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While it seems incredible to me, the fact is that Airbnb is now ten years old. The brainchild of Brian Chesky and Joe Gebbia was born after the pair couldn’t afford the rent on their San Francisco loft apartment. Knowing a big tech conference was coming to town which would increase the price of hotels, they decided to rent out space in their lounge.
Fast forward ten years and Airbnb is so well-known that we use it as a verb. Its ridesharing sibling, Uber, has followed a similar stratospheric trajectory. The two brands are flagships of the broader sharing economy, which is one of the fastest growing sectors of the decade — from $14bn in 2014 to $335bn in 2025.
However, while the startup successes of the sharing companies are undeniable, the term “sharing economy” does seem generous considering their business models. They act as brokers, merely connecting two parties on a supply and demand basis. While the early success of the sharing economy came with much hype over the benefits of the sharing model and how it would reduce unsustainable levels of consumption and build communities, this has not really turned out to be the case.
The Current State of the Sharing Model
While ridesharing and room sharing created a vast gig economy market that didn’t previously exist, it comes at a cost for the users. Airbnb is predicting profits in excess of $3bn within the next two years. A significant proportion of this is generated from the fees that the platform levies on its users on both sides of the transaction. The Uber fee model structure is similar to this as well.
The way that the companies secure their fees is by ensuring that users can only communicate via their in-app messaging systems. It’s true that if something goes wrong, the companies have full visibility of the communication trail. However, restricting off-platform communications ensures that users cannot connect to agree on their own rates or bypass paying fees.
There are other problems with the current sharing model. Uber got into hot water in 2017 when it was revealed that the firm had covered up a massive data breach, affecting around 57 million riders and drivers on the platform. Many incidents involving drivers sexually assaulting passengers have also been reported over the years, with Uber accused of trying to cover up these events.
Airbnb has also been involved in controversies. These include racism on the part of hosts who refuse particular tenants, and that the guest and landlord rating system skews to positive reviews.
Removing the Intermediaries
The emergence of blockchain and decentralized marketplaces will create a brave new world for the sharing economy. One of the core features of decentralization is the removal of intermediaries such as brokers, which could quickly make the roles of the traditional sharing companies redundant. In a decentralized sharing network, fees can also be significantly reduced, which will make decentralized platforms more attractive to users. After all, decreased fees is one of the main benefits that early Bitcoin adopters recognized over using traditional banks and credit cards.
The removal of intermediaries also creates a true peer-to-peer connection, in precisely the way that Uber and Airbnb try to prevent by restricting communications. A peer-to-peer connection using blockchain would enable users to connect and decide between themselves the value and terms of the sharing exchange. Smart contracts could execute the terms of the agreement automatically and no fees would be charged.
This is the model adopted by PAKET, a decentralized parcel delivery network. Someone who wants a parcel delivered can decide how many tokens they want to pay for the delivery transaction. The party who takes the delivery agrees on the fee, and if they don’t deliver the parcel, the smart contracts will refund the payment to the sender. The delivery party could be anyone from a courier or shipping company, to an individual who is visiting family in another state and wants to make some money from their trip by taking the parcel along with them.
Such a decentralized model doesn’t just open up the market. It creates a more cost-effective solution for the entire shipping industry to the benefit of consumers. One of the biggest problems faced by delivery companies is “the last mile” — getting the parcel from a distribution center to our home address. This final step accounts for more than half of the total delivery cost. So reducing this cost using solutions like PAKET could also make our online shopping cheaper.
Flexible and Secure Marketplaces
Decentralized sharing marketplaces also offer a lot more diversity and therefore flexibility to users. Someone driving in a ridesharing arrangement like Uber could also be delivering parcels in the same area using PAKET. A property marketplace doesn’t have to be limited to sleeping accommodation, it could also be used to rent office or studio space on a flexible basis.
Finally, blockchain provides other benefits in the form of security — both of user data, and of user integrity. IBM is already developing blockchain-based solutions for verified digital identity. These solutions will create more robust background checking procedures that could reduce the incidence of crime or other misdemeanors within the sharing economy. In addition, decentralized data storage on the blockchain is more secure than centralized servers, reducing the risk of hacks and data breaches.
It is true that Airbnb and Uber have created a tech revolution off the back of Web 2.0. However, Web 3.0 is now here. Although ten years may not seem that old, the next generation is already set to disrupt the previous one. Airbnb and Uber need to make sure that they are prepared for what blockchain will deliver before their business models become last year’s news.