Site icon Daily Fintech

Blockchain, SmartContracts and the professionalization of the sharing economy

I recently stayed in a house that I had booked through AirBnB. It was a very professional experience, comparable to staying at a cheap business hotel but at half the price.

This was not ye olde B&B, making conversation with your host as they cook breakfast.

Nor was it couchsurfing for free while swapping travelers tales.  I had clean sheets and towels.

This was a business and it was depersonalised and professionalized. I never met my host, just like I have never met Mr. Marriott or Mr. Hilton.

The point is that the sharing economy is going mainstream and professional. You can see it in the stories about Uber and Lyft in bare knuckle fights.

These first generation of sharing economy services do three things:

1. Match buyer and seller.

2. Payment processing.

3. Branding.

What they do not do is anything in the physical world. That is where Bitcoin 2.0 Smart Contracts meets Internet of Things (please excuse what sounds like a randomly generated “hype mashup”).

Bitcoin 2.0 re-decentralization platforms like Ethereum enable that kind of cyber meets real world. Let me give one simple example from a real world B&B experience. To enter the house I needed to key in a code that released a key from a lock. I am sure that the host will soon install a digital lock to make this one step not two. That code has to be dynamically changed per person per stay. I don’t know if AirBnB does this or if the host hacked this. (I envisaged my host as a tech entrepreneur  who was supplementing ramen profitability with some of the finer things of life by hacking add-on automated B&B services.

Look at the three things that first generation sharing economy services do:

1. Match buyer and seller. Google does this well. This cannot be a sustainable source of advantage.

2. Payment processing. Price matters. My AirBnB host was running a business. The price has to be low, so he/she has to keep costs low. That is where the combination of credit card fees and AirBnB fees start to add up. Bitcoin 2.0 startups could disrupt this.

3. Branding. As consumers adapt to the reality of these sharing economy P2P services, it will become apparent that the digital brand is fairly meaningless. I can expect AirBnB to process my order efficiently but I do not expect to call them if the milk for breakfast has gone sour or run out.

If I was in a Hotel and if the milk for breakfast has gone sour or run out, Mr. Marriott or Mr. Hilton would certainly be getting my call.

That is not a segue to “this sharing economy stuff will never work out” type of rant. I think that sharing economy services are here to stay. If they don’t fill consumer needs today, something better will emerge. I see two things emerging:

1. Local services marketplace. This will enable that professional AiRBnBer to have people deliver milk, change sheets etc with as much automation as possible. This is where I can see that mythical Internet connected fridge actually being useful to a person in the neighborhood who makes their living servicing a bunch of professional AiRBnBers in the area, refreshing supplies, cleaning etc. Their dashboard would tell them how many pints of milk and decaf Nespresso capsules to buy that morning for example.

2. Decentralized reputation rating services.This has to be two-way. The professional AiRBnBer wants to know that I am not going to trash the place and steal the family painting. Right now my LinkedIn or Facebook profile serves as a proxy for that. It should be more fine-grained than that. If I am rude to an Uber driver or don’t put the keys back where I should in the B&B, these should all be demerit points. If you want the “customer is always right” treatment, pay up for the privilege. In the sharing economy we need also to be rated as customers to get good service at a low price. In this world, the closed silos of reputation become so silly that it has to change. A decentralized reputation rating service must be under user control and that is hard to do right (I want to delete hate comments but should not be able to change my rating but I should be able to decide whether or not I release my rating data, it is my data).

The professionalization of sharing economy providers opens the door to low cost providers who also create an ecosystem of service providers.

Skip to toolbar