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How blockchain technology is changing sharing economy

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Blockchain technology is revolutionizing the speed and reliability of transactions. While the system is still in its early stages, it can benefit a wide variety of industries and sectors, including banking, commerce, healthcare, insurance, and government.

Blockchain could also play a part in a newer market segment known as the sharing economy. A peer-to-peer practice of purchasing, delivering, or exchanging access to products and services has been described as this fast-growing business model. It’s also made possible by community-based online platforms.

Airbnb, a provider of short-stay accommodations that uses a platform to connect people who have spare rooms, apartments, and homes with lodgers and tourists; and Uber, a transportation service that allows customers to use a mobile app to find nearby drivers that use their own vehicles rather than a manager’s vehicle, are two prominent examples of companies who are delivering services in the sharing economy.

The fundamentals of blockchain and the sharing economy

It’s debatable whether blockchain will ever play a significant role in the sharing economy. Some detractors believe it’s all a gimmick, and that blockchain’s function would be minor at best. However, supporters argue that blockchain and shared economy networks are a perfect match.

Businesses like Uber and Airbnb depend on their customers to add value to their networks, according to the Blockchain Council, a coalition of blockchain professionals and enthusiasts who promote research and advancement of the technology.

According to the blockchain council, the issue with this model is that the income raised is not evenly shared with all of the participants who help produce material. Because of their decentralized existence, blockchains allow smart contracts to deploy applications in a stable and decentralized manner.

Potential use cases

So far, blockchain has had little, if any, effect on the sharing economy. However, this could change in the coming months and years.

A blockchain platform can be used in a lot of contexts, although this is not guaranteed. This involves the use of tokens in a given sharing economy environment to transfer value amongst various categories of users, as well as the use of blockchain-based identification schemes to store data that is encrypted uniquely for each user, preventing mass hacking. The use of blockchain’s shared key infrastructure (PKI) will help with this.

In relation to the second argument, one should consider tamper-proof blockchain-based credibility and credential schemes that guarantee data protection. These are high-level concepts, and many kinks must be ironed out and proven before the technology can be used at large.

Advantages of blockchain

Blockchains professionals say blockchain aims to remove fragmentation as well. Users have to sign up and download an account for one of the various shared economy options they like in the past. If your neighborhood has five shared economy businesses, for example, you will have to sign up for each one in order to use any of their services.

However, through blockchain-based technologies like the ShareRing initiative, all utilities could be accessed from a centralized network, and transfers could be made there as well. This means you won’t have to sign up several times, and you won’t have to think about discovering locally appropriate sharing applications when traveling overseas, since the blockchain-based approach would bind you to local sharing economy solutions.

Blockchain solutions for sharing economy

Because of the technology’s decentralized existence, blockchain technology for the sharing economy may often be more safe. Traditional structured solutions are more vulnerable to hackers, and many have seen big data breaches in the past.

Hackers will never be able to enter users’ accounts in a blockchain-based sharing solution, let alone exploit them to offer a false identity. In practice, all users’ identities will have to be checked on the blockchain, giving users interested in peer-to-peer transactions an extra layer of security.

Users can now be constitutionally protected by blockchain technology because smart contract technology will offer arbitration in the case of a dispute.

For example, if an individual owns an autonomous vehicle and needs to rent it out for extra money, smart contract technology will mean that those who lease the car make the necessary payments without the requirement for a third party to supervise the transaction. In the case of a disagreement, the technology with the help of a blockchain expert, will review the vast and highly reliable data and have a fair and clear resolution.

Use cases

Decentralized carpooling services such as Lazooz or ArcadeCity, which run similarly to Uber but without a centralized operator, are also available. Only the technology built on a blockchain-based architecture, which is intended to regulate peer-to-peer communications between drivers and consumers, governs these networks. These platforms use blockchain technology to reward drivers that contribute to the platform with custom-designed tokens that mark a stake in the company. 

The more a driver contributes to the network, the more they will be able to profit from the platform’s growth and have more control over the organization’s governance.

As a result of blockchain technology, new types of organizations that are not just dematerialized but yet autonomous may arise. These companies, which lack a director or CEO, as well as some kind of organizational hierarchy, are run independently by anyone who interacts with a blockchain. 

As a result, they must not be confused with the conventional concept of “crowd-sourcing,” in which individuals donate to a forum but do not profit from its popularity.

Blockchain technology can promote a much more cooperative method of crowd-sourcing, known as “platform cooperativism,” in which consumers are both donors and owners of the projects they donate to. And, since there is no middleman, the wealth created on these sites can be redistributed more evenly to those who contributed to its development.

With this latest potential for expanded “cooperativism,” we’re getting closer to a real sharing or collective economy — one that is run by and for the people, rather than by and for a few big intermediary operators.

Wrapping up

The use of blockchain technologies allows top-down hierarchical organizations to be replaced by a method of autonomous, bottom-up cooperation. This move could alter the way money is spread in the first place, allowing individuals to work together to create greater good and ensuring that everyone is fairly paid for their efforts.

Many creative technologies integrating blockchain technology with real-world use cases are likely to emerge as blockchain technology begins to achieve widespread adoption. The sharing economy has a long way to go until it is completely stable and user-friendly, but with the amount of creativity in the room, the kinks could be ironed out sooner rather than later.

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