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Sharing Economy Ripe For Disruption By Blockchain Technology

December 15, 2017

It turns out that the internet is a great matchmaker—even beyond dating sites.  eBay matches buyers to sellers, Airbnb matches rentals to renters, and LendingClub matches borrowers to lenders.  Now, these stars of the sharing economy, many of whom were disruptors, are ripe for disruption themselves.

A definition of sharing economy

These businesses still have a lot in common with traditional business models.  The platform owner ensures that business is conducted as agreed, provides a level of safety, and takes a (sometimes hefty) cut as profit.  This is where the use of blockchain technology has the potential to foster enormous change.

A definition of block chain technology

Take ridesharing as an example, and imagine drivers and riders connecting directly via an app.  They are negotiating their own transactions without a middleman like Uber or Lyft.  (There are already startups doing this.)  Some view this as a more authentic sharing economy where individuals are not beholden to big corporate entities.  Blockchain makes this possible through its ability to provide things like digital identities linked to a publicly available reputation system and cryptocurrency payments—with no intermediary.

While the financial services industry has so far survived the “LendingClubs” of the world, the emergence of blockchain could change the game for better or worse.  Blockchains don’t have to be public.  There is a lot of investment and development underway on permissioned blockchains that can be utilized privately by a financial institution.  These could be used to make the infrastructure far less expensive, create efficient and secure ways to automate contractual agreements, track financial transactions, log asset ownership, etc.

And for once, regulation might be a good thing.  The highly regulated nature of the industry makes it more complicated, time-consuming and expensive for new entrants to carve out niches in this space, especially using new underlying technology.

These are just a few examples of how blockchain could disrupt the sharing economy and financial services.  The possibilities are endless.  It’s like going back to the 1990s and asking what we would be able to do with the internet—even though most of the answers hadn’t even been thought of yet.

*Definitions sourced from Oxford Dictionaries.

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