It wasn’t so long ago that industries like hospitality and business services were disrupted by new technology. Companies like Uber and WeWork gave us new models for old paradigms, effectively eliminating the traditional middleman from a lot of these transactions.
The economic impacts have been impressive. With more than 400,000 registered ridesharing drivers in the US alone, they now outnumber traditional taxi drivers more than four to one, according to Andrew Zatlin in Benzinga. Meanwhile, CNBC reports that WeWork’s disruption of the commercial real estate market is gaining speed, providing shared office space and business amenities for more than 100,000 businesses in several countries.
Yet while companies like these exemplify a radical departure from the traditional taxi and business leasing industry, they both still maintain control in a centralized place, keeping a middleman in charge of rates and running the show.
Now, there’s a new wave of disruption taking place that is disrupting the disruptors. Creating decentralized marketplaces on blockchain-based platforms, these innovative companies are taking away control from the middleman and giving the end users more control and greater freedom. And consumers are loving them.
Disruption means creating a win for both sides of the deal
In the familiar centralized marketplace, all orders or sales are routed through one central exchange, with no competitors or independent pricing, according to Investopedia. “The New York Stock Exchange is considered a centralized market because orders are routed to the exchange and are then matched with an offsetting order,” the article explains.
In a decentralized market, on the other hand, technology connects buyers and sellers through a network and allows them to deal directly with each other. And the technology behind this kind of commerce is blockchain and smart contracts.
The companies creating new services on the blockchain are not into disruption just for its own sake. Rather, they are creating solutions that benefit both sides of a business deal, making it easier, less expensive and more transparent for both the buyer and the seller to do business.
For example, decentralized apartment rental bidding platforms are disrupting the traditional rental business, making it possible for landlords and potential renters to connect and negotiate rates directly. For renters, this eliminates high traditional application fees and broker commissions. For landlords, it gives them all the tools they need to successfully screen applicants, and collect the rent without risk.
“We want to make life easier for both sides,” explains Rentberry’s CEO Alex Lubinsky, who notes that the tenant screening tools are free to use, including the credit reporting tool.
Peer to peer makes transactions transparent
Without a middleman taking commissions and cuts on both sides, transactions are not only getting less expensive – they are also becoming more transparent.
In the ride-sharing industry, for example, the middleman (Uber itself) sets rates and doesn’t allow the customer to choose their own driver. One ride-sharing service is changing that, by creating a decentralized marketplace in which the driver and rider connect directly.
Arcade City’s peer-to-peer (P2P) network runs somewhat like Uber or Lyft, but with some key differences. Without centralized control, drivers can set their own rates, and riders are encouraged to rate their drivers through a gamification app that can help drivers achieve “superhero” status in the platform. Without the middleman, drivers can develop a loyal and recurring customer base, allowing them to grow based on excellent service.
Decentralization is even happening in local food shopping, thanks to the blockchain-based tech behind the INS Ecosystem. They are building an open source marketplace platform in which the customer can connect through INS directly with food manufacturers and suppliers, in effect eliminating the need for the retail grocery chain. It’s all part of the new direct-to-consumer (DTC) model that is radically changing the way we shop.
Consumers are embracing this decentralized disruption
A key element in each of these ideas is transparency, “lifting the veil” as it were. And that is changing everything about our consumer transactions. In Rentberry’s case, transparency has the impact of knowing what you’re up against and making your own decisions about whether to move forward or not. CEO and founder Alex Lubinsky insists that, rather than raise prices, this kind of transparency could spell the end of under-cover bidding wars.
Arcade City’s CEO Christopher David agrees about the value of transparency and direct connection between users. A former Uber driver himself, he saw a lot of flaws in the system and a lack of control for both drivers and riders. By using a blockchain-based P2P network, he’s solved that problem.
As consumers insist on more transparent accountability, and less dependence on middlemen (and the cost that invariably goes with them), expect blockchain-based tech and the decentralized marketplace to grow and become the standard for disruption in the new economy.