Beyond Gatekeepers: How Blockchain Transfers Data Ownership Back to Employees

Employment verification is a massive hidden cost for HR departments. Over $2,500 is spent annually per employee on HR functions, with nearly $425 allocated specifically to recruiting. Yet, the manual verification processes that are currently used are not only expensive but also time-consuming and prone to compliance risks.

HR staff sink countless hours into fielding verification requests — time diverted from more strategic goals. Outdated procedures also trigger over 4,500 Fair Credit Reporting Act (FCRA) lawsuits annually as minor procedural mistakes yield firm penalties. Costs stack up. Large third-party verification services charge $50 to $100 per request, and complete employee background checks run employers $2,800 on average.

But the buck doesn’t stop with employers. Employees endure equal frustration accessing their own records. Confirming income or employment history to apply for a loan or lease means navigating tangled red tape.

We sat down with TransCrypts co-founder Zain Zaidi, who said: “We, as consumers, don’t own any proof of who we are or what we’ve accomplished. If I want to verify your employment, there’s nothing you could give me that serves as indisputable proof.”

Current employment verification falls short with both employers and staff. HR departments face ballooning costs and risks. Employees struggle to access their own data. There exists no efficient system for employees to control their professional records. Both parties are trapped in outdated verification models.

The Shift to Employee Sovereignty

Today’s status quo sees employers acting as gatekeepers, controlling access to employee records such as income verification and employment history. But the future lies in putting data ownership back where it belongs — with employees themselves.

Consumer preferences now demand individual control and instant sharing of professional credentials on their own terms. Just as open banking lets customers share financial transaction data as needed, employee-owned records bypass employer intermediaries. Employees can provide instant income confirmations or employment summaries — no lengthy verification sequences required.

This shift mirrors growing data sovereignty trends across domains such as banking and healthcare, allowing individuals to steward their own data. And blockchain technology enables it, allowing verified records to be issued one time and later shared securely without reliance on external confirmation.

Unlike emailed verification paperwork, blockchain technology allows records to be mathematically “hashed” into unique codes. These codes connect an employee’s career records chronologically in a digital ledger, where each new record connects to previous ones. Hashes protect private details, but any attempts to alter data break the chain, signaling fraud. This gives employees the sole authority to share their information instantly while guaranteeing accuracy.

In fact, a recent study combined blockchain with machine learning for financial fraud detection, achieving 98.93% accuracy in identifying fraudulent activities. This demonstrates how blockchain’s immutability provides ironclad fraud prevention when paired with artificial intelligence.

“Blockchain is just a technology — it’s not about crypto,” Zaidi said. “The power of blockchain is that it enables auditability and immutability. If a record changes, we know about it instantly.”

By letting employees control their own verified records, blockchain finally makes data sovereignty a reality rather than an ideal. HR no longer plays involuntary gatekeeper; workers showcase career accomplishments on their own terms.

The HR Perspective: Eliminating Costly Verification Bottlenecks

Employment verification represents a massive time and compliance sinkhole for HR teams. Consider a large airline that previously dedicated 270 staff hours monthly to verification paperwork. Employees requested income and employment confirmations from HR, creating delays and irritation. Accidentally sharing employee data also triggered FCRA lawsuits despite good intentions.

After adopting TransCrypts’ blockchain-based verification, the airline radically simplified this workflow. The outcome? Verification volume plunged to just one hour monthly. By putting staff in charge of their own verified credentials, the airline eliminated the verification bottlenecks that had drained HR bandwidth. Beyond huge time savings, the airline reduced compliance risks and legal liabilities. FCRA and other federal regulations require employers to carefully verify third-party records requests. It’s a manual process prone to data leaks, triggering lawsuits when errors occur.

By making staff the stewards of their employment data instead, compliance duties are transferred.

“HR departments don’t want this responsibility in the first place,” Zaidi notes. “They’re stuck managing verifications they shouldn’t have to touch. Giving that responsibility back to the employee makes things faster and safer for everyone.”

This theme resonates across industries as organizations balance security with data sharing. Blockchain-verified employee credentials present a solution that eases tensions. Workers store sensitive career records securely and can still share them instantly when needed. HR workflows simplify, resources reallocate to strategic aims, and compliance risks decline. Ultimately, ownership transfers back to whom the data belongs — the employee.

The Bigger Picture: A New Model for Employee Data Ownership

Verification served as an initial gateway, but the bigger vision is complete employee stewardship of work records, credentials, and essential identity documents alike. TransCrypts aims higher than streamlining employment confirmation workflows. The end goal is an integrated employee-owned ecosystem where employees store personal and professional credentials such as degrees, skills certificates, financial accounts, and IDs as unified self-sovereign profiles.

Employees then showcase verified competencies to employers, lenders, or government agencies instantaneously without repetitive third-party disclosures. This represents the next evolution of personal data sovereignty, in which nodes hold custodianship over their unique contributions to each system’s overall integrity. Just as blockchain pioneers envisioned a “trustless” economy with distributed power, employee-controlled records dissolve today’s centralized gatekeepers.

As deepfakes threaten data legitimacy, blockchain plus AI-based fraud prevention offers the antidote. Veracity is vital, and manual confirmation alone is growing unreliable as AI image and voice synthesis advance. Blockchain’s immutable ledgers provide permanent proof of records’ provenance and integrity over time. AI pattern analysis enhances human detection of altered credentials or anomalies that suggest identity theft.

Together, the fusion of immutable data guarantees and AI fraud monitoring provides the checks and balances needed for reliable identity confirmation, even as AI itself poses new misinformation perils. As Zaidi explains, “AI is making fraud more prevalent. The only way to combat AI-driven fraud is with instant, immutable verification — something only blockchain can provide.”

The Future of Employment Verification Is Employee-Owned

In the end, both employers and employees stand to benefit tremendously from this paradigm shift toward employee-controlled data sharing. HR teams gain faster, lower-cost verification with reduced liability. Employee frustration diminishes as the process of accessing records transfers from bureaucratic gatekeepers to individual self-service.

For HR specifically, blockchain verification streamlines previously manual workflows without compliance risks. Costs from high third-party fees drop while legal liabilities decline absent data management duties. HR bandwidth reallocates from repetitive confirmation sequences to strategic initiatives driving productivity and engagement.

Meanwhile, employees gain instant flexibility in showcasing their professional credentials to any valid audience. Job applicants share employment history details quickly as needed for background checks. Mortgage applicants verify incomes seamlessly to confirm loan eligibility, all without reliance on former employer availability amid clunky verification choreography.

This paradigm ultimately nurtures labor market dynamism by dissolving friction and barriers to workforce continuity. And employee-owned data mobility liberates aspirational mobility overall — across firms, industries, and geographies.

As digital disinformation proliferates in the AI era, only self-sovereign worker credential management can provide sufficient integrity, transparency, and auditability. The solutions merging blockchain’s assurances and AI’s pattern detection offer the essential formula for reliable verification systems as fraud threats multiply. Employment history represents merely the first application; income, education, identity, and skills credentialing may soon follow suit. In the dawning era of exponential technologies, putting employees at the center of new data architectures unlocks the next chapter of trustworthy innovation.