2016 is set to become the most interesting year yet in the life story of the sharing economy, says Helen Goulden.
It’s almost certain that we will see the continued growth and spread of those titans Uber and Airbnb and we can expect at least one other global marketplace punch through into the public consciousness alongside the proliferation of local sharing initiatives in cities; while issues of trust and regulation will continue to rumble on, with some progress.
But just as we get used to one kind of disruption, along comes another.
In 2016, we will see the disrupters being disrupted, as the next technological revolution simultaneously cracks the challenge of trusting strangers in the sharing economy while ripping up the rulebook for how those same platforms make their money.
Sharing economy businesses, despite their power to disrupt incumbents and despite being radical in their own right, make use of some very traditional business models.
The most common model is to take a commission on transactions; something businesses have been doing for centuries. Technology has done many things, but to date it hasn't been able to completely do away with the middleman.
When we first saw the rise of peer-to-peer platforms and other kinds of online marketplaces, there was a lot of talk of ‘disintermediation’; new ways to directly connect people through the internet that bypassed traditional kinds of intermediaries and organisations. While our experiences of using these new marketplaces are dramatically more convenient and have opened up the possibility of transacting with many different kinds of providers, the middleman is still very much with us. Indeed, the biggest new businesses are intermediaries of a scale barely imagined in the past – from Alibaba to Amazon, eBay to Uber.
What if there were a technological solution to fully disintermediate between people wishing to transact with each other? A way of directly transacting with anyone, in a way that was invulnerable to fraud, in a system that nobody actually owned, so no-one took a commission?
Blockchain technology offers this possibility. With the blockchain, the infinitely more interesting innovation that sits underneath Bitcoin, we have a fully transparent, un-ownable, distributed system that securely allows multiple kinds of transactions to take place between different actors, whether they be people, businesses or even governments – without the need for any kind of intermediary.
And so it’s no surprise that we see lots of resources flowing into it, and more than a little ripple has been sent through the financial and legal industries where it could ultimately wreak the most havoc – or present the most fantastic opportunity, depending on how you look at it.
In 2015, perhaps as a result of a hypersensitivity to the growth of the alternative finance market, we saw a coalition of nine investment banks committing to developing open standards for blockchain technologies for financial services. We also witnessed a steady stream of events dedicated to debating the future of blockchain tech and of course, the launch of Slock.it, which showcases one of the first technology stacks for a decentralised sharing economy.
So what does the sharing economy look like in a blockchain world?
Firstly, we’re going to have to invent some new business models if we want to continue to make money out of brokerage within the sharing economy. OpenBazaar, a proto-blockchain version of eBay (which, whether it succeeds or not, will pave the way for others) says it will be ‘free to use and always will be’. We've seen this phrase before, you'll remember, and Facebook has indeed, found some creative ways of making money.
Blockchain marketplaces will, of course, still need some kind of investment. Developers may be happy to spend their days bashing out cute code that bucks the system, but I’ve yet to meet any brand consultants, designers or marketeers who are similarly philanthropically or ideologically inclined. And these new marketplaces will need more than code if they want to burst into the mainstream.
But burst out they will, and without that pesky middleman getting in the way they will almost certainly be cheaper to transact through and the titans will have to work out what to do when they do.
Are the Grandaddies of the sharing economy going to succumb to that same belief in invulnerability that we’ve so often seen in traditional businesses before they are rapidly overtaken by more agile, tech-fuelled competitors? Or are they ahead of the game – experimenting in the lab, carving out their niche in the sharing economy 2.0?
Trust is the most often used word in any debate about the sharing economy and it’s a complicated beast. The current cadre of collaborative platforms are really quite clear: we can create higher levels of trust in the idea of the sharing economy; we can adopt best practices to ensure that our particular platform becomes a trusted place to undertake those exchanges, but we can’t guarantee that transactions between people will be trustworthy. The blockchain does away with that problem, and simultaneously removes any slow moving regulatory targets.
With a system that is immutable, tracking every transaction in a distributed ledger, with smart contracts that fully set the parameters and conditions of any exchange between peers, any need for a ‘trusted intermediary’ – or an entity that feels responsible for trust between strangers – completely falls away.
So by the time 2017 comes around, the regulators will be realising just how radical a rethink is needed for regulation in the sharing economy. With millions of individual contracts between different actors in the blockchain, one solution will be to code regulations into the system.
The brilliant WikiHouse is already developing ‘rules-based regulation’ for designing and building houses, and it could be a viable solution to implementing regulation in a highly distributed sharing economy.
When the sharing economy first arrived on the scene in around 2008, it was hailed by many as a phenomenon that could shift us into a new kind of inclusive, sustainable economy; a democratising force that could shift us into a post-capitalist paradigm. The reality has (to date) been somewhat different. And there are parallels with the dawn of the internet, which posited similarly utopian ideals in its early days. So it’s more than likely that ultimately, those who see the blockchain in a similar revolutionary light will be disappointed. But, that won’t make it any less disruptive for our sharing economy titans.