If there’s one good thing that the number of recent high-profile security breaches have taught us (besides the importance of protecting our data), it’s that relying on one gatekeeper for storing information is probably not the best idea. That makes blockchain and it’s many uses more attractive than ever. And for many freelancers, blockchain’s uses have the potential to impact some of the stickiest pain points that come with freelance life: contracts and late payment.
The problem with freelance job platforms
The nature of our plugged-in world means that a lot of freelancers find jobs online, namely through job platforms like Fiverr and Upwork. While these platforms do give freelancers the opportunity to find jobs from pretty much anywhere, they can negatively impact freelancers when it comes to a client dispute.
Freelance job sites themselves are responsible for settling issues between freelancers and clients. While disputes don’t happen too often, they are still situations that every freelancer will probably face at some point. Platforms like Upwork, for example, provide various ways for clients to dispute a freelancer’s hours and work. It’s definitely not a fun position in which to be, and arbitration through a middleman can become a drawn-out process that requires a payment to even complete.
Now, this definitely isn’t to demonize sites like Upwork. They have these policies in place for a reason, and there are clients who experience legitimate issues with freelancers. However, answering to a middleman to solve these problems is not the most efficient or cost-effective.
Smart contracts eliminate the middleman
That’s where smart contracts come in. Smart contracts are written with code, creating a document that lives in a blockchain network. These contracts cut out an intermediary (in this case a freelance job site) and allow you to have a document that can automatically enforce its own stipulations.
Why use a smart contract instead of a regular contract? Well, they come in handy in the event that you and your client face a disagreement and must compare your record of events. A blockchain network provides a public record for you and your clients to access that neither party can tamper with, as it alerts either party to any changes made. And because these documents come with their own enforcement, it prevents many disputes from happening in the first place. Smart contracts keep everyone on the same page and make the terms of a working relationship very hard to argue.
Blockchain helps with late payment
Freelancers often struggle with late payment issues – in fact, 29% of invoices for freelancers are paid late. It’s even worse for female freelancers, who are more likely to struggle with late payment than male freelancers, receiving late invoices 31% of the time vs. 24% of the time for men.
Now surprisingly, cryptocurrencies don’t actually help with late payment problems. It turns out 39% of invoices paid with Bitcoin are paid late (yikes). However, that doesn’t mean it’s time to rule blockchain out of the payment equation.
By writing payment information into the terms of your smart contract, you stand a better chance of holding clients accountable. Consider providing clients with a credit limit, meaning you’ll give them an additional $100-worth of work, for example, after which you will no longer provide services until all outstanding invoices are paid. These terms can exist as code in your smart contract, following the “if this, then that” logic by which they’re written, and automatically enforce themselves. You can also store invoices in a blockchain network, creating a secure and open paper trail in the event that further action regarding your payments is required.