One success story after another, you’ve probably read that Uber, Airbnb, and Upwork are peer to peer (P2P) companies. They certainly do enable direct interactions between individuals, and while both parties benefit from the interaction, the participants of these platforms do not get a fair share in the financial growth of the platform they are helping to build.
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A piece of the peer to peer pie
When you post your apartment for rent on Airbnb, you gain access to the network and a potential large group of short term rentees, which is enabled by the network effect, where the value of the network is the square of the number of users. And it’s great. You get the chance to earn a little extra for that spare room or summer home.
Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
However, you don’t gain directly in the growth of the value of the network. You don’t get a piece of the $31 billion USD valuation that Airbnb is now worth.
This is where Blockchain technology and tokenization has changed the game. By issuing a token which represents a utility or service within the network, we can finally enable the end user to be a beneficiary of the network growth.
Tokenization transforms the rental market
In the Airbnb example, the person who posts a room and has a rentee in addition to receiving the rental fee could be issued a token, let’s call it a BNB Token. The BNB token can be a discount on future rentals. This BNB token could then be sold on an exchange to another person who could then use the BNB token for a discount on their rental.
As the network grows, the ratio of BNB tokens which are issued could be reduced, creating a greater value for the hosts who decide to hold a portion of the BNB tokens issued to them. Alternatively, as more transactions occur, there can be additional fractions of tokens issued to existing holders of the tokens. This is also a fantastic way to incentivize the early adopters (or hosts) as they have a greater financial incentive to post their rooms. By the simple act of tokenizing value, users can become the direct beneficiaries of the growth of the platform they are helping to build.
Blockchain technology allows for this sort of innovation due to the very low costs to issue tokens, open source technologies, and growing number of exchanges. In addition to directly selling the tokens on the exchange for cash, you can even exchange your BNB Token for an Uber Token.
As more businesses look to tokenization, an incredible ecosystem of cross token value sharing will evolve. Right now, this is happening mainly within the blockchain industry, but there are several trials underway for government issued tokens, as well as large multinationals such as Disney and Burger King issuing reward tokens.
Value tracking tokens
Another interesting aspect of this tokenization of value is that the token becomes a representation or tracking instrument tied to the perceived value of the business. In other words, if you believe that AirBnB will become more valuable over time and that they will issue less tokens in proportion to the growth of the network, the token should correspond in value to this belief.
In the past 12 months, there has been an explosion of tokens being issued on various public blockchains such as ethereum. The bitcoin, and ethereum blockchains are themselves token based. Since 2009, when this new asset class started at $0, right up to today where the total market value is at over $155 billion, it’s clear that this is a growing sector of the economy.
David Moskowitz Co-founder & CEO of Indorse
The CEO and Co-founder of Indorse, David Moskowitz heads the decentralized professional network powered by ethereum technology. Moskowitz also heads and Co-founded Attores, which enables data and documents to be shared securely using smart contracts and blockchain technology. Attores partnered with Ngee Ann Polytechnic to formally issue diplomas on the blockchain.
As a co-organiser of the Bitcoin Singapore meetup he has been a vocal evangelist for cryptocurrency and decentralization. Prior to Indorse, David founded ‘Coin Republic,’ the Singapore based bitcoin brokerage in 2013 and sold it in 2015.
With 20 years of experience in product development, marketing and sales, David serves on the executive board of ACCESS, the Singapore Cryptocurrency and Blockchain Industry Association. Pre-Blockchain, he was a systems integrator, helping SME’s set up subscription systems online (SaaS).