Why we need a decentralised sharing economy

This piece was co-written by Raimond van Mouche

All of your online likes, upvotes, reviews and ratings look like they belong to you, and considering the time invested in getting them, you would think they do.

But in reality all of this online data and these interactions are stored on the end of the websites themselves. As soon as the rules change on their side, your data changes along with them and there’s not a lot that you can do about it. (1) This problem is most persistent in sharing economy platforms, who claim to treat you as an important part of the platform even though you’re often a dispensable product to them. (2)

That being said, we believe that the sharing economy has so much more potential than is currently being put to use. The blockchain can help in decentralising communities around sharing economy platforms (more on that later) so that these platforms can bring people together in a more bottom-up way. It is also an important vehicle in receiving alternative funding without an intermediate. So we started working on a first step:

We want you to have control over your own data and have total transparency when doing so. We do this by making use of blockchain tokens to create a ‘trustless’ and decentralised environment, with all the accompanying benefits. ‘Blockchain’ and ‘decentralised’ are the latest buzzwords in the tech scene and we will explain their future implications in this short article as well as explain why we think that they are relevant.

We’ve created a platform that you can use to recommend people based on their skill level. Whether you need a plumber, a coder or a gardener. Anyone can post their skills on the website and then other can recommend them by ‘approving’ their skills. The more people do this the bigger the chance someone is found by others searching for someone with that skillset. SKILL tokens are also tradeable, which means that people can exchange them between each other on the platform and ‘hire’ others to do their jobs because they’ve previously done other jobs themselves, thereby creating its own micro-economy (or sharing economy).

What is the sharing economy?

A quick Google search defines the sharing economy as follows:

an economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet.

Free or for a fee. That fee might as well be you putting in valuable data for advertising platforms to prey upon. We believe that you should be in control over your data. The incentive to share (the sharing action) is usually started by a sharing economy platform, because it is in their best interest for you to share something with them. As a consequence they are able to steer a whole sector towards their own predefined goals, whatever they may be and however they might align with yours. We don’t believe that this is the way to move forward for an emerging (sharing-)society and think that this model is poised to become way less profitable in the future.

That’s why SKILL tokens are tradeable between platforms and everyone is free to use them on their own platforms. They can, so far, only be generated through our platform at https://www.proofofskill.com, though.

We believe that the sharing economy is the way forward towards a more honest society. That’s where the blockchain comes in, with blockchains we can turn every piece of data, every like, share and every review into a traceable asset. This way you are in control of your data and communities finally get the tools to organise themselves away from the invisible hand of big corporations.

Added value of the sharing economy in the society of the future

We see it as perfectly feasible that the future holds the possibility for communities to organise themselves, thereby stimulating organic interactions as opposed to marketed ‘growth hacking’. Beautiful things can happen when people are able to return to truly peer-to-peer connections. The initial promise of the internet could live up again, fast-forwarding personal interactions.

More importantly, though, there are growing signs that the people of the future will have less and less paid work to do in general. (3) This is where a bottom-up community approach is logical, because people will have a lot of spare time on their hands that they will want to attribute to something. Our token system makes it possible to trade time for time, because a token that is received can be used to ‘buy’ other people’s time to do the chores you can’t or don’t want to do.

Even more so, we believe that humans are intrinsicly social animals. Humans did not develop only to be put to work as machines and we like to help each other out. It brings out the best in us, fostering personal interactions like the old town squares used to do.

But all of this can not happen without transparency, traceability and the appropriate infrastructure. The people of the future demand insight into their communities and digital management over their assets (tokens). This is why we’re developing the platform in such a way that it is user-friendly above anything else. Even though we are big fans of the blockchain, we also firmly believe that the levels of complexity in current interfaces are too high and only cater to the technically oriented among us. Our goal is to make the working of the blockchain (like wallets and block transactions) disappear or blend in with the user flow and interface as much as possible so that we can use it as an underlying apparatus and ethos but the user doesn’t have to bother the user with unnecessary interfaces.

Initial Coin Offerings

Another interesting appliance of blockchain technology would be to make it possible for communities to launch a crowdsale or an ‘Initial Coin Offering’ (4) around a certain task or activity. An Initial Coin Offering (ICO) is basically a crowdfunding campaign that returns tokens to the people that choose to invest. Initial stands for the fact that it is the first time that a token enters the market, which will not be the case for our product but the same dynamic applies to our proposition as well.

That proposition is based on two problems: small-scale social projects that need funding and people that are willing to invest but want tangible returns or assurances that their money is used to do good. An ICO is a great vehicle because it puts something into the hands of both parties. The tokens that the subsidiary receives also have the added bonus that they circulate within the system, they can be used to ‘buy’ labour from other members. For example to hire someone to build your website or to mow your lawn.

So the project receives the needed fiat funding on the one hand and the micro-economy gets a boost on the other hand because there are more tokens in circulation.

What is a blockchain?

A blockchain is a decentralised database or central accounting book, most well-known from its first appliance in the Bitcoin technology. By making use of strong crypto-graphical formulas, blockchains can ensure data immutability and put control over this data and its transaction history back into the hands of the user. (5) Blockchains are meant to be transparent and are in many cases publicly accessible. “Data [on a blockchain] is stored in blocks, which are time-stamped and linked to each other to form a chain.”

What are blockchain tokens?

These are encrypted tokens that are traded through a blockchain that is spread over thousands of computers (decentralised database hereafter). Because the transaction history is saved over many different computers through a decentralised database, the tokens and their transfers are honest and immutable as well as traceable. The exact math behind why this ensures immutability is beyond the scope of this article but you can find very good description of it in the Bitcoin (6) and Ethereum (7) whitepapers. Transactions that are done over a blockchain are ’trustless’ and decentralised by design. Meaning that there is no trusted middle-man or third party needed to ensure a safe transaction. There is no need for trust. The decentralised nature of blockchain means that the transaction data is not stored on one central server, but spread over different network nodes that collectively agree on the transaction history through complex cryptography. Bitcoin is the most well-known blockchain system, but there are many others.

What kind of dynamics are hiding behind these tokens?

Bitcoin was launched as a ‘peer to peer’ payment system in 2008. In the years following its release there were a handful of enthusiastic believer but a far bigger pool of sceptics that didn’t see Bitcoin progress into the future. These sceptics have all witnessed the massive rise in value that the currency has gone through (it’s at €6458,30 at the time of writing). But ever since Bitcoin’s release, people in the believer camp of the crypto space have been dreaming about a more accessible blockchain structure that could be used for more than just financial transactions. Ethereum (launched in 2014) finally introduced that sandbox version of Bitcoin that these people had been dreaming about. It comes with its own coding language called Solidity in which users can create their own ‘smart contracts’: predefined sets of rules with which tokens and currency can be traded. A smart contract describes what requirement have to be fulfilled before a transaction can be initiated in the form of a piece of self-executing code. Smart contracts have the possibility of giving traditional notaries a run for their money because they automate and make trustless a lot of the activities a regular notary does nowadays. (8)

Trustless? Decentralised? What does that mean?

With blockchain technology you don’t need a central authority like a bank or a sharing economy platform to guarantee the smooth operation of what you are trying to do. Blockchain tokens create a shareable asset that can be connected to any sort of data but are often used as a substitute for regular money. In the case of Proof of Skill the data connected to the token is sharing economy data. A SKILL token resembles actual labour invested by the user themselves in the platform.

The blockchain ecosystem has developed to a point where it is possible to develop so-called ‘decentralised apps’ or dApps that make full use of web technologies in conjunction with blockchain technology. Our technology is also developed as a dApp of sorts and makes use of PHP, Solidity, JavaScript and the Geth environment. (9)

All the major sharing-economy concepts have the issue that they are in control of the vast sums of data that we hand over to them. So even though we, the users, invest valuable time in the platforms to unlock all of this precious karma and up-voting data there is, usually, nothing that keeps the platforms from changing the policy and math that go on behind the data. We often see that it happens, a platform does a big upgrade and all of a sudden we stand helpless against the ‘big bad algorithms’. We feel betrayed. Well feel betrayed no more.

We do things differently. With every interaction you make on Proof of Skill you receive a set amount of tokens. These tokens are yours, readable with any wallet app. In future versions they will all be transferable as you wish to, perhaps by endorsing your newly registered friends.

This piece was co-written by Raimond van Mouche

References -

(1) Katz, M. (2017, Febuary 10). A Lone Data Whiz Is Fighting AirBnB — And Winning. Retrieved from https://www.wired.com/2017/02/a-lone-data-whiz-is-fighting-airbnb-and-winning/

(2) Brignall, M. (2017, July 27). Airbnb Agrees To Close Reviews Loophole After Intervention By UK Regulator. Retrieved from https://www.theguardian.com/technology/2017/jul/27/airbnb-agrees-reviews-loophole-intervention-cma-regulator

(3) Frey, C. B. & Osborne, M. A. (2013, September 17). The Future Of Employment: How Susceptible Are Jobs To Computerisation? Retrieved from https://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf

(4) Wilhelm, A. (2017, May 23). WTF Is An ICO? Retrieved from https://techcrunch.com/2017/05/23/wtf-is-an-ico/

(5) Mamoria, M. (2017, June 30). WTF Is The Blockchain. Retrieved from https://hackernoon.com/wtf-is-the-blockchain-1da89ba19348

(6) Nakamoto, S. (2008). Bitcoin: A Peer-To-Peer Cash System. Retrieved from https://bitcoin.org/bitcoin.pdf

(7) Buterin, V. (2014). A Next-Generation Smart Contract and Decentralized Application Platform. Retrieved from https://github.com/ethereum/wiki/wiki/White-Paper

(8) Maas, T. (2017, October 4). Understanding Ethereum: A Complete Guide. Retrieved from https://hackernoon.com/understanding-ethereum-a-complete-guide-6f32ea8f5888

(9) Ehrsam, F. (2017, April 30). The dApp Developer Stack: The Blockchain Industry Barometer. Retrieved from https://medium.com/@FEhrsam/the-dapp-developer-stack-the-blockchain-industry-barometer-8d55ec1c7d4

Further reading -

Laconesi, S. (2017, September 3). The Financialization of Life. Retrieved from https://startupsventurecapital.com/the-financialization-of-life-a90fe2cb839f

Unknown. (2015, December 28). Platform Capitalism And The Post-Job Economy. Retrieved fromhttp://jarche.com/2015/12/platform-capitalism-post-job-economy/

Scholz, T. (2014, December 5). Platform Cooperativism vs. the Sharing Economy. Retrieved from https://medium.com/@trebors/platform-cooperativism-vs-the-sharing-economy-2ea737f1b5ad

Olma, S. (2014, October 16). Never Mind the Sharing Economy: Here’s Platform Capitalism. Retrieved from https://networkcultures.org/mycreativity/2014/10/16/never-mind-the-sharing-economy-heres-platform-capitalism/

Morozov, E. (2015, June 7). Where Uber and Amazon rule: Welcome To The World Of The Platform. Retrieved from https://www.theguardian.com/technology/2015/jun/07/facebook-uber-amazon-platform-economy

Ross, S. (2017, June 15). What Is The History Of The Market Economy? Retrieved from: https://www.investopedia.com/ask/answers/020615/what-history-market-economy.asp