A blockchain is precisely designed to solve the problem that arises when the sharing economy attempts to expand its system for recording and enforcing who owns what when the thing being owned is granular and fast-moving, a programmer, blockchain expert and widely known economics blogger, has told The Guardian.
Steve Randy Waldman says blockchain is a different way of keeping track of a normative set of information, making the storage of information in multiple copies and distributed across all the nodes of a network instead of in one central location – the county records office, say, or Airbnb’s database.
Uber and Airbnb are two of the few “sharing” startups that have hit it big. They represent the sharing economy which made it possible for smartphones to give consumers seeking new ways to save and workers looking for new ways to earn new ways to transact. They disrupted the slow ownership system under capitalism’s core requirements in a stable property regime. Ownership of real estate is recorded by a county records office; owned cars recorded by a state agency. These involve a lot of paperwork and labor on its own. Enforcing ownership requires more paperwork and labor.
Yet, the high fixed costs of the traditional property regime presents the sharing economy with certain challenges. As a result, sharing companies end up keeping necessary information themselves: a database at Airbnb or Zipcar holds the record of rentals instead of the government. These databases require plenty of labor of their own to build and maintain.
There comes the smart contract which gives blockchain the power to not only record property rights but enforce them. Once deployed, a dozen lines of computer code can fulfill the same role as the county records office, the courts and the police. Waldman explains: You can have “the function of a trusted bureaucracy without the expense of putting together a trusted bureaucracy.” You can also cut out the middleman who extracts a fee for coordinating the transaction: theoretically, your home rental could now involve only the homeowner and the renter, bypassing Airbnb.
Blockchain is viewed as capable of helping to democratize the sharing economy by making it cheaper to create and operate a platform. It could enable what a company such as Uber does to coordinate a transaction be performed by self-executing smart contracts while others could be performed at lower cost by a variety of small competing providers.
This might make it easier for workers to form cooperatives that have the capacity to compete against the VC-backed behemoths that dominate the sharing economy which could result in something resembling the “socialized Uber” proposed by economist Mike Konzcal: a viable worker-owned alternative, run for the benefit of the people who actually perform the work and not for a handful of rich investors.
Images from Shutterstock.Follow us on Telegram or subscribe to our newsletter here.