Blockchain continues to be a blistering subject across the internet and is recognized as the most disruptive technology of the future. It will impact many industries, and the sharing economy will be one of them.
In the first part of this blog series, we discussed the mysterious origins of blockchain, explained its usage, and its innovative potential. In this post, we are going to talk about new trends, ideas, and developments that are impacting the sharing economy as a result of blockchain.
TWO BIG PROMISES OF THE INTERNET
In a recent TED Talk, journalist Thomas Ramge talked about blockchain disruption and how the technology behind bitcoin will create a true sharing economy. He argued that there were two big promises of the internet – liberating information and making the economy more democratic. We have seen the first one come true already but in order for the second one to borne out, the monopoly that big companies have over user databases needs to be eradicated. Ramge explained that the digital economy is based on platforms, which attract a huge mass of users and emerge network effects on those platforms. This specific behavior leads to exponential growth, which forces competitors out of business and monopolistic structures rise as a consequence. Well, blockchain promises to change all that by eliminating the middlemen and running software in a secure decentralized manner.
Blockchain-based applications can be used to organize the activities of a large number of individuals, who can consolidate themselves without the help of a third party. They bring essential value and freedom to people, allowing them to coordinate common activities, to interact directly with each other, and to manage online transactions safely.
As Innovation Enterprise mentioned in an article on the topic, “blockchain is a fully transparent, permission-less, proof-of-work, peer-to-peer distributed ledger that securely allows multiple kinds of transactions to take place directly between different participants.”
BLOCKCHAIN AND THE TRUST ECONOMY
Blockchain has the potential to reshape the economy. Yet, the awareness of this technology is linked with Bitcoin, the cryptocurrency, which limits people’s thinking and borders their vision of greater possibilities. Blockchains are a low-cost market disruption to any business that acts as a middleman, which eliminates the need for an intermediary, and it impacts some of the biggest technology companies. People will be able to connect, share, and transact directly with one another, shifting into the real sharing economy. But what does this mean in terms of trust and online reputation?
In today’s world, reputations are primarily driven by their digital presence and we tend to trust a person’s online reviews more and more. Blockchain technology can store digital identities and peer-to-peer reviews of individuals and companies. Thus, it will lead to the foundation of the trust economy. For example, a blockchain-based digital identity and trust level can verify that a person exists. Consequently, his or her trust elements could automatically be inserted into smart contracts when engaging in business transactions with them.
According to BTCMANAGER, blockchain technology has three important functions: the capability to stock records, to exchange digital assets without friction, and the possibility to execute smart contracts. Also, it can provide the necessary technological infrastructure for a more efficient and streamlined trust economy from which the sharing economy can hugely benefit. However, blockchain technology is still in its early stages. It will take time before it can be used to store digital identities and trust ratings on a global scale.
HOW IS BLOCKCHAIN IMPACTING THE FUTURE OF THE SHARING ECONOMY
Blockchain could help democratize the sharing economy by making it cheaper to create and operate an online platform. For example, transactions could be coordinated by self-executing smart contracts or performed at lower cost by other small competing providers. The next phase of the sharing economy can emphasize today’s inequalities or ease them, depending on the purpose of the technology itself.
Blockchains and digital currencies can change the way we work and get paid. As William Mougayar states in his article The Theory of Blockchain Circular Economy, “we are in the early stages of a new chapter in the nature of work. The blockchain will enable us to do our jobs and be compensated inside new circular economies that have their own currency units and their own work units. This, I believe, is one of the greatest themes to emerge from blockchain technology.”
Still, there are lots of questions to be answered on the subject of blockchain and the sharing economy, but one thing is for sure: its realization is inevitable. We are shifting to the Digital Age, which means that at some point companies will have to rebuild or reorganize themselves in order to keep up with the upcoming technological advances. There are several companies already that upraised as a result of blockchain, and other futuristic concepts are being discussed, such as mini circular economies and the sharing economy in space.
We are pretty sure that we have only seen a tiny dust particle of what is yet to come.