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A team of Brazilian entrepreneurs plans to enhance their existing freelancing platform by linking service providers’ reputation to the blockchain.
Crafty.work has a minimum viable product (MVP) called Diarissima which has been operating for almost two years.
Like other platforms, it helps customers who need services like cleaning or home improvement to connect directly with service providers. But unlike many others, it does not charge users any fee for its services. Freelancers on Other platforms pay a fee of up to 20% for the gigs they receive.
The Gig Economy
A 2017 study by US software company Intuit and market research company Emergent Research found out that there were 3.9 mln people in the US employed in the on-demand economy, also known as the “gig economy”. The number is expected to go up to 7.7 mln by 2020 and 9.2 mln in 2021, representing 43% of the US workforce.
According to the International Labor Organization (ILO), there are currently “at least 67 million” domestic workers worldwide. The figure does not include child domestic workers and is increasing steadily, especially in developing countries.
In Brazil alone, there are about seven million domestic workers, which is “more than in any other country in the world,” the ILO says.
The company estimates the size of the self-employed industry in Brazil at around $200 billion.
Domestic workers are often not covered by any labor legislation. They work informally in private households, usually without clear terms of employment, and as such are among the most vulnerable groups of workers.
Customer, on the other hand, often face difficulties finding trustworthy and qualified freelance workers. This lack of information, which Crafty refers to as “information asymmetry”, is central to how the on-demand market works. The industry is to a large extent reliant on individual customers’ inability to find the most qualified workers for each job. They either rely on word-of-mouth recommendations, which limits the scope of their search, or otherwise hire a professional from a large, trusted company.
Working with a well-known brand might seem like a good option but it is not always in the customer’s best interest either. Unlike small entrepreneurs, big brands have large advertising budgets influencing the customer’s choice. In addition, the costs of operating a larger organization and running promotions and marketing result in higher end-prices.
These are only a few reasons why freelancing platforms are in for a change.
Crafty.work’s new platform, which comes both as a mobile and web app, intends to fix such inefficiency through the power of the blockchain. Its eponymous platform will replace the existing one named Diarissima.
The company calls user reputation “collective currency” and intends to place it the center of the new network. It will use augmented-intelligence to create a reputation score for each user, helping clients and service providers to interact more efficiently and make better hiring decisions.
After each completed job, both parties will be able to evaluate each other with feedback, which is then stored in the blockchain. In exchange for their reviews, they will receive tokens.
In addition, AI will analyze historic user data and give relevant recommendations for products and services to future users.
The company is currently running an initial coin offering (ICO) for its CFTY token which will go until April 9, 2018.
CFTY is an ERC20 utility token based on the Ethereum blockchain. Its goal is to allow users to make payments on the platform, and provide gamification initiatives, such as rewarding users for feedback.
The ICO is hard capped at $35 million, with 60% of the funds planned for the project’s marketing. The sale includes 50% of the total token supply. Another 20% will go towards promotions and payments to the team, while the rest will be kept in a reserve fund, which will then be used to reward users for their feedback. Unsold tokens will be burned.
According to Crafty, it is the only company introducing cryptocurrencies to underprivileged social groups in Brazil, a country with a minimum monthly salary of $292. Its users are workers who prioritize household purchases and, for the most part, cryptocurrencies are out of their reach. This is even more true about Africa where the company also has plans for expansion.
“Our business model allows an easy access to the crypto-world, where every user can earn CFTY simply by evaluating their counterparty. Then they can use the coins to buy products or services from our trading partners or convert them to fiat if they so wish”, the company says.
The company is in talks with different organizations in Brazil to widen the circulation of the CFTY token. Recently, it met with Brazilian trade association ACICG comprising over 7,000 member companies in the western state of Mato Grosso do Sul. The organization has shown interest in promoting the use of CFTY among its member to encourage them to accept the currency, the company says.
Crafty is talking to more organizations for similar partnerships which will bring the coin to everyday use and, hopefully, result in value appreciation.
Though the team is based in Brazil, the project is operated through a legal entity called AZKLENY COMPANY S.A, incorporated in Uruguay. The team has been bootstrapping operations since launch in April 2016 in Sao Paolo.
Working on a tight budget has taught them to make the most of their dollar values, the company founders say. Thanks to this, they have been able to reduce customer acquisition costs to a minimum. Now they quote download costs of $0.39 on average for Android and iOS users. User acquisition cost stands at $1.1 on average, the company states.
The company says it has applied for a US patent. The project’s development roadmap envisages expansion to international markets, starting October 2019.