The definition of the sharing economy varies usually depends on who you ask — or what site you search. You will find that the definition often includes the sharing of a good or service through an online platform. The truth is, the sharing economy has existed for centuries. Communities historically shared limited resources instead of owning one of everything themselves.
The advent of the Internet changed the possibilities of a sharing economy for all of us, nowadays. This is a sharing economy and a gig-economy merger.
The Internet expanded the reach of connecting potential buyers to lenders — and everything else. It gave rise to tech giants like Airbnb and Uber that allowed everyday individuals to monetize their unused rooms, houses or cars. The Internet provided people with a more choices — affordable and accessible ways to get from A to B, and stay in C. Our traditional counterparts didn’t have this opportunity.
The sharing economy has gone through waves of hyper enthusiasm.
The Internets ability to make an impact on sharing smaller items such as home DIY tools hasn’t really caught on — but it could. And that dream is one that keeps so many entrepreneurs dreaming and producing. Transaction costs and convenience still favor purchasing an item outright. But the development of innovative technologies including blockchain, the Internet of Things (IoT) and the Business of Life Things (BoLT) are changing these limitations. These innovations are beginning to show us the possibilities of what a future of a true sharing economy could really mean for individuals, the economy, and the environment.
Overproduction vs. Underconsumption
The boom of the digital revolution and the likes of smartphones have allowed us to connect with the rest of the world in a way we couldn’t before. We are provided with access to greater options for booking accommodation, transport and accessing resources. Otherwise find unaffordable or inaccessible becomes not only possible, but realistic.
In the developed world, we still have a mindset where we need to own everything ourselves.
However even this concept is beginning to change. From our cars, to our internet, to our DIY toolkit that we only use once a year — what it means to be convenient, is changing. “Things” are costly and take up too much space. We don’t utilize the full value of our assets. Private vehicles go unused for an estimated 95 percent of their lifetime, so why does everyone need their own car? What if cars were rented by the day or hour, and you only had insurance for the period you were renting it, instead of the 95 percent of the time you’re not using your car?
Why have we stayed with third party platforms for so long?
The traditional need for third party platforms like online marketplaces, or websites listing your available room or other asset exist because users need someone to trust in the transaction process. You want to know that when you pay for a good or service, you will receive what you paid for. These platforms helped instill that trust.
The arrival of blockchain technology, although initially intended to disrupt the finance sector — has prompted almost every industry to be put under the microscope.
Now almost every site of operations faces optimization through utilization of blockchain’s key features.
These features include: decentralization, transparency, immutability, and security. Blockchain can provide a more trustworthy environment due to its decentralized element. The consensus on any given transaction will now be handled by a network of peers, or nodes — and not a central authority.
Various incentive or disincentive methods are applied across blockchain models to maintain honesty and integrity among the network.
This “review of peers” will ensure that valid transactions are verified and confirmed. Blockchain’s ability to decentralize ownership means that we can create an Uber-esque service without needing the company. Back to what the Internet has given us today — blockchain is lowering operational costs incurred by the central platform. We have seen the value of Yelp — enabling a true peer-to-peer exchange — and that same quality can be had with blockchain, where prices are agreed directly between seller and buyer.
This model also means that your personal data is not collected, stored, and later monetized by a single entity. That data receptacle has been the traditional modus operandi — provided by most online transactions up to this point on the Internet.
Beenest is one example of a company utilising blockchain technology to improve the house-sharing economy. They are eliminating the Terms of Service and costs incurred by centralized giants that typically hold the market share. Beenest is improving on qualities of existing companies classified under the “sharing economy” like Airbnb. But this company wants to allow the users — and not a company — to truly reap the benefits of what it means to share resources peer-to-peer.
In this new model of house sharing, those with rooms or houses to spare are able to directly connect with those looking for accommodation. There will be no intermediary or platform charging a commission or storing its user’s data (your data and everything about you). Beenest won’t be monetizing your personal information later — nor your private transactions.
How long before your individual state, local, or country government wants a piece of your very small pie — including data? The big guys and corporations, well, pay very little taxes with all the loopholes — and you are just trying to make ends meet.
The combined capabilities of IoT and Blockchain
Smart contracts are another element of blockchain remove the need for trust between parties providing and using goods or services.
Smart contracts, in essence, are a set of self-executing rules that run on an if-then premise between at least two parties. For example, if you wanted to rent a car for the day, you would send through the required payment to an account which is monitored by the smart contract. Once payment is received the smart contract would execute and unlock the car and allow you to switch it on. Once the rental period is up, the car would lock and would no longer turn on.
Slock.it is a German-based company that is building real-world applications for the sharing economy, by connecting human-machine and machine-machine sharing using blockchains and IoT and BoLT. Among their many endeavors, they are developing smart switches which can be used with smart contracts to autonomously unlock doors. These are the doors to a rental home, office space, vehicle, or even allowing access to services. Services may include such items as metered wifi upon receiving payment and give access for the period paid.
Through a simple app, users can search for connected devices to hire, pay and gain access to the device.
History and use of these devices are stored on the blockchain in the back end, recording data including time used, amount paid, and so on. For devices such as machinery, the machine records accrued time and will notify the device when it needs its next service. The use of smart contracts within a sharing economy model means that there is reduced or even no need for third party intermediaries. These are those who would normally contribute as the “trusted” platform providing the services. Thus reducing operational costs — meaning the renter pays less and the user sharing their good or service earns more.
With around 23 billion devices connected in 2018 we are now able to share more assets reliably. We can locate the asset and track it’s usage.
Thinking beyond the current and most obvious items that are being shared in today’s economy, there are many other resources, physical and intangible. We can introduce a sharing economy business model in underutilized spaces. These spaces can be rented out and shared with other users — to the benefit of your own economy.
- What if houses with solar panels could reallocate their extra electricity to neighboring houses via a power grid, and earn money instead of the power companies?
- What about renting the extra disk space we have on our hard drives, or the extra 20GB of internet data in our monthly plan that we never use?
What is YOUR what if? This is where the entrepreneur spirit can thrive and make a living.
Currently, it’s easier for people to buy their own plans and own hard drives (whether local or cloud based). What if there were convenient and affordable options for renting out these unused services that you still pay for?
Micropayments are essential to the inclusion of any type of asset or service into the sharing economy.
It has not always been easy to implement payments on small scale items where transactions costs represent a much higher percentage of the asset you’re paying for. The introduction of bitcoin as the first application of blockchain showed a new possibility for micro payments. Previously these had been hindered by transaction fees incurred by traditional credit card companies.
Cryptocurrencies were seen as the new solution that could allow you to pay per article on a media site. Now they are much more.
For just a few cents other available small purchases are suddenly widening the possibilities of what peers can share with one-another. Despite the issues some blockchain’s are facing due to congested networks and increasing costs, many companies are still working to improving networks. These persons are working to build instant, near or zero fee transactions.
One such company is IOTA, who is using a distributed ledger called Tangle to enable fast, secure, and zero fee payments. Soon these lightning transaction can be applied to any connected device. This is exactly what we will need to enable users to easily pay for goods and services. This action will finally allow connected devices to share and use services off each other, as well.
It is estimated that within the next 10 years, more than 50 percent of the global economy will be created from the major sharing economy sectors.
We will see peer-to-peer lending, music and video streaming, auto sharing, house sharing, and online staffing. This gig economy can be significantly greater as we develop current and future technologies to increase accessibility. More and more accessibility to what we can share with one another will grow with the individuals ability to share it. As others catch the vision of this ability to make a living and to have the ability to live better, we will see a much higher uptick in the ways that will be developed.
In a time where we are using too many of the earth’s resources, this could be a solution to the overconsumption and waste of resources.
We’ll also see a shift in the distribution of the economy as technologies, such as blockchain, allows everyday users to capitalize income from their own assets. Costly fees from central giants have eaten-up these assets before — but that consumption of our piece of assets — can become the past — quickly.
Of course, regulations, safety, and policies still to need to be developed — as we iron out what the sharing economy will really mean. It’s clear that consumers now have greater options for selecting products and services. We can give lenders (us) the ability to offer their unused goods or services to a much larger audience.
The economy works off or supply and demand, and it always will. Introducing more services available through individual persons will bring more competition. This will inevitably continue to foster greater innovation within the sharing and the gig economies. .