How blockchain-based startups could replace Uber, Airbnb and other major players in the sharing economy market. Part 7. Sharing economy on the blockchain.
Blockchain technology could solve yet another problem that exists with modern aggregator online sharing economy platforms. This problem is that the platforms do not distribute the profits evenly or according to contributions. It is the platform who is deciding who on the platform gets how much. As businesses, platforms are interested in keeping as much of profits as possible.
Here’s how a ridesharing blockchain platform could work: anyone who wants to become a driver on the platform creates a profile and attaches data to their profile with information about their car and their location. Just like on modern aggregator platforms, profiles on a blockchain network could have reviews on them for both drivers and customers. In addition to having reviews, the blockchain platform would also get an increased level of trust because if reviews were to be stored on a blockchain, then it would be impossible to edit or remove them, meaning that all members of the platform would always be getting true information.
When a rider wants to get a ride, he or she could place a request on the platform and the platform would match the rider and the driver. Then, they would exchange funds on the platform according to the rules of the platform. The rules would be transparent and clear. There would be no third party that could lower the rates for drivers for any reason it wants or start charging customers more because they live in an affluent neighborhood.
This is exactly what Christopher David is trying to do with his blockchain called Arcade City https://arcade.city/
David decided to start Arcade City after signing up as an Uber driver and quickly getting disillusioned with the platform. One of the biggest perks Uber and Lyft offer drivers is a sizeable bonus when a driver signs up to the platform. This bonus is usually somewhere between $300 and $500. The problem with such bonuses are not sustainable and the platforms have to pay for them with increasing the fees and cutting the rates.
Unlike with traditional aggregators, users on a blockchain could negotiate rates with the drivers. Also, feedback would be more transparent than just an up to a five-star rating.
In addition to this, David plans to allow users of his platform to vote on new smart contracts. His blockchain would have this capability because David is building it on the Ethereum network and one of the main differences between Ethereum and Bitcoin is that Ethereum has smart contract functionality.
Smart contracts and sharing economy
A smart contract on a blockchain consists of a code with “if/then… else” statements. The difference between a smart contract and a regular contract is in the enforcement of the contract. With smart contracts, enforcement is much easier and you often do not need a third party.
Let’s consider the following example. A person owns an insured and registered car, drives the car and gets into an accident. Currently, parties involved in the accident would need to call the police. They would also need to call their insurance companies Police would then create an accident report. After this, parties would need to pick up the report and submit the report to the insurance companies. The insurance companies would need to inspect the cars to access the damage. The customer may agree or not agree with the assessment. If he or she doesn’t agree, he would need another third party to file a complaint or dispute. If the accident leads to medical injuries and issues, the process becomes even more complicated.
With smart contracts on a blockchain, the process could work much more efficiently. An insurance company could receive an accident report automatically. Assessments of damages could also be done more effectively and could become a part of the blockchain, meaning that the record would become immutable and no party could change it.
With many other industries, blockchains could even process insurance claims right away. For example, a farmer could insure the crops and get compensation if the temperature drops below a certain mark for several days. A smart contract between the farmer and an insurance company on the blockchain could monitor the weather and if the temperature drops were to meet the conditions of the contract, the contract would automatically open a claim. All the information that the claim would need from the farmer could also be in the form of an immutable record on the blockchain, which would significantly reduce the risks of fraud.