Beyond Uber: Blockchain technology can enable a truly sustainable sharing economy

Baozou Comment : Uber, Airbnb and other platforms have become the current models of the sharing economy and are developing very fast. However, this centralized control platform still serves individual institutions and is not the ultimate goal of the sharing economy. For this reason, we can combine emerging technologies such as blockchain to create a decentralized peer-to-peer sharing economy that truly benefits the people.

Translation: Annie_Xu

Uber and Airbnb, one is a popular taxi service, the other provides a hotel-like short-term rental service; both are successful examples of the emerging sharing economy. "People as a service" is another hot word to describe the two business models; both platforms have received tens of billions of dollars in investment, and people are eagerly looking forward to their IPOs, and they are about to become the new favorites of investors.

Economists from the Centre for Blockchain Technologies at University College London (UCL) and the Impact Institute, a coalition for higher education and employment, wrote a report titled "Blockchain as an Institutional Technology Spearheading an Equitable Exchange Economy" that challenges the status of Uber and Airbnb as role models of the sharing economy. In fact, the authors of the report argue that the "platform revolution" exemplified by these two companies, as well as companies such as Etsy and Lending Club, will increase the wealth of platform owners and take away the wealth of value creators.

At the same time, Paolo Tasca, director of the Blockchain Technology Center and author of the report, and Mihaela Ulieru, president of the Impact Institute, believe that distributed ledger technology can realize a true sharing economy market, eliminating intermediaries and central institutions, and consumers and service providers can trade through a decentralized peer-to-peer network.

Uber and Airbnb provide consumers with attractive front-end services through simple and easy-to-use apps, which are faster, cheaper and more comfortable than traditional services. For consumers, the ability to purchase services directly makes Uber and Airbnb look like decentralized peer-to-peer networks.

In reality, they are centralized systems because transactions between consumers and suppliers rely on the platform operator’s infrastructure, hubs, and software. The operator collects fees and has full control over the network. And the operator can describe transactions to value creators, potentially marginalizing themselves and, ultimately, consumers.

Tasca and Ulieru said:

"To newcomers, networks like Uber may appear to be decentralized. However, although Uber runs on mobile phones, it is connected to a centralized platform through an app, which is controlled by the company and serves the company's goals. Centralized innovation means slow innovation; it also means innovation that is driven by the goals of a single company. This will ultimately lead to a single point of failure."

Another drawback of the centralized sharing economy is that it cannot withstand regulatory risks. The report authors pointed out that the number of centralized sharing economy service providers has reached the proportion of "too big to fail" and continues to face various possible regulatory and policy conflicts.

Looking forward to a true sharing economy

Tasca and Ulieru asked, “A platform that truly realizes the sharing economy returns value fairly to value creators; what would such a platform look like? Are there principles that can guide the design of such a platform?”

Paolo Tasca

The report offers a number of options, including providing peer-to-peer services through blockchain platforms based on decentralized open networks, an example of which was the early Internet, and on which a wide range of services can be developed.

"Blockchain can provide secure, time-stamped transaction records and turn them into applications that run on edge devices, independently developed and without authorization. Developers can use transaction services as a platform and turn them into applications that can be applied to any device."

Ultimately, the centralized sharing economy platforms controlled by individuals will be replaced by decentralized cooperative organizations; that is, Uber will not be controlled by Uber, and the revenue after deducting costs will belong to the members of the organization, who can control the platform and make decisions.

Tasca and Ulieru believe that in the near future, our economic activities will revolve around decentralized peer-to-peer sharing economic platforms, which may significantly narrow the income gap, achieve global economic democratization and a more sustainable social ecology. "Blockchain platforms combined with other emerging technologies may realize these potentials."