The Future of Blockchain: Why Do Services like Uber Lose Ground?
Leaders of the sharing economy abuse positions on the market, generating new types of services that do not impose their rules on customers. And it seems that the blockchain is going to change the rules of the game.
The 2010s were the time when a new economic reality was born. It was the dawn of Uber-like aggregators - Internet-based platforms that united millions of service providers with hundreds of millions of customers. Sharing economy examples like Airbnb, Uber, Booking.com and others were more effective than traditional networks since they used the latest technology, immense investment resources and eliminated the main intermediaries. They managed to create a brand new business landscape and became the first wave of peer-to-peer connections, also known as “decentralization 1.0”.
In the last couple of years, these services (that are nothing else than sharing economy examples) even managed to become almost monopolists in many countries and areas of the economy. It’s enough to take a look at these stats:
- 600,000 is the number of Uber drivers in the US. At the same time, the official taxicab industry employs only 232,000 drivers which is almost 3 times less.
- Capitalization of Airbnb, Lyft and Uber combined is about $106 billion. It’s slightly more than the GDP of the world’s 60th-largest economy, Morocco.
- 200 000 000 bookings were made through Airbnb since the service was launched.
And that’s exactly when things went wrong.
🌑 The Dark Side of the Sharing Economy Trend
Instead of becoming the global power that would stand up for transparent pricing and favorable rates for everyone, modern Uber-like aggregators have chosen another strategy. Nowadays, they look more and more like their former rivals from the centralized world. After all, these services try to use their position in their own interests.
And now I’m not talking about the owners of taxi licenses all over the world that are trying to oust Uber, or hotel owners that are confronting Booking.com. I’m not even talking about safety issues that are often considered as one of the main disadvantages of Uber-like services. Manipulation and dictation are much more dangerous problems. While trying to eliminate “greedy and unfair intermediaries”, modern aggregators, it seems, haven’t become a better alternative.
🚕 How does Uber try to fool us?
Many people believed in the idea behind Uber and started to use it as their main taxi service due to the transparent pricing: a fixed amount of money + a rate per kilometer. That was back then when Uber was one of the first to start the sharing economy trend.
Nowadays, it rather reminds me of a closed corporation that aimed at making profit by any means. Including the exploitation of drivers and the manipulation with tariffs. Nowadays you don’t know why you pay $35 for a taxi ride instead of $25. But this is only the tip of the iceberg. The further it goes, the worse it gets:
- Fortune reports that Uber and Didi merged and used their monopolistic market position to raise tariffs from 20% to 50%.
- As Bloomberg says us, Uber also tries to predict the maximum fare for a trip can be set for a particular passenger.
- According to another article, Uber takes more than declared 25% of the revenue from drivers. Actually, in some cases it charges as much as 42%.
Now Uber doesn’t look like a savior anymore, does it? All this is just a step away from the direct deception of users. And, what’s pity, this isn’t only about Uber.
🏨 Booking.com and small businesses: can’t leave but can’t stay
Booking.com which is one of the most popular hotel booking services and sharing economy examples, increasingly imposes conditions on hotels at prices and commissions. Being the main power on the global travel market, the service almost leaves no choice for small and medium non-chain hotels rather than to follow the rules. Otherwise, they will be kicked out of the system and won’t be able to compete with their more agreeable competitors. The winner takes it all.
This may not sound like a big problem, especially for customers. Yet, if at the very beginning Booking.com made it possible for small hotels to compete with popular chains, nowadays the service turns into a burden for many of them (in some cases Booking.com charges up to 25% as a fee).
As in the early 2000s, the global market is hungry for new economic solutions. The Internet & mobile technologies were the main engines of such a revolution almost twenty years ago. Nowadays, it seems, blockchain is becoming the power that could change the world.
📱 Decentralization 2.0
The desire of states and global corporations for total control and monopolistic management encourage people all over the world to stand against it. Decentralization becomes a global trend - if not on the governmental level than, at least, in people’s minds and hearts.
To thefts of personal data, interference into election processes and unceasing manipulations the world responds with Bitcoin, Wikileaks, BitTorrent protocol and blockchain usage examples. Yet, their aim is not to destroy the world as we know it. Their purpose is to build additional channels of peer-to-peer relationships that will be based on smart and independent algorithms and technologies.
Take BlaBlaCar as the vivid example. The service allows to travel together with drivers but doesn’t set prices. Therefore, prices are formed by the driver and passengers without the participation of the service.
Blockchain is one of these technologies. It consists of blocks - growing, linked together and encrypted lists of records that keep information about all the changes (transactions) in the system. These blocks are stored on thousands of computers all over the world and their authenticity is confirmed by every user in the blockchain system. Thus, data inside the blockchain can’t be retroactively altered or faked.
The main idea behind it was to design an autonomous system free of direct (and often imperfect) human influence. It was first applied in the economic sphere with the creation of Bitcoin. Based on the blockchain, Bitcoin allows making fast, secure and anonymous transactions so they can’t be interfered by any central authority.
This is a new level of development of decentralization which substitutes the sharing economy trend. Previously we could observe how young innovative companies took power from centralized authorities and global corporations. Nowadays, technologies are taking power from these companies, making the whole system even more autonomous and automatic. That’s what we call “decentralization 2.0”.
However, it would be a mistake to think that these changes relate only to cryptocurrency payments. There are many other potential uses for blockchain technology. For instance, it’s potentially suitable for transaction processing, recording of events, public administration, elections, medical records and much more. And we can witness this process soon!
🏆 How Blockchain is Taking Over the World
Despite Blockchain is one of the biggest trends now (and will remain so for the coming years), not all the potential uses for blockchain technology is realized now. Yet, there are already many projects and ideas that outline possible further development. So, what is the future of Blockchain?
📲 Blockchain for marketplaces (like Uber, Airbnb and others)
First and foremost, Blockchain’s impact on marketplaces is going to make a revolutionary change. Just imagine.
Blockchain can replace all the mediators. When you’ll have to find a room (using a decentralized analog of Airbnb) or a taxi cab (using a decentralized analog of Uber or Lyft), the whole process would be even more transparent and cheaper. The workflow of such a decentralized marketplace is also easy as that:
- You refer to the database that uses Blockchain, and enter your criteria.
- The system analyzes possible variants and offers them to you.
- The deal is confirmed by signing a smart contract.
- Blockchain also helps to make payments using digital channels.
- You get the needed service from a decentralized marketplace system with the lowest fee.
Sounds fantastic? Not at all. The possibility that such services will appear becomes more and more real every year.
💸 Carrying out money transactions with Blockchain
It usually takes less than a minute and not a penny to deliver an email to another continent. But when it comes to money transactions, some of them require few days of waiting and up to 20% as a fee to be done. Moreover, even the best banking system can’t guarantee you the safety of your accounts. A sudden server crash, banker’s dishonesty or a hacker attack will start a long investigation to find the person responsible for the return of your money. And all of these can happen to your regular bank account as well.
The blockchain offers us an alternative. The whole process of transfer takes a few minutes and costs ten times cheaper. If you keep money and information in the blockchain, the records will never be lost or faked as they are confirmed by all the members and this acknowledgment is stored on their computers.
This idea is implemented in the Abra app and it’s one of the vivid blockchain usage examples for handling transactions. It supports over 50 global currencies (including Bitcoin) that can be automatically converted if needed. For example, you may send a payment in Bitcoins but the other party will receive it in dollars.
Also, Abra charges no fees for sending and receiving money or for adding or withdrawing funds via your Bank (except the banks’ fees).
We can assume that in the future the number of such applications will only grow.
🗃️ Big data safety and Blockchain
The date and time of creation, modification or last access to files stored in our computers are usually easy to falsify. In order to do this, it is enough to move the system clock back on the computer and perform some operations. Despite it may not sound like a big issue, it is often necessary to establish the exact time in the course of investigations or judicial proceedings. Moreover, this can be used to confirm the authenticity of documents.
For this reason, the project OpenTimestamps was created. It uses the blockchain system to store information that will allow proving that a particular file was created not later than a certain date. Leaving tech details behind, this technology made it possible to record information of about 750 million files stored in archive.org’s web archives.
🏘️ Blockchain for real estate solutions
The process of buying a new real estate property isn’t the easiest one. It’s time and money consuming and non-transparent. Yet, here are a few uses for blockchain technology in this industry.
First of all, decentralization eliminates any middlemen. Nowadays we have no choice but to recourse to them since they hold information that we can’t access. Using blockchain technologies, it’s possible to create an open database with free access for everyone.
Secondly, the blockchain also allows transferring the title to a property from a paper form into digital one. It means that the whole process of buying or selling of a property can be handled inside the system, cutting out any middlemen and paperwork.
Moreover, the digital title is more protected against frauds as the ownership or facts of money transactions are verified by thousands of other members. For reducing fraud, it’s also possible to use blockchain-based smart contracts that become unalterable and irreversible once published.
🗳️ Fair elections with Blockchain technology
Some countries are beginning to use electronic voting in elections and referendums. Theoretically, this step should increase voter turnout: you can vote from home at any convenient time and spending just a few minutes.
However, some may try to hack the system. Due to the complexity of e-voting protocols, potential computer errors and hacker attacks, the election commissions in Kazakhstan and the Netherlands returned to paper ballots, ballot boxes and manual vote counting.
Yet, elections that are based on the blockchain are similar to the usual Bitcoin transactions. In such a case, citizens receive special colored coins from the election commission. Then, a voter is free to transfer this coin to the special account that is associated with one or another candidate. To determine the winner, it is enough to check the accounts balance after the election is over.
Since a public blockchain can be analyzed by anyone, each user can track the fate of his vote. So as the members of the electoral committee can deanonymize the voters, some suggest distributing colored coins with the help of blind signatures.
Now it’s absolutely clear: “decentralization 2.0” is coming. Sooner or later, decentralization will come to public administration, finance, real estate, insurance, transport - into all key areas, and will maintain transparency, freedom and fast speed of work. And, of course, we shouldn’t forget about its main tool - the blockchain.
What is our advice to everyone who is planning new projects and startups? Consider the blockchain as the main trend of the decade that will change the way of our lives and doing business in the nearest future. Take risks and be first where there is no one else yet. The winner takes it all, right?
Inspired by Forbes Ukraine