Undoubtedly you’ve taken a Lyft ride from the airport to your hotel while you’ve been traveling, or perhaps you called Uber for lift to and from a party. Not too long ago, I used an Airbnb service to book a nice getaway vacation in a remote part of Idaho—Potlach—to visit my aging mother living with my sister. My fiancé and I had an awesome time at this converted farm house-to guest house location on a secluded stretch of highway along miles of farmland in Idaho.
Such services are collectively known as a part of the shared economy. But just exactly, what is a shared economy? It is an “economic model defined as a peer-to-peer (P2P) based activity of acquiring, providing, or sharing access to goods and services.” Most of which one can now find online or with a convenient app on one’s smartphone. (Investopedia)
This shared economy is expected to grow from $15 billion in 2014 to $335 billion by 2025, writes Sarote Tabcum Jr. for Forbes.
It’s an economy that is largely driven by millennials, who are from 18 to 35 years old. They are maturing, and entering the work force in larger numbers. Richard D’Ambrosio wrote in Travel Market Report that a survey conducted by Allianz Index found that 93% of millennials said they aware of sharing economy services. This compares to 88% of Generation X, and only 70% of Baby Boomers.
Beyond Uber and Airbnb—the shared economy also includes services such as crowdfunding, peer-to-peer lending, or shared office space. (Martucci, Brian) Other useful services include talent sharing where you can offer skill or knowledge you’re not using in your day-to -day job such as gardening, painting, writing and more. There a numerous options for shared services that can help both the seller and the buyer of needed services. (Martucci, Brian)
Blockchain Use Case for Shared Economy
It’s no wonder that blockchain developers are looking toward shared economic services as a use case for blockchain technology. Let’s take a look at how blockchain can be disruptive to the current shared economy.
Revenue Sharing and Compensation—One of many challenges faced by shared economy services and platforms such as Uber and Airbnb is that the actual revenue generated is not evenly shared with all the platform members that help generate content and provide the vehicle for business revenue. Moreover platforms such as Google or Facebook, may be susceptible to censorship and “rely on the whims of the managers who are part of the corporate hierarchy of the corporation,” opines Toshendra Kumar Sharma in Blockchain CouncilTM
Such problems are an example of a “prime use case for blockchains” due to the nature of decentralized ledger technology. There are a number of features that are inherent to the shared economy—from payment systems to signing of contracts.
As an example, blockchains like Ethereum support smart contracts. A home owner can use a smart contract for their guests. The secured ID and valid immutable smart contract gives the owner what they need. Once they accept payment and a signed contract—they can then provide the home lock code to the renter.
Members no longer need to “rely on massive data centers to run the enormous profit-making platforms,” adds Sharma. One blockchain model is Steemit. It uses decentralized ledger technology to more fairly reward their users. They have established rules governing the ownership and distribution of generated content in the platform to ensure fairness.
Online Markets—Another shared economy example are marketplace platforms like eBay or Amazon. With blockchain technology every device with an internet connection can directly interact with the blockchain. Known as nodes, this model removes the need to trust intermediaries to set up a connection with buyer and seller, and charge fees.
An example of a blockchain platform for an online marketplace that works like eBay or Amazon is Open Bazaar. Instead of relying on a trusted middleman, with Open Bazaar buyers and sellers could transact directly—allowing anyone to create a listing on Open Bazaar. Buyers can then make a purchase by initiating an escrow payment, “which is settled in a decentralized fashion using randomly selected arbitrators”. (Sharma)
Ridesharing—Of course, probably the most well-known shared economy entity is Uber. Existing ridesharing platforms are run by a centralized companies. The platforms are limited in terms of security, profit, and transparency. Because blockchain can enable every device with an internet connection to interact directly with the blockchain—riders and drivers can now use blockchain ride-hailing apps, and no longer need to worry about these limitations.
Today, there are at least five use case examples of blockchain targeting the carpooling shared economy as reported by CoinsInfo. The aim is to empower drivers and commuters by solving current issues of the centralized business like Uber and Lyft. Blockchain enabled platforms will work to eliminate “excessive transaction fees, redistribute community value, reduce censorship, return community governance, and enhance transparency.” (CoinsInfo)
DRIFE, TADA, Chasyr, DACSEE, DAV—are five current examples of blockchain use case applied to ride sharing.
Sometimes, when it comes to building something truly revolutionary, it requires a paradigm shift in thinking. One away from dogmatic approaches to valuation…#Bitcoin $BTC #crypto #uber #blockchain #banks #fintech #airbnb #facebook pic.twitter.com/8L6zafDyo9
— CryptoChase (@cryptochaseio) July 26, 2019
Shared economy services have been popular for quite some time. As entrepreneurs look to profit by solving problems in this market place, it’s no wonder that blockchain developers and experts have found new avenues to apply their skills and expertise. Baby boomers will continue to retire over the next ten years, and millennials will move into the space of influence: they are the most likely user group who will quickly adopt new technology.
Investors and developers are well advised to consider shared economy services as a use case for blockchain opportunities.
CoinsInfo, “5 Ride-Sharing Blockchain Platforms You Should Check Out”, https://www.coins-info.com/news/5-ride-sharing-blockchain-platforms-you-should-check-out/, July 2019.
Chappelow, Jim, “Sharing Economy”, Investopedia, June 2019.
D’Ambrosio, Richard, :Shared Economy Services May Be Losing Their Popularity”, Travel Market Report, June 2018.
Martucci, Brian, “What Is the Sharing Economy – Example Companies, Definition, Pros & Cons”, Money Crashers, July 2019.
Sharma , Toshendra Kumar, “What Does Blockchain Means For A Sharing Economy?”, Blockchain CouncilTM , September, 2018.
Tabcum Jr., Sarote, “The Sharing Economy is Still Growing, and Businesses Should Take Note”, Forbes, March 2019.