Smart Contracts and the Gig Economy
The emergence of internet resource-sharing and freelancing ecosystems have led to what is now called the gig economy. With these services, work and projects are done in a way that have never been done before. Traditional labour structures and models are being challenged, with employers taking on various talented people at a distance, synchronizing projects thousands of miles away.
Today with Uber, you can find people around you offering you a ride, at the same time you can earn money for sharing your car. You can hire physical labour around you with TaskRabbit for tasks such as positioning and coupling furniture and Upwork puts you in touch with skilled professionals. With Peerby you can borrow and lend tools in your neighbourhood. These online, middlemen platforms host billions of dollars’ worth of peer-to-peer service engagement, however they remain hampered in a number of ways. Amongst other problems, issues of transparency, excessive taxing of income and postponements in delivering earnings are plaguing the sub sector.
On a general note most — if not all — of these organizations are governed by hostile, centralized architectures. Agreed is that a sizeable crowd of freelancers and employers contribute to the value of these platforms, except that they don’t get to have a fair share of the profits. In using these services, freelancers, who like to be on their own, many times don’t feel at home working for enterprises that do not give them their due. When it comes to charging for bridging connections between workers and employers, these platforms aren’t shy about taking a big slice of your hard-earned reward as highlighted below:
Upwork: 20% for engagements worth up to $500, 10% for those up to $10,000,
5% for gigs over $10,000 per client
Codeable: 15% per gig
Fiverr: 20%
Freelancer.com: 13%
This explains why freelancers find ways to get deals outside the services of these organizations, so that they don’t have to pay commission fees that often are exorbitant. It is against this backdrop that a lot of experts are of the opinion that blockchain, the technology that delivered Bitcoin and challenged the longstanding rule of banks and centralized financial institutions, alongside smart contracts can actually be the solution to the dilemmas the online gig economy is experiencing.
Making the Gig economy Equitable with Blockchain
Being transparent, available for all to see and independent of any centralized entity, the blockchain cannot be altered, tampered with or changed. The technology’s decentralized structure allows for secure peer-to-peer transactions not needing middlemen. However, it wasn’t until the development of smart contracts that the blockchain truly came into its own, making it possible for parties from anywhere in the world to engage with each other without requiring third-parties to establish trust.
Smart contracts are autonomous and self-executing computer codes containing the terms of agreement between two or more parties, hard-baked into the blockchains decentralized and distributed ledger system. The technology allows parties to enter into any agreement knowing that they don’t need to rely on a central authority, legal system or third-party enforcement agency to execute the terms of the agreement. Thereby ensuring that all contracts are transparent, accountable, and irreversible. The elimination of human arbitration and mediation parties drastically reduces the costs of service engagement. Using cryptocurrencies, delays are non-existent, payments instant and commission fees plummeting to a bare minimum.
Decentralized ownership of the platform
A distinguishing feature of blockchain-based freelancing platforms is the mutual ownership of the network. This is in contrast with centralized services functioning on top-down hierarchies, where the service provider dominates the application, the data and everything else you can imagine. It is a different situation for blockchain-based services, because their dependence is distributed and decentralized.
As to the number of startups that are leveraging blockchain, there are quite a few doing that, giving power and control to the participants reshaping the economy altogether. Hiway is shaking it from the grounds up.
Smart Engagements
As great as the blockchain is in solving a lot of the problems of the online gig economy, challenges and a number of risks still abound with its usage. The unstable prices of cryptocurrencies, lack of centralized policing against fraud and scams as well as scaling issues associated with blockchain platforms.
It’s cheering to see that startups have worked out some of these challenges. Take for instance the use of a reserve mechanism to protect employees against token value changes, after a contract starts as championed by Hiway. Or how its smart contracts immediately lock up allocated funds for job engagement, to pay out automatically once the terms of engagement have been met through its powerful utility token ‘WAY’.
The use of smart contracts to protect and enforce contract terms has enabled Hiway to develop a cutting-edge service platform with the lowest commission fee of just 3%. With Hiway, freelancers can now look forward to actually earning what they’ve truly worked for.
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