How Blockchain Technology Can Power the Sharing Economy
Try suggesting to your next Uber driver that they’re part of the so-called ‘sharing economy’ and it’s quite likely that they’ll laugh in your face. This is assuming of course that they have much cause for laughter in the first place.
The fact is that, in the case of Uber and many other similar companies, any ‘sharing’ that goes on is pretty one-sided. Whilst the guy driving you home in his car or the girl delivering your dinner on her bike are doing most of the hard work, the apps acting as the middlemen in the transactions are the ones taking most of the profits. You don’t need to look far to find examples of how disdainfully platforms like Uber and Deliveroo treat their ‘employees’, and how hard it is for these workers to earn a decent living.
With the sharing economy looking less and less like we once thought it could, the game could soon be set to change with the arrival of blockchain technology on the scene.
Innovative Blockchain Solutions
In the simplest terms, blockchain has the potential to cut out the middlemen and hand over control to the people on the ground – those who want to use a service and/or provide it. Operating as it does free from any centralised authority or control, blockchain is all about peer-to-peer transactions that can be viewed and ratified across a distributed network.
So, for those wishing to run a ride-hailing platform along the same lines as Uber, but without having to rely on a massive and morally dubious company in Silicon Valley to administrate it, blockchain could prove a godsend. Rather than going through a central authority, drivers and passengers will be able to communicate with each other to facilitate a journey, with a blockchain hosting the agreement between the two parties. With no middleman this would mean lower prices for passengers whilst ensuring that the driver keeps 100% of the fare.
Arrangements between users and providers could be implemented using smart contracts – agreements encoded onto a blockchain which self-execute when their conditions are implemented. Thus, once a passenger is delivered to their destination, the smart contract will authorise a release of funds – usually in the form of Bitcoins or another cryptocurrency – to the driver’s account. There would be no need to go through a host platform which would then takes its cut. With the contract’s terms clearly visible across the blockchain, any breach of them by either party would be visible to all those with access.
There are also positive implications for security here too. Centralised data storage is inherently vulnerable and there have been numerous examples of hackers breaching company databases to access precious customer records. With blockchain, the absence of a central data hub makes such breaches far more difficult to undertake. Data is stored across a whole network of separate computers (‘nodes’) and is accessible only by those with special permissions.
Any changes or manipulations are indelibly logged on the blockchain and visible to all those with access, so any attempt to steal or tamper with data is instantly discernible. Hackers have no entry point and no way of covering their tracks. The idea that a platform needs a central authority to store and protect customer data is entirely refutable.
Finally and perhaps most excitingly, blockchain is facilitating the growth of platform co-operativism, whereby those who use a platform and/or contribute its funding can also take a share of the profits. For example, if a network of users were to operate via blockchain a service similar to Airbnb, there would be no siphoning of profits to a central company – the winners are those who use the platform, not the platform itself. There would be no maintenance fees payable because the service is self-administered by its users.
Big-name companies who have proved to be inadequate caretakers of its underlying philosophy have hijacked the sharing economy. They have delivered popular services to us which have certainly had a big and often positive impact upon our lives, but have profited hugely at our expense and often provided a raw deal for their workforces. Blockchain looks set to change that and we can all profit if it does.
Perhaps your next Uber driver may have the last laugh after all.
Featured Image via Fotolia
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.