The sharing economy: Real-world challenges and blockchain use-cases
This is the 3rd article of our series that presents challenges and blockchain use-cases as potential solutions. The article is part of our weekly series, of which we are excited to hear your feedback or insights in the comments below!
Challenge 3: The sharing economy and intermediaries
The sharing economy has facilitated a significant transformation for a variety of industries. The well-known examples are the transportation and hospitality industries, due to the disruption generated by Uber and Airbnb. Both companies are giants, even though they do not really own any assets. Thinking about it, Uber doesn’t really own the cars and Airbnb doesn’t own the real estate. Their business has been made possible by people who willingly lend their own assets in exchange for accessing their wide pool of potential customers.
Simplified, this means that sharing services value is created by linking people to other people.
Airbnb, Uber, Lyft — all central authorities that people put their trust into. But in order to create a true sharing economy: it should not be about selling but sharing! “Among the growing criticisms against centralized services like Uber and Airbnb is how they still act as intermediaries in supposedly peer-to-peer transactions. Participants on these platforms still have no choice but follow all terms and conditions set by these companies. These companies also heavily influenced or dictate prices.” (Vilner, Y)
The sharing economy companies provide strong use-cases for disruption by blockchain. The problem with the sharing economy is that there are a few big players that dominate the market. There is no direct connection allowed within these systems. Although these companies provide a decent user interface to connect people, individuals may not communicate with one another outside of the platform, without violating terms of service, according to Ruthrie, S. As mentioned before, the companies not only have the power to dictate prices but of course take a healthy portion of earnings from supposedly “peer-to-peer” system. Another disturbing case, is that of safety and crime. Although these incidents seem to happen rarely, there have been reports of 103 US Uber drivers accused of sexual assault or abuse, while nearly 1/3rd of these had prior criminal convictions (according to CNN, 2018). Similar cases have been reported among ride-sharing companies such as Ola in India and Grab in Malaysia. Further, you can even find entire websites dedicated to Airbnb horror stories (from both guests and hosts). Although platforms like Airbnb undergo background checks, and these companies aim to improve the security, this verification processes could be improved. (Ruthrie, S.)
Access to what we want, when we want, anywhere we want it… in a trusted and secure way!
Blockchain technology can help with verification of identity and background checking, while making this processes more efficient, even taking a step further to incentivise food behaviour and punish bad behavior. Because of the nature of this technology, “everyone is watching” and bad actors can be found instantly. Further, the decentralization of databases across multiple nodes keeps data more secure, avoiding many of the vulnerabilities of centralized servers. Blockchain enables a peer-to-peer connection, which eliminates the need for an intermediary like Uber or Airbnb, who control our user identity and transaction data. Blockchain services reduce or even eliminate middleman fees. This allows those with something to share to connect directly with those wishing to borrow. The parties agree on the price and transfer it securely in cryptocurrency.
Blockchain technology allows to create that trust and interaction without the need of a central authority — in this case without the need to Airbnb or Uber. Blockchain-based ventures are applying new mechanisms to facilitate transactions. It allows transparency, automation, and decentralization to create a true peer-to-peer system — with no company in between. Since blockchain relies on a distributed and decentralized architecture, its underlying infrastructure grows as more people use the technology. There are a number of projects aiming to be the blockchain-based version of existing sharing economy services. (Vilner, Y.)
Read more on: https://www.forbes.com/sites/yoavvilner/2018/07/20/the-year-of-blockchain-and-sharing-economys-intersection/#14cc2fb54c28
An example of a few projects that are currently working on blockchain-based sharing are:
- BeeToken: a decentralized network that links house sharers with house seekers in order to replace companies like Airbnb
- SnagRide: a decentralized AI ride sharing application on the Ethereum blockchain
- Aworker: a recruitment platform where freelancers and gig workers could connect with potential employers
- ShareRing: plans to aggregate all sharing activities under one platform, potentially streamlining transactions for the sharing economy
- KeepGo: making mobile and cellular data shareable even across carriers
- Origin protocol: building a platform that empowers developers and businesses to create their own decentralized marketplaces. Check this link explaining it all: https://youtu.be/69IiccddsOQ
- Gladius: a decentralized CDN and DDoS protection platform, allowing users to combine unused processing power to defend devices from deadly DDoS attacks
(Thellmann, P., Techbullion PR, Vilner, Y.)
Do you know more use-cases? Let us know in the comments section!
How could this sharing economy look like?
Don Tapscott, explained how this sharing economy could look like with the example of Airbnb: Instead of having Airbnb (an estimated $25 billion corporation), there would be a distributed application on a blockchain, for example called B-Airbnb. This distributed application would essentially be owned by all of the people who have a room/apartment to rent. If someone wants to rent a room, they go onto the blockchain database sift through it. B-Airbnb would help them find the right room, and then the blockchain helps with the contracting through smart contracts. It identifies the party and it handles the payments just through digital payments — all built into the system. And it even handles reputation, because if someone rates a room as a five-star room, that room is there, and it’s rated, and it’s immutable.
What are your thoughts? Comment below! Stay tuned for the next article about the challenges presented by the healthcare industry, including blockchain solutions.
Don’t forget to check out our previous articles:
The unbanked and blockchain use cases: https://medium.com/@chainworkhub/real-world-challenges-and-blockchain-use-cases-2b83682440b2
Privacy, identity & data — including blockchain use cases: https://medium.com/@chainworkhub/identity-privacy-real-world-challenges-and-blockchain-use-cases-25e2816eec2b
References:
Tapscott, D. How blockchain is changing money and business. Accessed on: 18.01.19. Available at: https://www.ted.com/talks/don_tapscott_how_the_blockchain_is_changing_money_and_business
Vilner, Y. The Year Of Blockchain And Sharing Economy’s Intersection. Accessed on: 23.01.19. Available at: https://www.forbes.com/sites/yoavvilner/2018/07/20/the-year-of-blockchain-and-sharing-economys-intersection/#14cc2fb54c28
Rothrie, S. Sharing Economy Companies Are Set to Be Disrupted by Blockchain. Accessed: 25.01.19.Available at: https://coincentral.com/sharing-economy-companies-are-set-to-be-disrupted-by-blockchain/
TechBullion PR. The Blockchain is the Next Phase of the Sharing Economy. Accessed: 25.01.19. Available at: https://www.techbullion.com/the-blockchain-is-the-next-phase-of-the-sharing-economy/
Thellmann, P. Blockchain is the Infrastructure For a New Decentralized Sharing Economy. Accessed: 24.01.19. Available at: https://hackernoon.com/blockchain-is-the-infrastructure-for-a-new-decentralized-sharing-economy-f715da32bece
Disclaimer:
This article is not intended to be a source or advice of investment, financial, technical, tax, or legal. All of this content is for informational purposes only.
