Decentralised Freelance Platforms are Coming After the Large Incumbents
Well, here we are in 2019. The world economy is still chugging along, the internal combustion engine still powers our daily lives, and fiat currencies are still the most popular means of asset exchange. (In another 10 years these observations may need updating).
Do not get me wrong, the world is changing, and its changing fast! The way people interact and use technology is shifting at an alarming rate, but probably what is more profound is technology has changed how we live our lives.
The globalisation of the service economy, powered by traffic-driven platforms, has changed everything.
There is a platform for everything!
The food we eat at home is now delivered via gig-economy platforms (Uber Eats). Where we eat-out is now determined by review platforms (Yelp). How we travel for our convenience is no longer dominated by the taxi industry (Lyft, Uber). Where we stay does not need to be determined by the hotel industry (Airbnb). And sourcing a local person to attend-to home services such as cleaning, moving, or repairs, are most efficiently found on web or app platforms (Airtasker).
These services are so embedded in how we live that they have entered our vocabulary (Uber-it, Google-it).
Digital service freelancing
The one industry which is re-shaping the global work dynamic is the freelancing phenomenon, specifically freelancers offering digital services.
Such services may include the design of a logo or a website, more technical expertise in coding a custom project, data processing/mining, content writing, or marketing promotions.
The size of the global freelance work force is huge!!
In the USA alone there are nearly 60 million freelancers, 15 million in India, another 15 million in Japan, more than 9 million in Europe, 2 million in the UK, and 1.2 million in Australia.
And within ten years, freelance workers may represent more than 50% of the U.S. working population.
The demand (and supply) for digital service freelancing has created a handful of super-platforms:
- Freelancer (over 20 million users)
- Upwork (12 million freelancers)
- Fiverr (over 3 million services)
- TaskRabbit (owned by IKEA)
- Guru (over 3 million freelancers)
The Good and the Bad
Such large freelance platforms have the following positives:
- huge website/app traffic which allows client work to come-to the freelancers
- ease of signing up
- large online communities
- robust customer support
The bad aspects of these platforms include:
- huge platform fees, anywhere from 30% down to 10% of client project spend. This is the equivalency of double taxation on the freelancers
- fluctuations in project cost due to currency
- slow and costly payout processes
- hurdles for the unbanked to participate.
What do Decentralised Platforms Offer?
A decentralised freelance economy has the following exciting benefits and characteristics some of which are already in operation:
- Very low or no platform fees charged to freelancers — resulting to substantially more income for freelance workers.
- Near instant ‘payouts’ and transfers to freelancers with no international transfer fees.
- Access to the freelance economy by the nearly 2 billion ‘unbanked’ people around the world.
- The freelance economy run by a Decentralised Autonomous Organisation (DAO). Meaning no centralised entity needing to charge high margins to cover operational expenses.
Decentralised Freelancing Hurdles
The on-boarding hurdle
The on-boarding problems are best outlined by Chris McLoughlin who details what effects the adoption rate for freelance platforms built on the blockchain.
In a nutshell — the biggest stumbling block are the current steps required by clients (who need to pay freelancers) as they have to convert their fiat currency into the native blockchain token.
Solving this on-boarding hurdle will be akin to opening the floodgates for the demand side. Thus start-ups, SMEs, and corporates will have even sign-up friction compared to the incumbent freelance platforms. Given the advantages of the decentralised platforms mentioned above, one could argue the future for decentralisation is a win win for freelancers.
One exciting glimpse that a solution to the on-boarding hurdle is just around the corner can be found in a build update by CanWork (the decentralised freelance platform leader) where they mention a SaaS integration with LimePay.
Runway Capital
Building any scalable platform that is user-friendly, and growing on both the demand and supply sides, is hard. To complicate this task, to build any such platform on-top of a blockchain, which itself is a new technology evolving monthly, is VERY hard.
The ecosystem architecture demands sought-after talent, which requires capital. And this demand is juxtaposed with a token community who want 24/7 information and news updates.
Many of the decentralised freelance platform have raised millions through an ICO in either 2017 or 2018. Their capital concerns will also be amplified by falling cryptocurrency values and delays in technology stack integrations.
Lack of industry representation
Any established community has a recognisable and vocal group who represent their shifting interests, and the global freelancers are no exception. Large freelance associations or unions include:
The only companion for decentralised freelancers is the newly established Decentralised Freelance. The decentralised platform comparison on their website outlines the three main players in the market. Their advocacy for the decentralised cause started with a Change.org petition to raise awareness for the benefits of a shift away from the incumbent freelance platforms.
Where to from here?
When the on-boarding hurdles of the decentralised platforms are overcome and deployed on scale, the freelance osmosis will start to pick-up pace.
It is not all doom and gloom for the incumbents, the platform types can coexist in such a large market. And time will tell if the decentralised freelance platforms are the nirvana for the worlds freelance community, or just a shift in the globalisation of incredible talent.
