There is a lot of confusing and confused talk about “the sharing economy”. The term has been used to describe local resource sharing , and also to a variety of “peer-to-peer” businesses, a la, AirBnB and Uber .
The social psychology of these disparate enterprises seems to rest on the advantages of personal interaction. As Sensei Claire Marshall puts it, “Things change when money isn’t involved” .
This moneyless transaction is enabled by the Internet and ubiquitous mobile devices, and is realized in various forms of “markets”, which connect consumers with providers. This is the AirBnB trick. The flexibility and low costs of these systems also enables fine grained transactions (i.e., short term rentals and division of resources).
Digital technology enables, but does not determine how people use it. The “AirBnB trick” can be embedded in a variety of business models. The “Uber” model, popular with many companies, collects a rake-off for the operator of the market. The same technology can, in principle, support cooperative, user owned, business. There are a variety of efforts to create such “platform cooperatives”, with and without blockchains.
Into this confusion, Origin (which used to unwisely spell its name with a ‘zero’ at the beginning, 0rigin) is adding in the rolling catastrophe that is Ethereum. Their idea is, “The Sharing Economy Without Intermediaries” .
Their idea seems to be that the important problem with “the AirBnB Trick” is that the intermediary that controls and rakes-off from the market. They (Origin) want to build a blockchain-based decentralized system that lets anyone play the AirBnB game. They are using Ethereum executable contracts, and they say that the system is “open source” (whatever that means in this case).
Another key idea is that they imagine pooling all the users of all the peer-to-peer markets in a single gigantic market. Using Origin, the individual businesses will fish in this vast ocean instead of each one creating their own lake.
Together, these businesses would pay for the maintenance of the infrastructure, but no single company will own or control the use of the technology. (It’s unclear what role the “foundation” and developers would ultimately play in this network.)
I have to wonder about this idea, and not just because Ethereum is iffy, or because “smart contracts” are neither smart nor contracts.
The Origin people are eager to do away with not only the rake-off, but also the control and “censorship” exercised by the “centralized” company. Their product brief complains about an array of abuses, including unilateral fee hikes, evictions due to “arbitrary” rules, and politically motivated denial of service .
“Airbnb recently kicked guests out of rented properties and canceled their accounts after discovering those guests were planning to attend a Ku Klux Klan (KKK) rally”
The decentralized Ethereum technology will, they say, make it difficult for any authority to impose such coercion on service providers.
“What if goods and services that added value to the ecosystem could freely trade at their fair market prices and quantities without tampering from biased third parties?”
Well, I think we know the answer to “what if”. See, for instance, 4Chan or various digital Dark Markets.
Even if you accept their diagnosis of the situation, it’s far from clear to me that this technology actually solves these problems.
As Uber, AirBnB, and others have found out, legal and public pressure is applied to the company, not to the technology. Using executable contracts that “can’t be modified” will scarcely defend a company from the liability for their actions.
For that matter, the notion that blockchains eliminate excessive rents is highly dubious. Setting aside the experience of cryptocurrencies (which have been captured by large scale mining operations, who are—wait for it—extracting rents), running a business is an end-to-end system. Sustaining the business means fees, and successful companies and brands will charge premiums, blockchain or no.
Finally, I’ll remind the reader that the key to any of these digitally augmented peer-to-peer businesses is the user experience. Users neither know nor care about the back end, they care about the interface and the service provided. The blockchain not only doesn’t solve the UX problem, it often makes it worse.
Blockchain technology is pretty unpleasant to use, it generally has to be encased in conventional technology. For example, the brilliantly successful CryptoKitties made much of its use of Ethereum. However, the developers actually use a “centralized” server, because, as they say, no one in their right mind would connect a UI directly to a blockchain.
More fundamentally, the supposed virtues of the blockchain, including the lack of any responsible authority and the “trustless” protocol are antithetical to developing the trust of the customers. A successful company like AirBnB works very hard to establish trust among the customers using their system, and this is their important value added. How does blockchain help this quest for user trust?
My own view is that these businesses will be built with hybrid technologies, and will surely operate almost the same as a blockchainless business. The supposed cost savings from using blockchain (versus, say, conventional cloud based servers) are yet to be demonstrated.
Furthermore, I think the non-blockchain parts of the system will be just as arbitrary, and just as subject to regulation as any other system. Using blockchain will be awkward and inefficient, yet also will not deliver the imagined benefits.
The long and the short of it is, Origin is based on fundamental misunderstanding of technology, business, and society. I’ll be surprised if they get off the ground.
- Robin Chase, Peers, Inc.: How People and Platforms are Inventing the Collaborative Economy and Reinventing Capitalism, New York, PublicAffairs, 2015.
- Brady Dale, Pantera Invests $3 Million in Sharing Economy Token Origin. Coindesk.December 11 2017, https://www.coindesk.com/pantera-invests-3-million-sharing-economy-token-origin/
- Matthew Liu and Joshua Fraser, 0rigin Product Brief: The Sharing Economy Without Intermediaries. 2017. https://www.originprotocol.com/static/docs/product_brief_v15.pdf
- Claire Marshall, How to Make Money (and a whole lot more) by Sharing. 2015. http://www.sharestories.net/
- Matthew Liu and Joshua Fraser, The Sharing Economy Without Intermediaries. Origin White Paper, 2017. https://www.originprotocol.com/static/docs/whitepaper_v2.pdf