In a few short years, ‘the sharing economy’ has redefined our world. On any given day, we may summon an Uber, browse holiday homes on Airbnb, or book an odd job through TaskRabbit.
But while the sharing economy rose to ascendance on the revolutionary promise of 'peer-to-peer' connections, all of these interactions are in fact mediated and monetised. And its the platforms - rather than the people - that have emerged as the true winners, playing the role of middlemen and charging rent to the tune of billions.
Now though, a new breed of platform is emerging, made possible by blockchain technology: decentralised platforms that support ‘true’ peer-to-peer connections without the mediation of a centralised power. Are the ‘disruptors’ about to fall prey to a wave of decentralised challengers?
The sharing economy seemingly emerged from nowhere, but its momentum hasn't slowed, with the market forecast to be worth $335 billion by 2025. But many see a fundamental problem with this breed of enterprise, structured so that vast profits are siphoned off to what are in essence ‘shell’ companies, that own no assets and merely act as platforms to connect service providers with users.
Take Uber as an example. The closest thing it has to ‘workers’ are the drivers, but they own their own cars and aren’t protected by standard employee legislation. The drivers are allowed to be on the platform in return for Uber taking around 25 percent commission. And this pattern repeats in every industry touched by the sharing economy.
“The sharing economy promised to revolutionise travel with peer-to-peer home-sharing, but most home rental platforms aren’t actually peer-to-peer. Big corporations are still front and centre," says Jonathan Chou, CEO and co-founder of Beenest, a decentralised home sharing platform looking to challenge the dominance of Airbnb.
"Corporate-run platforms continue to prioritise company interests over the greater good of the communities they serve. This isn’t a revolution, it’s business as usual. At Bee, we’re building a better, more democratic home-sharing platform that will run independent of any corporate entity.”
The site currently has 30,000 users, and while this doesn’t currently come close to Airbnb’s four million listed properties alone, it is adding new members every day.
These platforms radically reimagine the standard business model dictated by modern capitalism, where profits are maximised in order to keep shareholders happy and the pockets of founders well-lined.
"The core value of any sharing economy app lies in the service provided by the platform users," says Chou. "The drivers on ride-sharing apps, the home-sharing hosts, the entrepreneurs bringing their talents from gig to gig. It’s the users that provide the services that truly power these platforms, and yet the majority of the value is captured by the big corporations that govern them. This is the model we’ve all come to accept, but we think it’s time to start questioning this model that favours corporations over communities.”
To do so, Beenest has chosen to set up on a decentralised, blockchain platform that levies zero percent commission on transactions. For hosts, this could amount to more than $15,000 in revenue that would ordinarily be sucked up by Airbnb. However, this isn't even the most radical part of the site.
In the model embraced by centralised platforms, early investors are rewarded handsomely, but early value-providers (i.e. the hosts on Airbnb, the drivers at Uber) do not receive any reward if the site becomes popular. For these platforms, this is instead funnelled to the founder, VCs and - for public companies - the shareholders. In fact, Uber drivers today are paid less than they were when the company first launched, yet at the same time fares have not got cheaper for the users of the service.
How does a blockchain based platform right this inequality? It allows the main contributors to the platform - the users and the homeowners, in the case of Beenest - to benefit from the success of the platform too. How? Through tokenomics. Beenest is a blockchain platform and the ecosystem is powered by a form of cryptocurrency called Bee Tokens. These tokens are used to transact value within the site, and can be swapped on exchanges for other cryptocurrencies or fiat money.
There are a limited number of tokens within the ecosystem, meaning that as the site becomes more popular, these will appreciate in value and you will be able to buy more within the site for the same amount of tokens. Through the token economy, users and early adopters are incentivised to ensure the continued growth and success of the platform. What’s more, everyone in the ecosystem is given the opportunity to earn tokens through activities such as referral programmes and arbitration.
At Beenest, tokenomics is used to motivate people to behave well on the site, meaning that participants in the network often have to stake tokens on a certain outcome, which they will lose if they don’t uphold their end of the bargain.
But aside from fairer redistribution of value, these platforms in many other ways represent a step change from their centralised counterparts. For one, no centralised body means no centralised governance, a duty that in the Beenest ecosystem falls instead to smart contracts layered on top of the platform’s blockchain protocol and the most engaged users of the site. The latter can put themselves forward into a pool of ‘arbiters’, from which they may be randomly selected to make decisions on disputes between hosts and users.
And Beenest is not the only blockchain platform taking aim at sharing economy giants. Origin Protocol is working with developers to build decentralised marketplaces using blockchain technology. SnagRide, a decentralised Uber, and BlockFood, a decentralised take on Deliveroo, are among the projects currently working with the organisation. The truth is just about any form of online, peer-to-peer ‘marketplace’ has the ability to be recast as a decentralised marketplace - Etsy, Ebay and even Amazon included.
But one thing to consider: how do these platforms plan to monetise? Beenest has stated that its goal is not to create profit from the site. Instead they will draw on the money raised through the Bee token sale, the reserve of tokens held back by the company and possibly a fee charged to help third parties set up their own marketplace within the Beenest ecosystem (although all of the code itself is open source) to ensure the site has continued funding for growth.
However, being a blockchain platform and a profit creating entity aren't necessarily mutually exclusive, and these new platforms can take a number of approaches to how they command revenue. “They would still be able to take a cut, but it probably wouldn’t be anywhere near as aggressive," says Colin Maher, Regional Legal Director and Compliance Officer of Origin Protocol.
This distinction is evident on the site of one of Origin Protocol’s partners, a decentralised marketplace for beauty boutiques. The site advertises that it will charge one percent commission on transactions, compared to the 20 percent typical of the industry.
"There are many different economic models that they could employ - a commission model, referral or finder’s fee models, but I think having that optionality and having it be open source and decentralised is extremely important vs ‘Airbnb makes the rules and either play by them or be locked out',” says Maher.
A current barrier to entry for these platforms is of course, being crypto-savvy, and Chou confirms that most current users of Beenest are those who joined the community during the token sale so were likely already engaged with the crypto community. But for those bullish on the mainstream uptake of crypto and blockchain, there may not be long to wait until these platforms hold widespread appeal.
In fact, Chou is betting on a five year window frame before this is the case, in line with cryptocurrency becoming more secure and user-friendly. “The average consumer (for example, my mother) is comfortable using a credit card to order an Uber ride. However, they’d have a much harder time buying a crypto kitty,” says Chou.
With satisfaction with the current economic model at an all-time low, is now the time for new frameworks to flourish?
“Younger generations are awakened to the fact that the industry giants we’ve all put our trust in are designed to prioritise corporate interests over the greater good. Recent revelations around the corporate misuse of personal data privacy and the evident shortcomings of the current sharing economy model have revealed an urgent need for better, more democratic alternatives. Blockchain-based platforms are poised to be that better alternative,” says Chou.
“Younger generations are more willing and able to adopt new technologies and they will play a key role in leading widespread adoption.”