions, Armstrong said. The technology was also used in unnamed African countries to provide ID cards to individuals where not having a card may mean denial of public services, he said.
Payroll-related uses for blockchain include paying international employees in cryptocurrency, which can be converted into the employee’s local currency, Armstrong said.
The technology can also help with the numerous information requests that payroll receives, such as for Forms W-2 and other pay statements, time cards, and tax records, by creating a log of payroll-related transactions, Armstrong said.
“This will take the place” of record storage and retention, even in electronic forms, Armstrong said.
Blockchain can also improve the employment verification process by improving access to available information, Armstrong said.
Obstacles to blockchain include cost, with Armstrong noting the median salary of a blockchain developer is $140,000; resistance to change; and lack of regulation, Armstrong said.
“It needs to be regulated, but just the right amount, not overbearing,” Armstrong said.