Anyone who uses Airbnb knows that the company rests on its laurels as a first mover in the home sharing economy 1.0, but its dominance comes from exploiting the hosts and guests who actually share and create value. The guests pay too much and the hosts too little. The resulting situation is similar to feudalism that turns hosts into serfs who rent out their houses, keep things clean, look after guests, and do the real work. However, the value derived from Airbnb’s peer-to-peer exchanges goes straight to shareholders, who are several steps away from what’s happening on site. It is nothing short of an injustice.
There is a very simple reason for this. Web 2.0 sharing economies like Airbnb and Uber are being forced to adopt the so-called extraction imperative. In the early days of these platforms, they were aligned with their users on both sides of the market and both treated as partners to boost network effects – similar to offering early subsidies to get people onto the platform. The peer-to-peer element of the sharing economy was brought to the fore in the brand’s marketing and it appeared that a populist takeover of the travel industry was underway.
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Sharing economy with Web 2.0
It wasn’t long before we realized that this vision of the sharing economy was a lie. Web 2.0 companies are driven by a model of growth at all costs to go public and then become committed to shareholders who benefit from that growth. To live up to this model, these companies are being forced to get as much profit as possible from the users doing business in their marketplace in order to appease shareholders and other stakeholders who are not the users themselves.
While selling a myth of empowerment and peer-to-peer sharing, platforms like Airbnb are now at odds with their users because they have to take everything away from them to maximize their profits and ensure their survival. Airbnb, for example, has gone from being well aligned to being completely misaligned, and that has created a ripple effect across the market.
A prime example of misalignment in the home sharing economy is the action Airbnb has taken in the aftermath of the global COVID-19 pandemic and its damaging impact on global travel. Airbnb has unilaterally changed its cancellation and refund policy in favor of guests in order to retain as many customers as possible while putting the burden of disinfection measures and last-minute cancellations on the hosts. This was a strictly profit and loss margin-driven measure, prioritizing the needs of the guests rather than the hosts, since the guests are ultimately the users who drive sales. However, the hosts, who provide the assets that fuel the revenue, were at a loss and a chasm of suspicion arose.
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Worse, most Web 2.0 sharing economies like Airbnb don’t work on solid foundations. Their workforce is extremely bloated and their business models remain unproven. They have had to raise countless rounds of funding to keep growing, while at the same time diminishing the value they bring to their user community. As incumbents consolidate their control and profit skimming, a turning point is imminent.
Decentralization is the key
Users are aware that they are being exploited – they just need a viable alternative. So how do we resolve the need to extract, middlemen sucking value from value creators into the hands of wealthy shareholders, and the lack of trust and agency that both hosts and guests endure when interacting with platforms like Airbnb? The answer is a decentralized marketplace set up and governed by its users, functioning more as an apparatus than an extractive cartel with unicorn dreams.
Home sharing is the ideal place for a decentralized marketplace as travel is one of the largest industries in the world and anyone with a home or an itinerary can participate. The underlying technology and infrastructure of the blockchain is now scalable enough to meet the needs of such a marketplace. And while the COVID-19 pandemic has caused setbacks for the travel industry, we are already seeing a return of significant demand that will only increase as trends such as remote working, digital nomadism, and alternative accommodation change gears.
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If Airbnb is a feudal state, decentralized home-sharing marketplaces are a shared, democratic economy where those who create value keep value. You can create better alignment between guests, hosts, and the marketplace where they do business. And those who actually use the platform make the decisions that are directly tied into the platform’s value creation mechanisms.
Based on a blockchain infrastructure with proven models for a peer-to-peer marketplace with powerful, integrated tokenomics, the decentralized alternative for the travel industry is there. And it means home sharing 2.0, travel booking for the web 3.0 and an end to the exploitation of hosts and guests around the world.
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The views, thoughts, and opinions expressed herein are those of the author alone and do not necessarily reflect the views and opinions of Cointelegraph.
Lukas Kim, originally from Tokyo and Seoul, is the co-founder of Berkeley Blockchain Xcelerator, a co-inventor of two blockchain-based public finance models in partnership with a US mayor’s office and a technology marketer. As a Genesis team member at Dtravel, he is shaping the future of the home sharing economy.