Uber and Airbnb are among the world’s fastest growing companies today. These companies’ business models enable people to rent assets from each other. Recently, the sharing economy has seen explosive growth, with a report by Juniper Research estimating that the revenues from the sector will reach $40.2 billion in 2022, up from $18.6 billion in 2017.
According to a similar report by Statista, the number of adult sharing economy users in the U.S. will reach 86.5 million by 2021, up from 44.8 million in 2016. However, with the advent of blockchain technology in the industry, there is potential for that growth to be much faster.
Among the key challenges that have been preventing mass adoption of the sharing economy is an unequal distribution of the value generated by companies in the space. Large intermediaries such as Uber and Airbnb reap huge profits from the sharing economy while smaller companies get little to nothing.
Through projects such as ShareRing and Origin, blockchain technology could eliminate this disparity by introducing decentralized platforms where peer-to-peer sharing can happen transparently and without intermediaries.
Origin aims to create a set of protocols that allow developers and businesses to build a decentralized sharing economy marketplace on a blockchain.
ShareRing seeks to merge all of the existing sharing platforms into one app in which users can execute transactions efficiently across all of those platforms. The app will allow users to pay for goods and services in the shared economy using tokens, effectively eliminating the need for carrying cash or debit cards.
Blockchains also seek to eliminate fragmentation. Traditionally, users are required to sign up and download an app for each of the many sharing economy solutions they want. If there are, for example, five sharing economy companies in your locality, you would be required to sign up for each company to access all of their services.
However, with blockchain-driven solutions, such as the ShareRing project, all services could be accessible on a single platform and payments can be made through the same platform. This means that you do not have to sign up multiple times and, even when traveling abroad, you do not have to worry about finding locally relevant sharing apps, since the blockchain-driven approach will connect you with the local sharing economy solutions.
Blockchain solutions for the sharing economy can also be more secure, given the decentralized nature of the technology. The traditional centralized solutions are more prone to hackers, and many of them have had instances of major data breaches.
For instance, last year, Uber disclosed that hackers had accessed the personal information of 57 million riders and drivers from its platform in 2016, prompting the company to pay a $100,000 as ransom. Airbnb has also been faced with multiple instances of data breaches, with the biggest attack making the platform disappear momentarily back in 2016. In a recent incident, hackers hijacked accounts of top-rated users and used them to book homes of hosts that they would then burglarize.
In a blockchain-powered sharing solution, hackers would never be able to access users’ accounts, let alone manipulate them to give a false identity. In fact, all users’ identities would need to be verified on the blockchain, adding protection to users involved in peer-to-peer transactions.
Blockchain technology will also protect users legally when, in the event of a dispute, the smart contract technology can provide arbitration. For example, if a person owns an autonomous car and wants to rent it out for extra income, the smart contract technology would ensure that those who hire the car make payments as required without needing a third party to oversee the transaction. Also, in the event of a dispute, the technology would analyze its rich and highly accurate data and could offer a transparent and just settlement.
Likewise, if the car were co-owned by two or more people, the same smart contract technology would ensure that the parties would each automatically get their fair share of income and would settle disputes as well.
As blockchain technology continues to gain mainstream acceptance, there is a high likelihood that more innovative solutions combining the solution with real-world use cases are yet to come. The sharing economy has a long way to go before becoming a fully secure and user-friendly space, but with all the innovation in the space, it's possible that the kinks will be straightened out sooner rather than later.
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