It’s hard to believe that most of the companies that make up what we call the sharing economy–the Airbnbs, TaskRabbits, and Ubers, of the world–have only been around for a decade or less. In what seems like no time, we’ve become utterly comfortable with and even dependent on the experiences they introduced. We vacation in the homes of complete strangers. We instantly delegate nettlesome chores with a thumbtap on our phones. We use “Uber” as a verb.
In 2014, the sharing economy was estimated to be worth about $14 billion. By 2025, just over a decade later, it’s projected to reach $335 billion, with a significant portion of that value coming from the fees these companies charge on every transaction. The companies making the largest share are classic disrupters; they created customer experiences that millions deemed preferable to what more traditional players in hospitality and transportation were offering, as rewriting the rules around consumer engagement and, in the process, upending entire industries.
Today, as these onetime upstarts mature into commecial giants, a new wave of disruption could be headed their way. Blockchain, a decentralized digital ledger that allows for transactions between users without an intermediary (and without its fees), is poised to reinvent the user experience in the sharing economy, eventually posing a threat to the established players.
To understand how the user experience in a truly decentralized sharing environment could evolve, we spoke with Josh Fraser, cofounder of Origin Protocol, a platform that allows developers and businesses to build peer-to-peer marketplaces on the blockchain, and Primavera De Filippi, author of Blockchain and the Law. Here are five key changes they’re anticipating:
1. One account is enough.
Today’s sharing platforms require separate accounts and various isolated sets of reviews that form the basis of a user’s reputation. Those sharing on blockchain marketplaces would be verified through a single platform, such as the ethereum wallet, and would seamlessly use that account across all verticals.
This would mean fewer accounts to set up as new marketplaces emerge, and perhaps more importantly, one reputation that follows the user regardless of whether they’re renting out their car, or renting a room. Additionally, because of the integration of cryptocurrency, Fraser says, “blockchain-based marketplaces are instantly global. You won’t need to worry about currency conversion when transacting across borders.”
2. A new trust emerges.
Currently, those participating in the sharing economy place their trust in the intermediary platforms they use to connect with others. If your TaskRabbit doesn’t show up, or your WeWork card won’t let you into the building, you know there’s a large company supported by customer service representatives that will fix the problem. But since blockchain lacks an intermediary, there’s no number to call and no central body to refund your money. Instead, trust is meant to come from the transparency and reliability of the technology itself.
“The challenge [for blockchain-based sharing platforms] is the governance and reputation system,” says De Filippi, a permanent researcher at the National Center for Scientific Research (CNRS) in Paris and a faculty associate at the Berkman Klein Center for Internet & Society at Harvard Law School. “It’s not enough to have a system that enables the matching of people and resources, it is also important to find ways for people to ‘trust’ that no one will abuse the resources being shared. We need to build a new layer of trust (or reputation) on top of these platforms before they can really pose a threat to the centralized platforms we know today.”
Origin Protocol’s Fraser believes one solution is digital “tokens,” which would encourage users to follow the rules. “The token plays an important role in insuring the health and growth of the network by creating an incentive system to reward good behavior and punish bad actors,” he says. “For example, sellers are required to leave a deposit in escrow, in a process known as ‘staking.’ That deposit can be forfeited if you’re shown to be a bad actor. Likewise, the tokens can be used to reward positive behavior. You can get cash back in the form of token rewards for making purchases, leaving reviews, or inviting your friends to join.”
3. Sharers get a better deal.
It’s tempting to think of the people renting goods or services as the real “users” in the sharing economy. However, it’s probably those on the other side of the equation—the people who offer their resources—who stand to gain the most from decentralization.
“I think end users don’t really care about who is running the system, as long as they get what they want at a low price,” says De Filippi. “The ones who will benefit the most from a blockchain-based system are the Uber drivers or Airbnb hosts who will be able to obtain a share of the profit from the overall venture, instead of just acting as ‘contractors’ for a large company that is mostly interested in the maximization of its own profits.”
4. There’s more to share.
The types of things we share today—cars, apartments, labor—have high enough margins to make building a marketplace around them profitable for intermediaries. But in a true peer-to-peer sharing economy, where the barriers to entry are lower for all involved, items we frequently need but rarely think to share could be fair game.
“There are many types of sharing economy marketplaces that simply wouldn’t be profitable enough to justify the millions of dollars of venture funding it takes to get started,” says Fraser. “But that doesn’t mean they wouldn’t be extremely interesting or valuable to consumers. The average power drill gets seven minutes of usage in its lifetime, but there isn’t a good marketplace today for finding and renting a power tool from one of your neighbors. What if we had a better way to share things like sporting equipment, kitchen appliances, or tools?”
5. Lower barriers to entry.
While hopping on an app such as Lyft or TaskRabbit sounds simple, millions of people have no means to access these and other platforms because they don’t engage in traditional banking. “We have 2 billion people on this planet who are unbanked,” says Fraser. “That’s 2 billion people who can’t use Uber or Airbnb because they require a bank account and a credit card. But a growing number of those people have access to inexpensive smartphones and therefore have access to digital currency and decentralized marketplaces.” Marketplaces such as Origin Protocol.
Blockchain-based sharing marketplaces will mean big changes in how we experience sharing and how we connect with each other. They stand to reinvent the way we trust each other in digital interactions, even the kinds of currencies we use when we transact. Whether or not people will accept these changes remains to be seen.
But just as companies and industries were caught by surprise at how quickly today’s sharing platforms became an everyday part of our lives, blockchain marketplaces could be ruling our interactions before we know it.