The blockchain & the sharing economy: a necessary combination
In the decade since the 2008 financial crisis, there has been an incredible reorienting of our perception about what classifies as commerce. Distrust in the mainstream financial system led Satoshi Nakamoto to launch Bitcoin in 2009, and Bitcoin inspired the creation of dozens of other digital currencies that would go on to establish a collective cap of more than $800 billion.
At the same time, a sluggish economy, an increase in digital normalcy, and an innovative millennial generation recreated the meaning of work, and they blurred the definition of employment and ownership. This new way of doing business, dubbed the sharing economy, predicates the success of juggernauts like Uber and Airbnb, but it’s also soaked into the ethos of an entire generation.
What’s more, the sharing economy is more lucrative now than ever before, and its value is trending upward for the foreseeable future. According to The Brookings Institute, the sharing economy is expected to swell to become a $335 billion industry by 2025. Such growth would represent a 2,300% increase from 2014 levels.
So far, the results are nothing short of astounding.
The peer-to-peer market is currently $26 billion, and virtually all studies show it increasing. Airbnb’s achieved market share is on par with Hilton, and they reached this pinnacle 23 times faster than the Hotel conglomerate. In addition to producing its status as one of the most valuable private companies in the world, Uber has so wholly inundated the cultural experience that it’s joined the lexicon. “Ubering” is as much a colloquial verb as it is a statement about their company.
More money. More problems.
Of course, that doesn’t mean that the sharing economy is without its shortcomings. In comments translated by Entrepreneur, New York Capitalist, Fred Wilson, challenged the future of the sharing economy with stark predictions about its viability: “Think about gambling without a casino. Think about stock trading without an exchange. Think about real-estate transactions without deeds. Think about transactions without clearinghouses. That’s the world we are heading into.”
This scenario is particularly perilous for the housing industry that is profoundly impacted by the sharing economy. A stunning housing shortage and new opportunities afforded by the sharing economy has more people renting homes than ever before. According to a Harvard University study, the percentage of renters in the U.S. has increased precipitously in the past five years. This change reflects similar patterns around the world.
This is a nuanced trend that creates several unique problems that demand compelling answers. After all, it requires a lot more trust, security, and reliability to let someone live in your house than it does to ride an Uber.
For this, new technologies are emerging that proliferate the sharing economy’s ability to effectively recognize its overwhelming potential.
The blockchain & the sharing economy
More specifically, the blockchain is gaining notoriety as a next-generation technology that can help facilitate the trust and transactions that power the sharing economy. In their 2018 Joint Economic Report, a bipartisan group of U.S. Senators described the blockchain as, “nearly invulnerable to cyberattack but is revolutionizing the way the world conducts commerce and shares information.”
The possibilities of the blockchain are expressed in the platforms that are developed on top of its technology. For the housing sector of the sharing economy, there are several platforms that are making meaningful improvements for clients and consumers alike.
For example, RxEAL creates a platform for housing lenders that simplifies the process of attaining, securing, and redistributing security deposits. This relatively mundane task becomes problematic when it’s met with the scale of the sharing economy. As the number of rentals increase, so do the number of conflicts surrounding security deposits. Using the blockchain’s smart contracts, RxEAL services as a trustless digital service that mediates disputes and distributes funds accordingly.
Meanwhile, other platforms like ShareRing are addressing the multifaceted nature of the sharing economy. With so many disparate platforms, it can be difficult for clients and consumers to locate new opportunities or services. This is especially true for consumers looking for long or short-term housing while also trying to implement the benefits of the blockchain the process.
These are just a few of the blockchain-based platforms that are supporting the sharing economy and improving on its most glaring weaknesses. Since housing rentals are the highest stakes component of the sharing economy, it’s critical that these platforms emerge to help renters and landlords function with reciprocity and trust.
Like the sharing economy, the blockchain is just beginning its ascent, and its capabilities are becoming more renown as its use cases become more evident. Practically, each of these trends finds their best expression in collaboration with one another. The blockchain needs an industry to improve, and the sharing economy is desperate for better technology to enhance the movements functionality. The dual ascension should be a boom for everyone involved.
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