Believe it or not, long before Yelp, reputation was a big deal. Even Socrates knew the value of it when he said: “The way to gain a good reputation is to endeavor to be what you desire to appear.” In our current digital world, peers, clients and customers ensure good reputation is painstakingly earned, as everyone with internet access has a voice. If a company, seller or vendor can maintain a good name, growth and scaling are much more attainable. However, if the opposite occurs, the outcomes are damning.
There is no way to escape an online reputation, especially when one bad review can be found via a simple Google search, ruining a potential sale or partnership in no time flat. While keeping track of online reputation for a business is paramount, it’s also an arduous and time-consuming task, that could require several employees to constantly monitor every single platform and/or marketplace wherein transactions occur – that’s a full time job on its own! While credit reports once served as a means to verify an individual’s or business’ merit, they are no longer sufficient as many services are now conducted peer-to-peer (P2P); for example: Airbnb, Uber and eBay. Our lives and reputations exist online, and right now, the major corporations that control data use it to benefit or harm users, because they have all the control. However, the advent of blockchain technology has the power to put ownership back into the hands of users.
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For decades, quite possibly centuries, a transaction was conducted through a physical, or face-to-face, exchange of goods and/or services. In most cases, a company or retailer would establish a brick-and-mortar location and a consumer could go to a physical location to make purchases, with the ability to touch and see products, then leave with it in hand. If there was a dispute or defect with the product, the consumer would simply return to the store and the company would take responsibility, within reason. If the problem escalated, the consumer could seek help from management, or even the Better Business Bureau, a phrase that once struck fear in the hearts of business owners.
The business model outlined above is a fading concept as the era of the shared economy takes over. It’s been forecasted that the number of adult shared economy users is likely to increase to 86.5 million by 2021. Platforms like Airbnb, Uber and eBay, combined, are facilitating hundreds of millions of transactions every day, maybe even more, and most interestingly, these transactions are conducted based on trust. Consumers are trusting an Airbnb rating, Uber rating or eBay seller’s reputation to conduct business, and it works both ways… in a system of blind faith, both consumers and their hosts, drivers and sellers should know who they are conducting business with.
In this context, ratings and reputation are extremely important, but the underlying problem is that companies and corporations, like Uber and eBay, own this data, even though the ratings are about users. In the case of a service like Uber, this data can be used to determine a driver’s route, the amount of money he or she earns and who they pick up, yet drivers don’t have full access to information that could potentially help improve performance and/or decipher the company’s algorithms. More importantly, the data collected on the driver is locked in to Uber’s platform, rendering it difficult for him or her to leverage a positive rating on other ridesharing services, limiting potential income.
The shared economy model isn’t going anywhere, but blockchain technology has the capacity to revolutionize this space. If a decentralized system were implemented across marketplaces where transparency is relatively limited, it would allow service providers and users, i.e. buyers and sellers, to truly own their own reputation across all platforms, enabling limitless earning potential to those who strive to thrive.
The implementation of a blockchain protocol across (P2P) platforms and marketplaces, particularly involving e-commerce, would offer a multitude of benefits, including:
- No fees. The most immediate and compelling argument is that true P2P commerce does not have any fees. Sellers keep more of their hard earned money, and buyers get lower prices across the board.
- Users own their own reputation, transaction history and data. This allows users to build up a public, transferable reputation that can be utilized anywhere. The result is that sellers and buyers can switch platforms at any moment, without having to build up their reputation from scratch.
- No censorship. Buyers and sellers can communicate directly, so there is no central authority that can interfere with transactions.
- Neutral third party mediators. Buyers and sellers can choose the person or entity that helps resolve any potential disputes, and rest easy with the knowledge that these neutral parties don’t have a secondary motive (like growing the marketplace).
Looking ahead, as peer-to-peer services and platforms expand and multiply, the shared economy infrastructure will inevitably need to adapt to scale with user demand. One simple, yet effective tactic that can help streamline this process is implementing a blockchain protocol to not only increase transparency within an opaque industry, but to also facilitate universal reputation and increase data ownership and privacy, ensuring consistent growth.