Uberizing Uber — The Rise of Blockchain
An interesting coincidence happened in 2009 surrounding the expansion of the collaborative economy triggered by Uber and the development of distributed ledger technologies aka blockchain
The Zero Marginal Cost Society
In 2014, few months after its release, I read Jeremy Rifkin’s Zero Marginal Cost Society which appeared to me as one of the most far-sighted book I have ever read. In this 400+ pages work, Rifkin highlights the rise of the sharing economy, predicts the development of the Collaborative Commons and the demise of capitalism as we know it. Rifkin forecasts these shifts based on new technologies enabling individuals to work together in a more direct and efficient way. The conclusions drawn were a bit astonishing especially because Rifkin based them on actual and tangibles trends and facts.
Arising technologies such as 3D printing, Internet of Things or AI transform current vertical scheme towards models where value is shared more directly, all of this being facilitated by digital platforms acting as a cornerstone of the common pattern of the new economy. The energy industry is one clear example where consumers are confounded with producers to become prosumers, using renewable sources of energy to provide power locally and efficiently. The same shift applies for education, where knowledge is shared between one another, and every other industry fed with capitalism, top-down approaches and oligopolistic situations.
Uber brought a first stage towards decentralization
I often read articles and point of views about how Uber-like companies disrupted traditional business models but most of the time the analysis ends on true decentralization being the final step, as if a decentralized economy was the ultimate goal.
What I think is missing in these analysis, is that decentralization is not a goal but a means. A means to achieve a massive collaboration between individuals without the need of a central entity. The goal is to be able, as an individual or a company, to thrive and collaborate without frictions, to produce and exchange value in a peer-to-peer manner and bring forward social benefits rather than financial profits.
With today’s shift of consumption patterns induced by digital ubiquity, and with the rise of what we call “uberization”, it is more and more important for organizations to rethink their mode of operation, to answer the need of proximity and transparency sought by their final users.
Uberization refers to these digital platforms that facilitate peer-to-peer transactions between individuals and service providers. Uber and Airbnb as pioneers, quickly realized that the under-utilized assets and human resources of traditional companies could be overcome through digital tools. Uberization also refers to the collaborative economy with the first platforms who put into direct contact customers and service providers, thereby massively connected people together and allowed them to exchange value, knowledge, expertise, service, asset etc…
But on our path to a massive decentralization, it feels like there are several important intermediaries remaining: the platforms themselves. The collaborative economy is removing original monopolies for digital-native pervasive companies that rely more on data collection than profit margin to achieve growth.
Blockchain, the missing layer of the collaborative economy
What if there was an open-source tool that could replace these platforms, rendering control and power to the crowd but still allowing individuals to act in a responsible and collaborative way? What if tomorrow one could gain sovereignty over its data, trade its know-how to a counterpart, exchange value to a peer, all of this without any intermediary?
The Collaborative Commons described in Rifkin’s work is not so far-fetched than we might think. An enabler has gained more and more interest in the past few years. Blockchain, as a matter of fact, seems to be the missing tool for a participative, inclusive and collaborative ecosystem, bringing transparency and security in a decentralized environment. This technology brought to life in 2009 proved through Satoshi Nakamoto’s Bitcoin that it was possible to provide a digital payment system for everyone without any central authority to regulate it. Bitcoin has shown that blockchain (i.e. cryptography, consensus protocol and distributed databases) is a powerful enabler for a paradigm shift rendering power to the crowd instead of a given third party.
In this fashion, blockchain and distributed ledger technologies appear to be the instrument to flatten processes and allow widespread collaboration for decision-making through its intrinsic incentive mechanism. We can quite easily draw parallels between issues discussed in the Zero Marginal Cost Society and characteristics of a blockchain. According to Rifkin, more and more companies are organized collectively (e.g. cooperative societies). Just as a community is handled and managed by its members in a consensual manner, blockchain relies on the network to perform value transfer and information recording. The process is no longer descending and rigid but collaborative and flexible. Rifkin also predicts access to goods and services will be favored over ownership and collaboration over competition. The inner characteristic of a blockchain is that it is not owned by anyone and that it is distributed across all the participants that work together towards a common truth. With this kind of mechanics, members can cooperate in a trustless environment where transparency and security is ensured thanks to cryptography.
Blockchain is really disruptive in the way that it secures value exchange in the digital world. How do you ensure that one digital asset you own can not be replicated? In the collaborative economy, only centralized platform such as Uber and Airbnb secure the transfer of value from one individual to another. They ensure that the money you spent for a fare or a flat renting can’t be spent twice. This double-spending problem is one of the most complex challenge in the digital world. The internet was built to exchange information that was copied from computers to computers erasing uniqueness out of it, because transmission works by replication. With blockchain, value is transferred like a move, not a copy, and this is what we need for the collaborative economy to thrive in the digital age.
With new technologies like blockchain, we can imagine the next Uber relying on a distributed and decentralized database, where full remuneration would go to drivers and small fees retrieved to run the blockchain and reward the nodes empowering the network. In fact, that is what is already developing Eva. But the case of Uber is just the tip of the iceberg. Centralized economies of scale scheme of today’s collaborative platforms will be truly disrupted and evenly flattened between service providers and consumers thanks to blockchain.
Decentralized environments are where blockchains have the most impact and where benefits are the biggest. I believe that until we reach such kind of deconcentration between economic actors, institutions and individuals, there is still time for blockchain to reach industrialization and user-friendliness.
Finally, in a world where social impact and cooperation are real expectations, having a technology that allows anybody to share, trade, pay or sell anything within a secured and transparent network will definitely bring the Collaborative Commons to life.