The leaders of the sharing economy create new types of services on the market that do not impose their rules on customers.
In the past decade, a new force has emerged and developed on the world market – service aggregators, uniting on its platform many suppliers and connecting them with consumers. Uber, Booking.com and Airbnb are just a few examples. Such aggregators turn out to be more efficient than traditional networks. They have huge investment opportunities and new technologies. They get rid of unnecessary intermediaries and, in fact, create new reality on the market, relentlessly reshaping the business and consumer landscape. These enterprises and the like became the first wave of peer-to-peer (a network based on equality of participants) connections, “decentralization 1.0”.
However, in recent years, a trend has been visible. Aggregators, in many market segments and specific countries, who have taken almost a monopoly position, have begun to leak into the camp of their former rivals – traditional corporations and government structures. Starting, along with them, using tools such as dictatorship and manipulation, they are at the head of globalisation, which is essentially centripetal force. It is much like a hypermarket instead of hundreds of kiosks; one Facebook instead of many local sites. Now, the retailer begins to dictate tough conditions to local suppliers for “calling” on their shelves, and the social network begins to pick up the contents of custom news feeds, inspiring users with the necessary feelings and desires, including in the interests of advertisers.
The consequence of globalisation is the growth of social inequality, a problem recognized at the global level. According to the international humanitarian organisation Oxfam, at the beginning of 2018, the wealth of 1% of the richest people on Earth was approximately equal to the wealth of 82% of the rest of the people on the planet. It was predicted that, by the end of 2018, the most affluent layer, for the first time, would be richer than 99% of the rest of the world’s inhabitants.
Manipulations and loss of freedom
The main nodes of the globalised world, intermediary systems, are extremely vulnerable and prone to the prosperity of unjust conditions and manipulation. Government agencies, lending institutions, international corporations and cloud data warehouses are constantly attacking hackers. Intermediary systems are opaque – no one explains to the user why a taxi ride at rush hour is, instead of the usual 300 or 400 rubles, raised to 550 rubles. Appetites are constantly growing. Money transfer fees have now reached as high as 17% of the transferred amount. With popular taxi services in the United States, over 30% of revenue is now being taken from drivers.
An example of a typical centralised system is the well-known service for travellers, Booking.com, which increasingly imposes conditions on commissions and rates on hotels. Being practically a monopolist in the global travel market, the service, in the contracts, ultimately obligates hotels (under the threat of blocking in the system) to provide the lowest prices and to not allow bookings through other channels. Many hotels, especially non-chain hotels, for which Booking.com has become the main instrument for attracting guests, simply do not have a choice. Today, in Russia, small hotels have reservations from this service accounting for up to 50% of their clientele traffic, and the mediator’s commission reaches 25%. The more actively the company monopolises this market, the greater its opportunities are to dictate hotel rates to hotels and increase their commission.
Another example is Uber, initially the flagship of the sharing economy. Increasingly, it is starting to resemble a closed large corporation, aimed at making profit by any means, without concern for the exploitation of drivers and the manipulation of tariffs. The media has covered cases where Uber users were charged a price for a trip depending on the battery status of their phones, as a client who is about to be left unconnected is psychologically inclined to agree to the proposed conditions, rather than wait for a possible tariff reduction.
The popular Airbnb aggregator was once the very embodiment of the peer-to-peer economy. Some ordinary people rent their homes to others. This idea turned into a global corporation worth more than $30 billion. Not so long ago, an illustrative case arose where the company blocked the accounts of the participants of the right-wing congress in the United States, saying that the behaviour of nationalist groups is contrary to the values of Airbnb. It’s not easy to love the far-right nationalists, but the fact is that a company that is practically a monopolist in its sector is effectively imposing its values on others. Who will be banned next? Same-sex marriage opponents or, perhaps, supporters of available abortions?
Rebirth of aggregators and blockchain
Before our eyes, a new powerful trend of decentralisation is emerging and expanding, as a response to the desire of governments and global corporations for total control and management, and the transformation of the first wave of aggregators into a super-centralized force. For people around the world, freedom is a key value and they want to protect it. In this sense, the explosive growth of blockchain’s popularity is correlated with the anti-globalisation movement, the bitTorrent protocol, the phenomenon of Wikileaks, Occupy Wall Street, Brexit and the unrest in Catalonia.
The idea of ‘decentralisation 2.0’ is not to destroy centralised systems, but to build additional peer-to-peer relations based on smart, independent algorithms and contracts in addition to them, thus retaining the advantages of the existing structure, but reducing people’s dependence on intermediaries.
Perhaps the most powerful manifestation of decentralisation today is the blockchain. In terms of strength and significance, this phenomenon can be compared with the invention of the Internet. Blockchain, as a technology, carries great potential for business, society and every person. It is the cutting edge of progress for the whole of civilisation.
It was funny to observe how the recent rise of cryptocurrency provoked complicated feelings from financial institutions, these strongholds of globalisation. On the one hand, large international banks are trying to unite in an alliance for the development of Ethereum. On the other, the head of JPMorgan Chase, Jamie Dimon, argues that Bitcoin is “fraud and worse than tulip fever”. The head of Sberbank, Herman Gref, calls for the legalisation of cryptocurrencies, and the head of the Central Bank of Russia, Elvira Nabiullina, equates them to financial pyramids. The elite clearly feel the powerful potential of technology and rush out of fear of being out of step with progress, with an overwhelming desire to retain maximum control over society.
An imaginary decentralised analogue of, say, Airbnb could be a distributed application in a blockchain whose owners would be all owners of rental rooms. The client accesses the database on the blockchain, enters criteria and, after “screening out”, finds a suitable option. The blockchain helps with the contract and deals with payment via digital channels built into the system. Relations of the parties would be built on the basis of smart contracts, without a single centre and with minimal commissions. The possibility of the emergence of such services every year becomes more real.
Distribution of ‘decentralisation 2.0’
E-mail reaches the other end of the earth in seconds, and for free. In this case, remittances within the boundaries of one locality can go several days, and the commission reaches 10-20%. Obviously, decisions of the new generation must grow in this field, but the seedlings are already evident. For example, in the United States and in the Philippines, the Abra application works to transfer money on the basis of the blockchain, with a commission of only 2%. It performs its function using bitcoins, even for accounts funded by regular bank transfers.
Decentralisation also penetrates into show business. In 2016, the project ‘Mycelium’ was initiated, where music is distributed on the basis of Ethereum smart contracts. Listening to a song is either free or worth micro-cents, going to a digital account. Creating a ringtone for a call involves different conditions and inserting music into a movie is a third tier option. Copyright peculiarities are specified for each case. The song in question on this platform is sold by itself, while protecting the owner’s intellectual property. Since there is a transparent payment system, all the money goes to the artist and the creators of music directly control the industry, instead of labels and associations.
In the transport sector, there are already services close to the concept of ‘decentralised’. For example, there is BlaBlaCar, where the driver and passengers set prices without an intermediary.
Decentralisation is approaching like a tsunami and this factor should be taken into account by those who are planning new business projects today. Sooner or later, it will come to all key areas: government, finance, real estate, insurance and transport, and finding a balance with centralised structures will work to increase transparency, freedom and speed. Perhaps for the first time in the history of mankind, people all over the world will be able to trust each other and cooperate on equal terms, and this, over the next 20-30 years, will be one of the most powerful trends in the development of civilisation.