The shared economy has been growing at a vigorous rate since cash-strapped consumers began sharing more during the 2008 recession. New income streams have been generated from renting out living spaces, cars, sports equipment and power tools. Yet as more consumers participate in peer-to-peer exchanges, average household wealth is not keeping pace.
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The largest beneficiaries of the sharing economy are the centralized platforms that facilitate the exchanges. Corporate middlemen including accommodation giant AirBNB and car sharing service Uber raked in $18 billion in revenues in 2016, or 10 percent of the shared economy wealth. Some platforms, such as Uber, take a 30 percent or higher cut to serve as the go between for peer rentals.
Blockchain P2P networks are replacing these corporate structures with community platforms and enticing consumers to jump on board for a greater share of the wealth. The movement of the shared economy to the blockchain is putting more money in the wallets of consumers and creating a new generation of shared economy businesses.
Sharing Economy 2.0
Call it the revenge of the uberites. The blockchain, specifically built to host peer-to-peer networks, distributes economic power and trust, currently concentrated in central authorities, among the users.
High and increasing transaction costs have slowed the collaborative economy’s growth.The sharing economy generates income when individuals rent out items they are not using. The blockchain significantly lowers the cost of operating peer-to-peer lending by allowing lenders and renters to transact directly over a smart contract. The middleman and costly administrative infrastructure are eliminated.
Trust issues are also replaced by cryptographically secure and traceable transactions. Cyber security has been a growing concern since the identity of tens of millions of Uber drivers and customers was exposed in a 2016 data breach by hackers. AirBNB hosts are becoming victims of online property piracy. In one scheme, an old ad with the original host’s profile is advertised in a different geographic location. When the guests show up at their holiday rental after being coaxed into sending a deposit off of the AirBNB platform, no such rental exists. With a self-executing smart contract, a trackable escrow payment can be provided via the renter’s smart wallet. Payment is only released when the door to the rental is unlocked.
New Collaborative Consumption Models
With the major risks of offering shared services mitigated on the blockchain, many new shared services models are developing. New decentralized marketplaces include home EV charging station operator Share&Charge and shared computing power platform Golem. Soon, 3D printers, parking services and drones will be rented by activating a smart contract with a digital token.
The sharing ethos is also improving upon the blockchain, which has itself fallen victim to centralized, authoritarian control. Skywire is providing a truly disruptive model by creating its own blockchain to host its shared free internet services. The service is accessed via its own cryptocurrency, the Skycoin (SKY). Internet users can earn Skycoin by sharing their bandwidth with other internet users.
By also collaborating on software development, Skywire is building a better blockchain model for the sharing economy. Over 80 developers across the globe have contributed to the development of the Skywire platform. The new cryptocurrency protocol provides unique advantages over the ECR20 token standard used by most ICO tokens.
One major improvement is on the Bitcoin mining process, which has fallen prey to profiteering owing to a centralized reward-driven protocol. Skywire has replaced the faulty reward mechanism with its own mining process based on the Obelisk consensus algorithm. The Skycoin blockchain is reconciled across all nodes, rather than on a block-by-block basis. The algorithm relies on a web of trust to keep malicious nodes from entering a network.
In addition to the improved mining process, the Skycoin will be distributed in increments over 25 years to prevent inflation and speculation.
Early investors in these shared value creation marketplaces should enjoy more of the economic profit being steered their way.