Five years ago, catching a cab to the airport meant hailing one on the corner or scheduling a black car service. When you arrived at your destination, maybe you rented a car and drove to your hotel, where you made a reservation weeks in advance.
Today, you call two Ubers and book a room instantly through Airbnb, saving you time and money.
Not only that, when you’re traveling, you can put your home up for rent and earn additional income, trusting that a stranger won’t burn it down while you’re away.
Uber and companies like Uber have changed consumer behaviour in a short amount of time. Their pace of innovation (and adoption) is on par with or quicker than other changes we’ve seen over the past few twenty years: Amazon driving ecommerce, Google leading digital transformation, and Facebook changing our social networking. I believe the speed of innovation will continue to increase.
What happens next in the sharing economy? How quickly does it mature? When does it become another protocol or platform to build services on top of?
The Sharing Economy Imbalances
The sharing economy isn’t going anywhere. While many people laud it because of the obvious reasons (reduced consumer costs, ability to earn revenue on your existing assets, flexibility), it’s not perfect.
To start, there are two participants we should think about. First, you have the marketplaces. They facilitate tons of transactions, take a small cut of the revenue, and earn customer loyalty. Small cuts of revenue can add up to billions of dollars. They’re the dominant players.
Then you have the service providers, agents of the sharing economy. Your Uber driver or Handy cleaner captures a small share of overall transactional volume and income.
There’s a natural imbalance between the two participants. Companies build real wealth while the contractor earns what they can purely base on market dynamics and the whim of customer ratings. They’re at the mercy of the marketplace provider.
But that’s only one source of tension sharing economy companies create.
Centralization Causes Issues
I believe the sharing economy is a force for good. But besides one party receiving a disproportionate amount of the benefits, there are other issues. For instance, what’s the official relationship between the marketplace and its agents?
And what about the sharing economy’s relationship with our government and other local businesses? Companies will and should save money in taxes. Where the sharing economy goes untaxed, its taxed competitors will come calling. Airbnb is now paying local hotel taxes against its wishes as a result.
What Real P2P Sharing Looks Like
Something needs to be done to improve the sharing economy—before it’s too late. A decentralized approach would solve these challenges, but create new ones.
Can our sharing economy become fully decentralized? Or could it more closely align with a peer-to-peer model that has some central nodes?
It’s true the centralized approach boosts confidence in the market. If you have a terrible experience with Uber, at least you can reach out to Uber and let them know. After all, marketplaces operate on trust.
But is a centralized approach, like that of Uber, Airbnb, Lyfy, Handy, and a million more, the only way to build trust? What would trust look like in a fully or partly decentralized model, something closer to a real peer-to-peer marketplace?
I don’t know. But I think we see hints with the blockchain protocol.
Only time will tell—but you better believe someone’s working to solve that now. I’m excited for when Uber finally gets Uberized.