Close to twenty years ago, the global economy has progressively shifted away from the traditional model of centralized organizational processes characterized by dominant large operators in charge of offering services to a group of passive customers. Presently, the world economy is moving towards a new model of significantly decentralized organizational processes where huge operators are in charge of cumulating the resources from multiple individuals to deliver a service to a highly active group of customers. This swing signifies the dawn of a new invention of dematerialized' organizations that can run in the absence of physical assets, offices or even employees. However, the problem with such a model is that most often the value generated by the crowd is unevenly distributed among all those who have sacrificed their efforts in contributing to the value production. In other words, the profits generated are consumed by the huge intermediaries owning and operating the platforms. Nonetheless, in the recent past, new technology, which is likely to dismantle such disparity, has emerged. It is called blockchain. The blockchain will solve the current imbalance in decentralized organizational processes by easing the exchange of value in a decentralized and secure manner in the absence of an intermediary and at a reasonably low cost.
Sharing economy is a term used to describe the situation in which people share products or services with others through peer-to-peer basis. However, intermediaries have take advantage of these sharing processes and made profits by exploiting the users. Blockchain technology, which is a digitized, decentralized, public ledger of entire cryptocurrency transactions, is presenting a global online database which can potentially replace the intermediaries by allowing everyone to own it provided they have internet connection (Wright & De Filippi, 2015). It allows all the users to keep track of their transactions without the need of a central record keeper.
The mainly revolutionary aspect of blockchain is the ability to run software in a decentralized and secure manner. With the blockchain technology, there is no need to deploy software applications on a centralized server (Swan, 2015). Instead, the software applications are run on a peer-to-peer network which is not centrally controlled by anyone. For example, Wikipedia is an information resource website with the content contributed by several individuals, but it is not controlled by any single person. This is the same concept that blockchain is introducing to the sharing economy. The software applications of blockchain are applied in coordinating the activities of a huge number of individuals. These individuals organize themselves without the need of an intermediary or a third party. In essence, blockchain offers a means for individuals to facilitate their interactions, coordinate their common activities and manage themselves in a decentralized but secure manner.
Already, there are a significant amount of blockchain applications that have been deployed. For example, Steem.io and Akasha, are applications distributed via the social media and operate like the previous platforms such as Facebook, only that these new applications lack a centralized platform like the former (Mainelli & Milne, 2016). Rather than depending on a central intermediary organization to run the network and direct which content should be displayed to which party, the blockchain applications operate in a decentralized manner, cumulating the content of disparate groups of peers, who manage themselves and coordinate their activities, through code-base rules preserved in the blockchain servers.
Blockchain presents a new approach to keeping track of a normative set of data. Rather than keeping all the set of data in a centralized location, for example, a country office, the blockchain reproduces multiple copies of the information set and doles out across the network nodes (Tapscott & Tapscott, 2016). The nodes are not necessarily people; they can be things. Through this feature, blockchain resents a powerful technology that is likely to elevate the sharing economy as it assigns property the capability to know the owner. For example, blockchain allows everything with an internet connection to know the owner. A house owner can rent his or her house as would do via the Airbnb, which is a centralized intermediary currently offering rental services. The blockchain technology allows the owner to program the front door to open once the tenant has reserved it and made a payment and locks the door after the tenant leaves the property.
Also, blockchain will unlock the sharing economy potential through creation and operation of an online platform that is cheaper to share. For instance, transactions could be harmonized through self-executing smart contracts or similarly achieved through lower cost small competing providers (Pisa & Juden, 2017). It is important to recall that the blockchain technology is emerging to solve a problem where an imbalance has existed in sharing profits or where intermediaries are consuming huge profits from the content of several individuals. Therefore, the blockchain will be seeking to promote a cheaper and economical sharing economy which will undoubtedly focus on the lowest cost possible means of operating the platform.
The blockchain is presenting a vision to reshape the society and the sharing economy. The main focus of blockchain technology is to realize cheaper, decentralized and secure sharing of information and delivery of services. This is achieved through elimination of the exploitative intermediaries who are often less transparent in undertaking transactions. Blockchain technology creates platforms where the individuals coordinate their activities and govern themselves, not with the help of centralized organizations as it has been the case before. It is obvious then that such a mechanism would be cheaper because there is no intermediate service provider who will demand payment for the services of coordinating the activities of the individuals. Also, the blockchain technology revolutionizes sharing economy by ensuring that information is no longer stored in a central location, rather it is replicated and distributed throughout to be accessed by anyone connected to the internet. Given this potential of the blockchain technology to simplify sharing economy through cheaper and efficient means aimed at delivery of various services ranging from accounting to legal services, there is the need for the developers to rise and begin building applications and experimenting them ready to deploy for use.
Mainelli, M., & Milne, A. (2016). The impact and potential of blockchain on securities transaction lifecycle.
Pisa, M., & Juden, M. (2017). Blockchain and Economic Development: Hype vs. Reality. Center for Global Development Policy Paper, 107.
Swan, M. (2015). Blockchain: Blueprint for a new economy. " O'Reilly Media, Inc.".
Tapscott, D., & Tapscott, A. (2016). Blockchain Revolution: How the technology behind Bitcoin is changing money, business, and the world. Penguin.
Wright, A., & De Filippi, P. (2015). Decentralized blockchain technology and the rise of lex cryptographia.
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