sharing economy

Management / How to get a fair deal in the sharing economy

How to get a fair deal in the sharing economy

The sharing economy has grown rapidly over the past years. Whether it is looking for accommodation in someone else's home via Airbnb or catching a ride in another person’s car through Uber, paying people rather than companies for goods and services is now commonplace.

Indeed, a recent study by Warwick University showed the sharing economy grew by 60 per cent in the past 18 months, while PwC forecasts peer-to-peer transactions will hit £140bn by 2025, up from £13bn in 2016. But the whole success of this sharing economy is based on trust. Who do we know who to trust?

“The whole trust issue is an interesting one,” says Euan Semple, author of Organisation Don’t Tweet People Do. “It is question of who do we trust to make it up on our behalf? Is it the guys in the suits, the banks, or could we cut the middleman out and trust each other?”

What Semple thinks will help with this issue of trust is blockchain - the distributed ledger system where everything is permanently recorded, transparent and traceable. Nothing can be changed unless all of the computers in the network agree.

People can then buy and sell items with each other through a smart contract which sits on the blockchain. The contract outlines all the conditions that need to be met for the purchase to take place. There is no need to use a middleman, cutting out the fees associated with these.

“The big question is it better or worse than the current set up,” Semple says. “A lot of people are becoming interested in it as a value exchange as it can trace back the origins of ownership.

“At the higher end a number of people have talked to me about high net worth individuals buying artefacts or works of art through smart contracts because they can offer proof of past ownership. They know it is a genuine piece.”

But on the other hand, he points out, not everyone feels comfortable a degree of transparency, that made it common knowledge that - for example - they owned an expensive piece of artwork.

“At the moment it is a bit like the Wild West, like the early days of the internet,” he says.

Ultimately, Semple believes it will have more potential than we realise, but it will all depend on how the current incumbents wish to adopt the technology and the problems it can solve for them.

“As any technology it has to solve a problem,” Semple says. And the area in which he thinks it will be useful is where goods have to pass through multiple national boundaries, perhaps in developing countries where little infrastructure. It removes the friction in transfer.

According to Semple, blockchain has the potential to shake up society and rebalance power from the big institutions into the everyday consumer as there is no need for the middleman.

“There is a lot of interesting prospects in the sharing economy and as people get less willing to put up with the siphoning of vast amounts of money into small groups of people’s pockets something is going to have to change,” Semple concludes.