How Tokenized Mesh Networks Will Spawn the Sharing Economy 2.0

Shazir Mucklai  |

Collaborative consumption, a term coined by authors Rachel Botsman and Roo Rogers, is transforming global economies, as people eschew the hyper-consumerism of the 20th Century in favor of crowdsourced commerce.

In their 2010 book, “What's Mine Is Yours: The Rise of Collaborative Consumption”, Botsman and Rogers write that this new sharing economy is “enabling people to realize the enormous benefits of access to products and services over ownership, and at the same time save money, space, and time.”

This transition entails a departure from long-held economic orthodoxy, where businesses owned their means of production, a practice enshrined in capitalism from the Industrial Revolution until the end of the 20th Century. But technological innovation and the rise of on-demand mobile services have created a new marketplace, where nimble peer-to-peer (P2P) platforms connect supply and demand.

The digital revolution has made asset-heavy business models cumbersome and inflexible, preventing enterprises from achieving the lean operating efficiencies needed to access the cutting-edge markets of the future. Over the last decade, this trend has transformed virtually every industry, with the most notable examples being the transportation, gig and lodging sectors.

Now, P2P mobile services like ride-sharing app Uber, freelance labor site TaskRabbit and short-term vacation rental platform Airbnb are creating a new economic paradigm that is light on assets and driven by community. With Uber not owning any vehicles, Airbnb not operating any hotels and TaskRabbit only providing a platform that connects gig seekers with gig employers, “access over ownership” has become the core mantra of the sharing economy.

Enabling this access are decentralized P2P networks, which empower users to communicate and share data amongst themselves, thus eliminating central client-server infrastructure as a prerequisite. Millennials, the generation born between 1981 and 1997, according to think tank Pew Research Center, are driving the adoption of P2P commerce with their increasingly mobile-first, digital-only consumer behavior. In fact, this demographic represents the inceptive mobile-first generation, According to auditor Deloitte.

Eighties-baby Millennials were also the original test subjects for the first salvo in P2P disruption: The ill-fated music-sharing site, Napster. While music industry lawsuits drove the venture to bankruptcy in 2002, Napster’s legacy survived, spawning the mass-migration to P2P tech that underpins Generation Y’s collaborative consumer profile.

Today, the global sharing economy is worth $250 billion and has a potential addressable market valued at $2 trillion, according to a June 2017 Bank of America Merrill Lynch (BAML) research report. But market intelligence firm Juniper Research is more subdued and projects global platform-provider sharing revenues to approach $19 billion this year, a number that could swell to $40.2 billion by 2022.

Although Millennials comprise the largest segment of the collaborative market and are five times more likely to share than Baby Boomers – those who are 55 and older – every cohort is driving the trend, according to BAML. Specifically, the BAML survey reveals that Gen Y accounts for 49 percent of all sharing revenues, while Gen X, or people aged 35 to 54, and Boomers are driving 30 percent and 22 percent of collaborative commerce, respectively.

Despite the undeniable value that this nascent ecosystem has unlocked, the sharing economy still has dark side, according to researchers Arvind Malhotra and Marshall Van Alstyne. In its primitive 1.0 stage, first-generation sharing platforms have exploited the value of crowd aggregation, while hoarding profits generated by exorbitant fee structures for themselves.

For example, when the supply of Uber cars drops below a certain level, the service can charge ride fares that are nine times higher than normal, according to Juniper. Additionally, the market intelligence firm found that Uber and other ride-sharing apps are taking nearly 30 percent of driver earnings on average. Airbnb has also drawn the ire of room-seekers blindsided by its hidden three-percent currency conversion fees and hosts, who are also seeing rising platform costs and no indemnity for guest damages to their property.

Thus, the problem with the sharing economy 1.0 is that “the value produced by the crowd is not equally redistributed among all those who have contributed to the value production,” according to a 2017 Harvard Business Review article. Instead, large intermediary operators have been expropriating the lion’s share of the value generated by peer-driven networks. The upshot: This first iteration of sharing is not a true expression of peer-market economics.

But consensus Blockchain technology is reforming the ecosystem and giving way to the sharing economy 2.0, according to IBM. The Blockchain is a distributed ledger that validates the minting and transfer of virtual currencies and is the operating system that generates bitcoin. The network relies on majority consensus to approve P2P transactions and contracts, a self-regulating mechanism that eliminates the risk fraud.

So rather than using centralized platforms to connect with other people, the Blockchain allows users to connect, share and transact directly. RightMesh, a mesh network solution that enables smart devices to channel the connectivity of other web-linked gadgets in their proximity to amplify Internet signal strength and improve digital access, is one startup leveraging Blockchain innovation to improve sharing.

Built on the Ethereum network, a hybrid smart-contract platform and open-source programming language, RightMesh is using Blockchain technology and tokenization to improve digital inclusion for the estimated 4 billion people worldwide, who lack Internet access, according to the Center for Financial Inclusion, a think tank.

Analyzing the societal benefits of mesh adoption, a 2017 RightMesh white paper found that a city with the population density of Dhaka, Bangladesh (24,700 people/km2) could be entirely covered with only 5-percent network penetration. Otherwise, to enable universal Internet access, data prices would need to fall roughly 90 percent below 2016 levels, according to a 2016 PricewaterhouseCoopers report.

With Blockchain-based mesh networks, RightMesh chief executive officer John Lyotier believes global populations can access the web without traditional internet service provider (ISP) extorting them for data fees. Instead, RightMesh empowers individuals to operate as their own ISP, providing them with a secure platform to monetize their unused digital assets.

Lyotier says that RightMesh’s proprietary digital token, minted on the Ethereum Blockchain, allows individuals using his network to monetize their own data and Internet access, device storage, battery, and processing power, or other digital goods and services they create, signifying “the first truly decentralized and infrastructure-less, peer-to-peer service.”

This disintermediation will be foundational to the sharing economy 2.0, as the Blockchain facilitates the “emergence of new forms of organizations, which are not only dematerialized," with no physical offices, tangible assets or employees, but also completely decentralized, according to the HBR article.

“RightMesh is the logical next step in collaborative innovation, eliminating the need for large ISP intermediaries and enabling people to capitalize on previously inaccessible digital value streams,” says Lyotier.

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