How To Create A Labor Exchange Using Blockchain

Labor Exchange Using Blockchain

Are you trying to find out how to create a labor exchange using blockchain?

This is a market segment that still has lots of room for growth.

According to MCKinsey & Company, “Online talent platforms are increasingly connecting people to the right work opportunities. By 2025 they could add $2.7 trillion to global GDP, and begin to ameliorate many of the persistent problems in the world’s labor markets.”

By creating a innovative labor exchange software application, your company can be at the forefront of this shift in global work practices. Here’re a few amazing case studies of companies who hired DevTeam.Space to build similar products:

  1. MyTime – Scheduling And Payment Web Application
  2. Send Sonar – Social Media Web Application and Chatbot
  3. eSports Tournament Project – Web Application For Tournament


Labor exchanges: A brief history
An example of a labor exchange
How effective are labor exchanges?
Blockchain: What it is, and how it can help
Creating a labor exchange using blockchain
Planning to create a labor exchange using blockchain?

Labor exchanges: A brief history

Henry Robinson in Britain had first proposed the idea of employment exchanges in 1650, and he proposed the creation of an “Office of Addresses and Encounters”. The intended objective was to connect employers to job-seekers, however, the British parliament had rejected his proposal.

However, nearly every developed country adopted this idea in the early twentieth century. In the United Kingdom, Alsager Hay Hill, a social reformer and employment campaigner opened the first labor exchange.

He established it in London, in the year 1871. Later, the “Labour Bureau (London) Act 1902” enabled the creation of official employment exchanges. Read more about this in “Employment agency”.

In the USA, the “New Deal” emerged as a result of the Great Depression in the 1930s. Among other reforms, this included rolling out of a federal program of employment services. The “Commonwealth Employment Service” in Australia emerged in 1946, which was the first public employment service in the country.

There were private employment agencies, e.g., Gabbitas & Thring in the UK, which was established in 1873 by John Gabbitas. Fred Winslow in the USA started “Engineering Agency” in 1893. However, in this article, we focus on government labor exchanges.

An example of a labor exchange

The US National Labor Exchange (NLX) is an example of a prominent labor exchange. NLX provides the following services:

  • Job-seekers can create an account, search for jobs, and access career resources.
  • They can search for jobs by the state as well as by member companies.
  • Veterans have a separate option on NLX to search for jobs.
  • Employers can register with NLX and post jobs.
  • They can avail services that will help them to comply with the applicable regulations.
  • Employers can post career events, and they can access analytics reports.
  • NLX aggregates jobs for veterans, disabled people, and senior citizens, moreover, it shows jobs from diversity-friendly employers.

How effective are labor exchanges?

Labor exchanges demonstrate different levels of effectiveness across various countries. In the USA, a 2003 U.S. General Accounting Office report stated that the “Employment Services” (ES) administered by the federal and state governments served more than 19 million customers in 2002. The report identified it as the largest such program in the country.

The various in-person services that ES provides are seen as cost-effective, however, it’s not known whether the automated services and self-service assistances are equally effective. It’s not known whether ES helps the employers equally well.

The report recommended the implementation of better information systems to measure the effectiveness of services provided to employers. Better quality of data will also help to measure the effectiveness of the automated services and self-service assistance. Read more about these observations in “Evaluating the effectiveness of labor exchange Services”.

Blockchain: What it is, and how it can help

Blockchain is a technology with huge potential to transform many aspects of society and business, and it can transform labor exchanges as well. However, let’s understand the characteristics of blockchain first, which are as follows:

  • It’s a “peer-to-peer” (P2P) network, and public blockchains networks allow anyone to join. Private blockchain networks allow only trusted parties to join, though.
  • Each computer on a blockchain network is called a “node”. Nodes maintain a shared ledger containing all transactions, therefore, blockchain is also called the “Distributed Ledger Technology” (DLT).
  • Blockchain uses advanced security features like digital signatures, data encryption, cryptographic hash functions, and consensus algorithms to protect data against tampering.
  • Its decentralization, distributed ledger, and security features offer transparency, audit trail, and efficiency.
  • Blockchain platforms like Ethereum, NEO, and EOS offer smart contracts, which are immutable pieces of code that transfer cryptographic assets when predefined conditions are met. These are transparent, moreover, their execution is autonomous and irreversible. They have the potential to improve contract administration.

Read more about blockchain in “How to build your own blockchain using Node.js”. With its immutability and distributed ledger, blockchain can significantly improve how labor exchanges function.

Creating a labor exchange using blockchain

You need to take the following steps to create a labor exchange using blockchain:

1. Agree on the project scope

Hire a project manager (PM), an IT architect, and a team of business analysts first. You need to hire people with sufficient experience in blockchain development projects.

This team needs to discuss with the business stakeholders and gather the business requirements. Define the project scope based on this, which should include offering a web app.

2. Prepare a comprehensive project plan

Blockchain development projects tend to be complex, therefore, you need a comprehensive project plan. You need to consider several questions, e.g.:

  • Do you need a cryptographic token?
  • Should you use a public or private blockchain?
  • How to find the right blockchain network hosting provider?

You can read our guide “What to plan for when undertaking blockchain software development?” for more insights.

3. Opt for a private blockchain since you will deal with sensitive data

A labor exchange needs to comply with stringent labor laws, moreover, it must comply with privacy regulations. Labor exchanges deal with sensitive data such as identity, and you need to protect them adequately.

A labor exchange will likely serve millions of job-seekers, moreover, it might serve thousands of businesses. It needs scalability and high transaction throughput.

Given these, I recommend that you use a private blockchain. They offer the following advantages:

  • You can let only trusted parties join, therefore, sensitive information isn’t out in the open.
  • You can choose consensus algorithms that enable scalability and high performance.

Read our guide “Public vs private (permissioned) blockchain comparison” for more information.

4. Select an appropriate enterprise blockchain framework

Building an enterprise blockchain can be complex, however, using an enterprise blockchain framework makes it easier. I recommend that you use Hyperledger Fabric, which has the following advantages:

  • Fabric, as it’s commonly called is an open-source framework for creating enterprise blockchain networks.
  • This framework is part of the Hyperledger Consortium, which is an industry group, and technology giants such as IBM, Cisco, etc. contribute to it. As a result, there is a continuous effort to improve the framework.
  • Fabric is scalable and performant, moreover, you can build a permissioned network using it.
  • You can take advantage of its modular architecture and pluggable components like consensus algorithms.
  • Fabric makes it easy to protect sensitive data with its “Channel” technology.
  • You can code “chaincodes”, i.e., smart contracts in Fabric parlance in Java, Golang, and Node.js.
  • It also offers a “Hardware Security Model” (HSM) to ensure additional security to digital keys.

Our guide “Pros and cons of Hyperledger Fabric for blockchain networks” explains its advantages in detail.

5. Find the right blockchain network hosting provider

You need to find an appropriate blockchain network hosting provider so that you don’t need to manage IT infrastructure while building your blockchain network. I recommend “Blockchain on AWS” since it offers the following benefits:

  • It supports Fabric, moreover, it uses the excellent cloud capabilities of AWS.
  • AWS supports both decentralized and centralized ledger. Members own peer nodes in the case of a decentralized ledger, whereas a trusted authority manages a centralized ledger and shares it with others. You get the key advantages of blockchain in both cases.
  • You can use the Amazon “Quantum Ledger Database” (QLDB) for this project, which is a fully managed ledger database.
  • AWS offers its fully managed “Amazon Blockchain Service”, and you can use it along with the “AWS Blockchain Templates” to build a blockchain network quickly.

I have explained about “Blockchain on AWS” in “Best blockchain network hosts 2019 – Ethereum – Amazon etc.”.

6. Select the right Platform-as-a-Service (PaaS) platform for the web app

You also need a “Platform-as-a-Service” (PaaS) to deploy the web app, and AWS Elastic Beanstalk is the right choice for this. It manages the cloud infrastructure, networking, operating system, middleware, and runtime environment, therefore, you can focus on developing the web app.

You can easily integrate 3rd party APIs, moreover, you can use the AWS DevOps services on Elastic Beanstalk. Read more about it in “10 top PaaS providers”.

7. Prepare a cost estimate for the project

You need to prepare a cost estimate for this project to get the necessary budgetary approvals to proceed. This involves estimating the development manpower, moreover, you need to estimate the cost of hosting Fabric on AWS. Our guide “How much does it cost to build a blockchain project?” can help you to prepare this estimate.

8. Form the complete project team

You need to form the complete project team now, and hiring competent blockchain and web developers assume importance here. Our guide “How to find a good software developer” can help you.

You need the following roles in the team:

  • UI designers;
  • Web developers with Node.js skill;
  • Blockchain developers with experience in developing apps on Hyperledger Fabric;
  • Testers;
  • DevOps engineers.

9. Design the user interface of the web app

You need a user-friendly user interface (UI), therefore, you should follow appropriate guidelines. I recommend that you read “User interface design guidelines: 10 rules of thumb” for guidance.

10. Create the blockchain network and develop chaincodes

It’s time to create the blockchain network on AWS, therefore, I recommend that you take the following steps:

  • Create a Hyperledger Fabric blockchain network including the first member.
  • The next step is to create an endpoint.
  • Set up a client to communicate with the network.
  • This being a permissioned network, you need a member admin for this system. You now need to set up such an admin.
  • Users for this system will need to execute transactions, therefore, the system needs the peer nodes. Start with creating one peer node, subsequently, you need to add more.
  • You now need to code “chaincodes”, therefore, I recommend that you read “Chaincode tutorials”.
  • You need to create a channel to process sensitive data.
  • A labor exchange using blockchain will involve sending sensitive data from one user to another, therefore, you need to create a joint channel. You also need to invite the relevant members.

You can read “Get started creating a Hyperledger Fabric blockchain network using Amazon Managed Blockchain” for guidance.

11. Develop the planned web app

I recommend that you use Node.js for developing the planned web app. Node.js is a popular open-source runtime environment based on JavaScript, and many developers know it. It offers more advantages, e.g.:

  • js is suitable for creating scalable and performant web apps.
  • There is a large developer community that supports it, and this community has developed many open-source tools and frameworks.

I have explained the benefits of using Node.js in “10 great tools for Node.Js software development”.

Developing this web app involves the following:

Planning to create a labor exchange using blockchain?

You can expedite your project using this guide, platforms, tools, frameworks, and documentation, however, developing a labor exchange using blockchain involves several complexities. You should engage a reputed software development company for such projects. Our guide “How to find the best software development company?” can help you to find such a trusted service provider.

Frequently Asked Questions

What is a labor exchange?

A labor exchange is any forum, agency, or job board that connects employers with job seekers. Work can be unpaid or for an exchange of goods or services but is usually on a paid basis.

What is the best labor exchange? or Craigslist are some examples of good labor exchange sites.

Can you create a labor exchange using blockchain?

Blockchain is an ideal technology for creating a decentralized labor exchange as it has a number of benefits including the ability to create smart contracts to automate agreements between employers and job seekers.

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