In the past, the freelance industry was considered a last resort. It was often a means to make ends meet for college graduates as they waited for career opportunities. It was a reactive path chosen when nothing else seemed forthcoming. But attitudes have changed; we are in the midst of the growing gig economy, and it shows no signs of slowing down.
In fact, Intuit CEO Brad Smith estimated that about 34 percent of the U.S. workforce is now freelance based, and that number is expected to grow to 43 percent by 2020.
The move toward the gig economy results from a number of factors. First, technology has made it easy for people from all corners of the world to collaborate on common projects. The corporate path is also highly unpredictable, making it preferable for some to shape their own destiny. Most of all, a majority of today’s generation wants a flexible routine. They shy away from the 9-5 routine and opt for the less traditional income generation opportunity offered in the freelance industry.
The platforms that drive the gig economy
The number of websites offering freelancing opportunities has also grown accordingly. Some have made quite a remarkable reputation for themselves becoming household names. Fiverr, Upwork, and Freelancer are just a few of the most popular freelance sites that provide access on a global level. Due to their popularity, there is no end to the number of job opportunities on any of them. Success mostly depends on how good a freelancer is at pitching a proposal, and their ability to offer competitive rates for services.
Fiverr, for example, rose to popularity with its $5 standard rate for virtually any job done. It prides itself as one of the world’s biggest online marketplaces for digital services, with more than 25 million projects completed. Current pricing is not limited to that $5 rate, which means users can set their own lucrative price points.
Freelancer, on the other hand, brings freelancers and clients from all fields together on one platform, with providers competing with others to get ranked and pitch bids. Meanwhile service provider sites like Uber and Lyft offer gig economy-style freedom, along with solid operational support that eliminates the need to pitch and bid jobs.
With all of these sites, the global reach makes it easy for professionals to decide how much their time is worth and how they want to schedule the tasks they undertake. The freedom inherent in this is compelling.
The challenges of traditional freelance platforms
This freedom that freelancers enjoy also comes some big challenges. The risk potential for freelancers to get scammed is real. On your own, it is often hard to tell genuine clients from scammers, and the most common way to ensure security is by working within one of the platforms and relying on their payment services.
This security comes at a hefty price. On Freelancer, the commission rate is 15 percent, while on Fiverr it is 20 percent. The high competition on the sites often compels freelancers to bid low in spite of these high commissions. The result is a gross underpayment for services and a general sense of dissatisfaction.
Scam projects, fraudulent payments and unresolved disputes leave freelancers often walking away empty-handed. Yet the risk of working outside the platform makes freelancers stay.
Clients can also lose out big time by hiring scam freelancers. Some providers ask for upfront payments and never deliver. Others deliberately delay projects, asking for additional payment beyond what was agreed to. Clients are left out of pocket and still in need of the project they paid for.
Blockchain disrupts the freelance payment challenge
Considering the massive size of the freelance industry, solving these challenges is imperative. Innovative solutions are being created to eliminate the challenges and create mutual trust between the providers and the companies that need their help. It will help to sieve out scammers from genuine persons, effectively restoring the sense of security that should be hallmarks such platforms. And in the process, it will leave more of the funds in the freelancer’s pocket, by reducing the hefty platform fees.
The technology behind this innovation is blockchain, which has already brought a welcome disruption to many aspects of today’s life. In many areas, blockchain and the cryptocurrency that runs on it are taking over where traditional financial systems have rested on their laurels and passed costs onto the users.
Could blockchain be the solution that the freelance industry needs to address its challenges? Let’s look at how it’s being used in the freelance industry.
Coinlancer is one of the latest examples of the blockchain disruption to the freelance industry. It is an Ethereum-based platform where freelancers and clients connect remotely through smart contracts, with both the freelancer and the client given equal attention.
The needs of each are addressed and solutions are already devised to solve common problems – like high portal fees, random user freezes and payment frauds and delays. This innovative platform charges a 3 percent escrow – instead of the common 15-20 percent commission – and ensures payment for services using Coinlancer tokens secured by that escrow fund.
Image source: Coinlancer.io whitepaper
The use of Ethereum smart contract technology safeguards the client’s interests as well as the provider’s. And in dispute cases where both sides have valid causes for complaint, a freelancer tribunal manages the fair distribution of escrowed funds between the two parties. This is likely to offer fairer judgements than a centralized panel of stakeholders.
The tokens used offer an investment opportunity within the platform, providing freelancers another opportunity to grow financially. Coinlancer is also integrated with the HitBTC virtual currency exchange platform to expand investment opportunities for the freelancer. (Note: investing in any cryptocurrency carries risk. Only invest what you can afford to lose.)
The future of the freelance industry in the crypto economy
Today’s freelancer enjoys a world of unique opportunities as well as challenges. Anyone who has tasted the joys of this industry might find it challenging to revert back to the traditional job industry.
And for the clients that use freelancers, they can choose from a wide pool of competitive and enthusiastic professionals, without the expense of hiring on new staff. The truth is that no one would like to see this world come to its knees due to scam, fraud and excessive fees. In fact, our current economy absolutely depends on gig workers to thrive.
Blockchain technology could be the saving innovation that is destined to revolutionize the industry and put an end to some of its significant challenges. The decentralized structure, high level of security, low commission rates and investment opportunities are vast improvements over traditional freelancing platforms.
If the world is ever going to realize a truly fair working environment for freelancers, it will most likely be based on this disruptive technology.
This post is part of our contributor series. The views expressed are the author’s own and not necessarily shared by TNW.