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The blockchain can save the sharing economy

The economy of sharing has betrayed its own intentions, concentrating power in the hands of a few companies, serving an edition 2.0. How to make the transition is explained by Marco Ottolini, serial entrepreneur of the internet economy, journalist and expert in new technologies

15 Jun 2018

The dream that the Internet and then the sharing of goods and services could make the world more democratic was shattered against the concentration in the hands of a few of all power.
The companies of the FAMGA (Facebook, Apple, Microsoft, Google and Amazon) and the BAT (Baidu, Alibaba and Tencent) hold the almost total property of the data of the users and thanks to these they succeed in proposing services and products that obscure the availability of others. The Web’s Oligarchs act as birds of prey every time some new interpreter appears on the market that quickly acquires users, and with them their data, buying it at any price: see Instagram, Whatsapp and Nest. And when the operation fails, they try to kill him in the cradle by slavishly copying every move of the opponent, just ask SnapChat in this case.

FROM THE WEB FREEDOM TO MONOPOLIES

Yet the Internet was born from the idea that the global connection of all digital services would free us from the slavery of the past. The knowledge hidden in libraries around the world would be revealed and the farmer from Pachino could sell his tomatoes to the Russian from Novosibirsk. It was not a simple utopia but the field deployment of Metcalfe’s law, which together with Moore’s law, according to which the power of processors doubles every 18 months, ruled the digital explosion from the 80s onwards. Enunciated by Bob Metcalfe, the inventor of Ethernet and founder of 3Com, the law that bears his name states that the effect of a network is proportional to the square of the connected users, that is, as the size increases, the value of a network increases geometrically. Although there is no theoretical proof, the practical one is represented by the whole shared economy. What Metcalfe could not foresee is that a network, when it acquires a certain critical mass, becomes a monopoly because of the inertia of its participants. By spending time researching and sending lots of emails, it would be possible to find a room to rent in Berlin, but it is much easier to contact AirBnb and book with just a few clicks.

CRACKS IN THE SHARING ECONOMY

While the shared economy is a tangible success for consumers, it also shows visible cracks on the suppliers’ side. When Uber lowered the commissions for its drivers, they had no choice but to accept and so they would be forced to host AirBnb if the platform decided to increase their fees.
But even consumers who have helped build the network and given power to the platform, are often penalized, for example when a service is transformed from free to paid or when you make improper use, albeit declared, of their data. The latter aspect in particular was long underestimated until the Cambridge Analytica case exploded. Only then did part of the public realise that what had been created to optimise advertising investments could be used to influence the outcome of elections in free countries. In the past, political communication, mainly through posters and TV, could only be generalist, with simple messages and, all in all, calm. Now, being able to know in detail every single person, it is possible to mount (dis)information campaigns, using fake news, that successfully hit very narrow targets without incurring any side effect from other potential voters. For example, a voter who is against vaccines but in favour of integration will only receive NoVax messages and racist posts will be completely precluded.

IMAGINE A 2.0 SHARING ECONOMY

If the sharing economy has failed by creating an oligarchy of monopolies that increasingly resembles a 1984 dictatorship that controls and influences us closely, is it possible to imagine a Sharing Economy 2.0 in which power is not concentrated in the platforms but remains distributed and, consequently, impalpable, in the hands of those who provide the services and those who access them?
The answer is yes and the key word is “distribution”, or through “distributed applications”, as opposed to “concentration”, or application platforms in the hands of a single subject. In a nutshell using the Blockchain, in its incarnations, as Ethereum, Eos or Neo, which allow you to implement Smart Contract and give rise to distributed applications, the so-called dApps.

AN AIRBNB BASED ON THE BLOCKCHAIN

For example, there may soon be a new entity, probably supported by the launch of an ICO, providing a Blockchain-based system similar in functionality to AirBnb. If you want to rent your house, you should register and then enter your accommodation details and photos. For simplicity, let’s say that two Smart Contracts would be generated in the Blockchain, one relating to the person and the other to the accommodation, in relation to each other. The first difference is that the data would not be maintained in a central database but would be “distributed” in the Blockchain and would be the property of the person who entered them. When a user decides to rent the apartment, he only has to make a reservation by sending the money to the Smart Contract that represents the accommodation. This will change your status and prevent others from booking for the same period. The owner of the accommodation can transfer the funds to his own account and convert them into other crypto currencies or money using one of the many exchanges available. All this happens without paying commissions, more or less hidden, but remunerating with “gas”, modest amounts of crypto currency, the systems that keep the blockchain alive by mining.

BENEFITS OF DECENTRALIZATION

The advantages, as well as in terms of cost and ownership of the data, come from the decoupling between the distributor and the service provider. Returning to the example of AirBnb, at this time if an owner wants to distribute their apartment on multiple platforms must register several times, copy several times descriptions and photos and especially manage any double reservations. Assuming instead to use a dApp (decentralized app, which does not need a person to manage and manage it to work), the owner would make a single registration and then it would be AirBnb, Tripadvisor and others to access its data, intrinsically preventing double bookings.
The other advantage is that distributors could multiply, since the threshold of entry would no longer be to have set up a complicated software system and to have collected a multitude of users, but simply to aggregate an audience, even a small one. Today, if the Municipality of Milan wanted to make the offer of local accommodation available on its tourist information site, it would have to face two choices: to implement a booking system itself with high costs or to make an agreement with AirBnb, with the outrage of the competitors, to incorporate its offer in the square of Milan. In the future, if the dApp for accommodation existed, it would have to extract from the Blockchain the availability of accommodation in Milan and show it on its website, providing a service to tourists and citizens, without any significant cost.

A SOCIAL NETWORK WITH SMART CONTRACTS

Similarly, one could imagine a social network in which user data and their relationships were recorded in Smart Contract: suddenly thousands of applications would be born that would allow us to exploit our network in different ways, for example, allowing us, as users, to have a single profile and a single network shared between Facebook and Linkedin. Each application would extract the relevant information from our network and show it to us, without in any way appropriating it and using it to its advantage.
In addition, using a Blockchain, it is possible to implement mechanisms of guarantee “Zero-Knowledge”, ie ensure an actor in the system that a certain statement is true, without revealing anything else. For example, you can guarantee the age of a participant or its reliability, without showing his identity card or the detail of all reviews received.

THE ISSUE OF DATA OWNERSHIP

But who provides an App used by millions of users and service providers, in the end, will not have concentrated in themselves the same power that today’s sharing economy platforms have? No, because the ownership of and access to the data is with the provider, i.e. the service provider or the buyer, and not with the system provider. It is the same difference that passes between Microsoft, which sells Outlook and Exchange to companies to build a private e-mail system to which only employees have access, and Google, which gives everyone e-mail, except then read the contents of the messages to propose advertisements whose price paid by advertisers serves to support the free service. A quid pro quo that is not at all clear to users, which then leads to disasters such as that of Cambridge Analytica.
The road to technological evolution is paved with good intentions that have turned into monopolies and bad habits that are then often replaced by new interpreters. Microsoft coined the motto “A computer on every desk and in every house”, but then it was sanctioned by the antitrust and Google arrived, which was born on the wings of “No Evil”. History seems to be repeating itself and it is now in the hands of the new entrepreneurs of the Blockchain Economy to correct the mistakes of the past without incurring new ones.

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