Cryptocurrency analyst. Founder and editor at btcpeers.com
The sharing economy is fast transforming how we interact as people and work. Valued at around $15 billion five years ago, the sharing economy is predicted to be worth over $335 billion by 2025. The potential for the industry is massive.
Based on peer to peer (P2P) activity where individuals acquire, provide, or share access to goods and services through a platform, some skeptics believe that the blockchain’s role is minimal in this industry. But, contrary to this belief, blockchain has a more significant role to play.
According to the Blockchain Council, a group of experts dedicated to research and development of the technology, the sharing economy suffers from a poor model where the revenue generated isn’t fairly shared with all the members involved. Also, there is an issue with how platforms like Uber and Airbnb act as intermediaries in what are supposedly peer-to-peer transactions leaving participants with no option but to follow the terms and conditions on offer.
Direct connections are highly discouraged. Even though these platforms may offer decent user interfaces, individuals cannot communicate with each other outside the platforms without violating the terms of service.
These companies have the power to dictate prices, and they also take a considerable chunk of the earnings in a supposedly “peer-to-peer” system. Additionally, there have been cases of safety and crime. Even though incidents occur rarely, there have been reports of sexual assaults with Uber cataloging 2,936 cases in 2017 and 3,045 cases in 2018 in the US alone. Other ride-sharing companies such as Grab in Malaysia and Ola in India have seen similar cases reported.
Astonishingly you can even find entire websites dedicated to horror stories about Airbnb from both the guests and hosts. From shootings during Halloween, theft, prostitution, and even voyeuristic hosts using spy cameras to watch guests.
Even though a platform like Airbnb does undergo background checks to improve security, the verification process can be improved. Blockchain can help with verification of identity and background checking, thus making the process more efficient. It can even go a step further to incentivize good behavior and punish bad actors.
The decentralized nature of the technology ensures databases are safer, limiting the vulnerabilities of centralized servers.
With the many benefits the sharing economy stands to gain from the blockchain technology apparent, we are witnessing the emergence of blockchain-based platforms in the sector.
Blockchain’s role in the sharing economy is being facilitated by protocols like TimeCoinPrototol that offers a platform where new projects can build a sharing economy service. The project also believes it can solve some of the issues within the gig economy. Having launched last year, the project uses “time tickets,” allowing users to tokenize their business hours. These tickets can be bought in exchange for various services, including consulting, photography, and relationship counseling. Other potential use case includes offering financial advice, fortune-telling, programming, and coaching.
According to Cointelegraph, “TimeTicket has already succeeded in raising $3.2 million in equity, and now, an initial exchange offering is being planned in Hong Kong to get the TimeCoinProtocol up and running. A total of 100 million TimeCoins (known as TMCN for short) are going to be issued, 58% of which will be allocated to the token sale.”
TimeCoinProtocol is just one platform that is utilizing the blockchain to offer benefits to the sharing economy, there are others like Origin based on the Ethereum blockchain, and a few others that can be seen on Defiprime.com, a platform that lists top DeFi projects.
The sharing economy is expected to grow much faster than traditional operating companies. One study by PWC found out that between 2013 and 2025, the revenue of sharing economy will grow by a mind-boggling 2233%. In contrast, companies with traditional operating models will increase their income by just 39.6%.
The study conducted in 2015 also found out that around 44% of Americans were familiar with the sharing economy business model, and 19% had already tried it. Fast forward to 2020, and this number has increased tremendously.
Statista predicted that over 86 million Americans would be taking part in the sharing economy by 2021. This number is almost double the 44.8 million Americans exposed to the sharing economy by 2016.
According to Credit Suisse, 17% of people were open to the idea of sharing their sofa. This goes to show how the sharing economy is gaining popularity with more people willing to share items they don’t frequently need.
According to China Daily, over 700 million Chinese citizens took part in the sharing economy back in 2017. That more than half the entire population. The industry was estimated to be worth more than $760 billion at the time.
According to Airbnb, hotels worldwide are losing over $450 billion annually due to the platform. More people prefer using the platform since its cheaper, and while you are at it, you can even rent one of the 1,400 islands available, or choose a castle from the 3,000 available.
Ultimately, the blockchain will help platforms in the sharing economy sector reduce their reliance on corporations. By eliminating managers, intermediaries, and employees, fees will be reduced significantly. Security is guaranteed using an in-app rating system that is censorship resistant since it's based on the blockchain. Additionally, fairness is also ensured through a financial incentive as users administer the platforms collectively.
Dislosure: I don't have any vested interests in any mentioned projects.