To be the first truly decentralized solutions provider for the freelancers market worldwide. We want to bring the power of blockchain to freelancing world in order to give the users the power to work, earn more and build a community that is based on upholding the interests of all involved.
The nature of work is changing. With more tools and technological resources, more and more people are working on freelance related jobs. Freelance work industry is comprised of many jobs. The majority are referred to as freelance jobs, others use the term gig economy and others use the term freelance contractors. According to recent studies, the total addressable market for global freelance and gig economy is estimated to be $1.5 trillion. North American accounts for over half of the global freelance marketplace. In the USA alone, there are an estimated 55 million freelancers in 2016 which is a growth from 53 million in 2014.35% of the U.S workforce is made up of freelancers and they earned a combined $1 trillion in 2016 according to a survey by Freelancers Union.
More than any other time in history, more people are opting out of the 9-5 corporate jobs and working on freelance contracts. Some of the things that have propelled this rise include cloud computing, digitization, smartphone apps, online marketplaces and other changes in nature of work. Some new jobs have been created that do not require the normal 9-5 corporate environment. Others have evolved and can be done away from the workplace. 41.9% of freelancers say that they obtained their training from colleges and universities and 43.8% are self-taught. 13.4% say they learn on the job. This shows that majority of freelance workers today learn on the job or are self-trained showing that the nature of job demands have contributed highly to the rise of freelance economy.
Types of Freelancers
There are different types of freelancers based on the type of work done.
Independent contractors make up the biggest percentage of freelancers with 40% of the total freelancers. These are the type of freelancers that don’t have one employer and instead do temporary, supplemental or project-on-project basis.
Moonlighters are the type of freelancers that have a primary of a traditional job and then take up additional work in their spare time. Example of such include people working on a normal 9-5 job and then working as web developer or designer on the side in the evening.
Diversified workers are the type of workers that have diversified sources of income from both traditional jobs as well as other freelance jobs. Instead of working 9-5, they work on hourly basis and therefore in a single day they can work 2-3 jobs based on the amount of work that needs to be done.
Temporary workers are individuals who are employed in an organization for a specified amount of time until the job is done and then move on to other types of jobs. They are mainly consultants and they work on contractual basis. Their work can be done either remotely or in the office based on client demands.
Freelance business owners
Freelance business owners group makes a major segment of the freelance workforce. These are the type of people who source jobs from different clients and then set up a team to handle the jobs in form of an agency. They identify as freelancers because they source for jobs from different areas both online and offline. An example would be a social media marketer who seeks jobs both from online sources and other offline sources. He or she then hires a team to be handling the jobs. The employees may work on full-time basis but the employer seeks many and diversified jobs in order to ensure sustainability.
Breakdown of freelance jobs
Technology related jobs comprise the majority of freelance jobs. As of 2014, $486 million earned from technology jobs. Other freelance job earnings are shown below:
Where are freelance contractors located
The global distribution of freelance workers is as follows.
The European distribution of freelance workers is as follows;
Statistics also show that the younger workforce has more affinity to freelancing than older people. Freelancers aged between 18 and 24 make up 47% of the freelancers’ workforce and Baby Boomers make up only 28%. In addition, freelancers are earning more than full-time workers. 46% say they raised their rates in the past year. Furthermore, the majority say they are able to increase their rates more often than it would be in the case of full-time jobs. More than half of those who quit traditional jobs to get into freelance earn more. Furthermore, the majority say that having a diverse set of clients is more economically secure than having just one employer. These trends show that the freelance economy is set to grow even further. Majority of the workforce is made up of young people are they are increasingly shunning traditional 9-5 jobs.
Europe versus U.S.A
A survey conducted by Mckinsey Global Institute found out that the number of freelancers in Europe has over the years been significantly undercut. Current estimates show that there are more freelancers than previously thought. Freelancers continue to face challenges because the current labor market policies are designed with a traditional 9-5 job in mind. There is need to revise the labor policies in order to ensure they are representative of the current situation. One of the main contributors in the growth of freelancers in Europe has been due to job losses. After the 2013, recession, more and more people have taken up jobs as freelancers in order to supplement their income. Freelancers are able to work on different clients over a long period of time and therefore earn a living commensurate with their expertise. This also enables them to make their skills more affordable to potential clients. As technology advances the ability to deploy expert skills in a flexible manner will be a key to success for the majority of the innovative and advanced organisations. From 2004 to 2013, the number of freelancers in Europe grew from 6.2 million to 9 million professionals which is a 45% increase. Netherlands is estimated to have the highest number of freelancers in EU with 93% followed by France with 85%. United Kingdom has 63% and Italy has the lowest number of freelance workers at 12%. A significant number of freelancers are also found in countries such as Poland, Finland, Belgium and Germany. However, as compared to USA, there are fewer freelancers in Europe. In USA, about 25% of the working population is made up of freelance contractors. However, in EU, it is only 1.1%. Netherlands has the highest percentage at 2.9% while in UK it is 2.1%.
In addition, the type of jobs freelancers do in Europe is a bit different from the USA. Professional, scientific and technical activities make up 25% of the duties done by freelancers. The breakdown of other jobs is shown below:
In Europe majority of freelance contractors are men who take up 54% of the total workforce. However, the proportion varies across European states. In Belgium, 60% are male and Finland it is 46%. Another unique characteristic of freelance contractors in Europe is that majority of them are migrant workers. 1 out of 4 can trace their origin to a different country. One of the main reasons for this could be attributed to the fact that it is difficult for migrant workers to get jobs in Europe. Some of them do not have the required papers while others lack experience and qualification to work in traditional full-time jobs.
In the majority of existing freelancing sites, sellers have to bid for jobs from clients. In other sites, the sellers wait for buyers to pick them up. Upwork is currently the largest network of freelance contractors. In 2014, Elance and oDesk merged to form Upwork and currently has over 10 million registered users with 4 million clients, three million jobs postings every year. There are also other sites that command large numbers such as 99 designs, PeoplePerHour, LinkedIn Profinder, SimplyHired and Fiverr among others. Basically, the way these platforms work is that a user signs up an account and specifies whether they are a seller or a buyer. Majority of them allow for one person to be a seller and buyer. There are established timeframes for each task which can be dictated by either the seller or the buyer. Payments are made in an escrow manner whereby the buyer pays before ordering a task. The money is kept in escrow and when the seller delivers the work, the payment is automatically released to the seller.
The major challenge of existing platforms is that a large proportion of revenue earned by sellers on the platform goes to the provider. Upwork charges sellers 20% for any task and later on goes down to 10% after reaching a certain level. 20% is charged for the first $500 work done on the site and 10% of the work done worth between $500 and $10,000. 5% total billings is charged for work exceeding $10,000. Across all the existing freelance contractor websites, on average, 10-20 of revenue goes to the provider
Apart from service charges, freelance websites also charge payment processing fees. Upwork and other sites charge up to 2.5% processing fee per payment transaction. Furthermore, clients in US, Europe and certain areas of Australia pay a monthly flat fee of $25 instead of 2.75% per payment. The processing fee is high because these sites have to rely on third-party payment processors such as PayPal, Stripe, MasterCard, Visa among others. Therefore users are double charged-first by the platform and then by the payment processor.
Payment infrastructure is broken
The majority of freelancers take up to two weeks to receive payments for the work done. Sometimes, the payments do not reflect and if they do, they reflect incorrect payments. In some cases, the payment method proposed by the freelancer may be rejected by the provider. Other times, contractors in the site are limited in the amount of money they can access or withdraw at any particular time. This ends up inconveniencing freelancers on the site because of uncertainty in whether payments will be made or not.
In the majority of the existing freelancing sites, the level of customer support is low. Majority of the users are automatically treated as scammers and therefore even the top-rated sellers with long-term contracts are not treated well. In most cases, it takes more than 24 hours in order to get customer support for specific types of tasks. Furthermore, disputes are resolved by third parties and mainly not on the platform. In many cases, the disputes are not resolved due to lack of a proper channel for mediation. Therefore even though the current freelancing websites have high numbers, their retention rates, as well as rates of customer satisfaction, are low.
The customer review system in the current platforms is broken. Some of the reviewers do not give the honest opinion. There are no checks on the platform in order to verify the authenticity of reviews. Some of the users can easily buy reviews from other sites and this would go unnoticed.
Based on detailed analysis of the current freelancing platforms, it is clear that the system is broken. However, blockchain provides a solution to all these challenges. With blockchain, it is possible to have a decentralized freelance contractor site that is low cost, efficient and serves the needs of all the uses on the platform.
The blockchain is a decentralized digital ledger that records all transactions across a different network of computers. The record cannot be altered and the information is available to all people within the network. This aspect of blockchain makes it suitable for freelance contracting. Blockchain came into the mainstream overview with the introduction of Bitcoin in 2009. Bitcoin is the world’s first decentralized cryptocurrency that enables peer-to-peer financial transactions without relying on centralized third parties such as banks and payment processors. The emergence of Bitcoin enabled people, who otherwise would not have been able to send cross-border payments, to do so. Further, through Bitcoin, it is possible to send money at low cost and faster rate. This concept of low transaction costs, flexibility and efficiency is the main idea behind Blockchain that is being applied to freelance contracting.
Eliminating the middleman
Freelancing platforms have contributed greatly in connecting talent with work. However, this has come at a great cost because, in order for the current freelancing ecosystem to work, there needs an aggregator that connects the freelancers with the clients. This is in order to ensure trust and transparency. However, with blockchain, trust is now bestowed on the community and not one single entity. As Vitalik Buterin, the founder of Ethereum platform said:
“Blockchains automate away at the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi driver work with the customer’.
This is the similar case of freelance contracting. Instead of going through platforms such as Upwork, freelancers connect with the job provider directly and make their own agreements. Therefore blockchain enables leveling of the economic playground and effectively eliminates the middleman and thereby providing greater rewards to creatives and freelancers everywhere.
The blockchain is, therefore, a trust-less distributed system that does not require a centralized authority to monitor and control how it works. Indeed, it assumes that actors will try to cheat the system. Through a verification process by nodes in the network, the nodes must come to a majority consensus in order for a transaction to go through.
Use of smart contracts
Another aspect of blockchain technology is the use of smart contracts. Smart contracts entail a way to digitally exchange money, property, shares or anything of value through the internet in a conflict-free environment without the need of a middleman. With smart contracts, it is possible to define the rules governing the agreement and once an agreement is made by the two parties it automatically self-executes. This eliminates the need for third parties monitoring whether the contract has been adhered to. This is useful in freelancing environment because it enables two parties to enter into a contract without the need for a third party middleman or aggregator monitoring the execution of the contract. For example, a buyer can come off the freelance platform and he or she wants to seek a developer to build a website. The terms and specifications of the website are specified in the smart contract. Therefore when a seller takes up the task, payments will be released only when the terms of the contract have been met. Therefore smart contracts make the freelance contractor landscape more efficient, predictable and eliminate bad actors who promise to do a certain amount of work and then do not follow through.
The platform: Introducing BitContractor.io
Why Ethereum platform
BitContractor will be on the Ethereum platform. We believe that Ethereum is geared towards unlocking more applications of blockchain than ever before. Bitcoin completely changed the way people use and adopt digital currencies. Until recently, it was difficult and complicated to build any other application on top of blockchain. Now with Ethereum, there is no need for complex background of coding, cryptography and mathematics. Ethereum allows applications such as digital assets to be built on blockchain and therefore making it possible for developers to deploy decentralized applications on the blockchain. All this is possible through the use of smart contracts. Smart contracts can be used on the Ethereum platform in order to allow individuals to enter into a binding contract over the blockchain platform. Bitcontractor will therefore use Ethereum and specifically smart contracts in order to enable contractors enter into agreements into one another. With Ethereum, there is no need for a centralized third party that handles engagements and transactions between freelancers on the site. Trust will easily be established between parties through smart contracts.
The BitContractor platform will have both buyers and sellers. In order to ensure they work well, it is important to ensure a seamless process that connects buyers and sellers.
For a seller on the BitContractor platform, the first step is to create a seller profile. The profile indicates the type of qualifications and skills by the seller that he or she can use to do contracts. The next step is to create detailed job contracts. These job contracts specify the type of work you can do, the budgeted deliverables. Third step is to search for jobs on the platform. There are various categories on the BitContractor platform that can enable the seller to easily find jobs they are qualified to do. Contracts can be searched based on skills, or other categorizations.
The platform also allows sellers to easily manage their wallets. Since it is based on blockchain, BitContractor will allow payments via BitContractor token. Users can easily change into other cryptocurrencies and fiat currencies.
Bid for a job
The seller or freelancer has the opportunity to bid for a job if they think they are qualified for a job. Furthermore, sellers can pick up the jobs they can undertake on the jobs board which is accessible to all sellers. The seller also has the opportunity to cancel a job if they are willing. After the job is completed, the seller rates the buyer or client.
Sellers on the platform will be able to advance their levels with time. The levels are: beginner, intermediate and pro. Moving from one level will be determined by number of completed jobs and the reviews by users. On the pro level, buyers will earn more, be able to dictate the price and get custom offers by the best buyers on the platform. Furthermore, holding BitContractor tokens for a long period of time will attract more rewards. Holding tokens for long term will increase the value of token because they will become more valuable. Therefore the more users stay on the platform and hold the BitContractor tokens, the more they earn.
The pro account has several benefits:
A buyer is also required to create a buyer profile on the platform which is easy to set up.
As a buyer you can easily follow your project as it is being executed by the seller. A buyer can set deliverables along the way in order to ensure the project is progressing according to plans.
Select a freelancer
A buyer will be able to select the freelancer they want to work on their job. They can choose based on skills, reviews and number of jobs taken in the past. The buyer needs to have enough funds in order to pay for the job. The buyer pays when ordering the job but the funds will not be delivered until the job is completed. This is automatically done through use of smart contracts.
Terms and payment
The buyer and seller agree on price and time period. If both are in agreement, the contract is automatically executed. When the freelancer is done with the job, he or she receives the payment. The client has an option to review the task and offer ratings. The buyer has an option to request for modification if it was specified in the smart contract.
Cancellation of a task
A task can also be cancelled by the buyer or seller or based on mutual agreement if the contract is not executable.
The current platform charge high fees because of centralization. The high charges to customers are used in order to maintain the platform and pay salaries to employees working at those companies. This is the natural by-product of centralized systems-they give users a platform and when they have a large number of users they can charge high costs and eat up revenues. However, the blockchain solution by BitContractor gives power, control, and authority to the users in accordance with blockchain framework. With decentralization, there is no single party controlling the system and therefore charges low fees and no withdrawal charges. The network only needs low transaction costs that are used to incentivize the miners who verify and confirm transactions.
Rigid payment infrastructure
As earlier stated, blockchain is a trust-less ledger system that automatically eliminates bad actors. This system is replicated in the payment infrastructure. It automatically manages buyer and seller relationships. When a buyer wants to purchase an order, all nodes must verify whether the buyer has enough funds in their account. Once the payment is confirmed, it authorizes the transaction and it is recorded on the blockchain. The payment systems is therefore certain and effective and therefore both the buyer and seller have peace of mind.
In addition, BitContractor platform allows for more payment methods. The current systems only allow for mainly US dollars or the Pound or Euro. As much as these currencies are adopted in many countries around the globe, they are not accessible to vast majority of people. For the first time, there is an option that payments can be made in cryptocurrencies. The users then have the liberty to convert to the currencies of their choice. The BitContractor platform will allow for use of main cryptocurrencies such as Bitcoin as well as have native cryptocurrency for the platform.
End of Fake Reviews
With BitContractor, fake reviews are eliminated through the peer-to-peer review system. This is because, on the blockchain, every transaction is verified and visible to other users on the platform. Bad actors will, therefore, be eliminated because they will be detected since they are not on the platform. Furthermore, manipulating the blockchain is near impossible because reviews are also part of blocks and in order to change blocks, users will need a lot of hash power. Therefore BitContractor’s users and providers are reviewed, rated by a self-governing infrastructure of the distributed user base.
Both buyers and sellers will have the opportunity to review work of each other. The reviews will be from 1-5 with 1 being the lowest and 5 the highest. It is important to have reviews for both buyers and sellers in order to ensure the authenticity of the system and to weed out bad actors.
However, there is a risk of failure to raise enough capital in order to finance the realisation of the project. In order to ensure this vision in this whitepaper is executed, there needs to funds for various activities such as personnel development, marketing and product development. The project will only become successful if there are enough funds for all these activities. We are therefore raising money through Initial Coin Offering in order to ensure users are part of the process and everyone can enjoy the benefits together.
Above we presented a new freelancer platform where we solve the current problems and exploite the Blockchain features. Coming in January 2018 is the second part adding the financial part; Initial Coin Offering (ICO).