What is the sharing economy?
“Someday we’ll look back on the 20th century and wonder why we owned so much stuff.”
This is the first line of an article in TIME Magazine called 10 Ideas That Will Change The World, written in 2011. The idea in question was the sharing economy, and a decade later, they’ve already been proven right. By 2025 the sharing economy will be worth $335 billion, rising from $14 billion in 2014, according to Statista. Here, we’ll explore what it is, the history of sharing, examples of how it works, some of the reasons why it’s growing at an incredible rate, and how it fits in with World Mobile.
So, what is the sharing economy?
So what is the sharing economy? And how does it have the potential to change the way we live?
According to the Oxford Dictionary, the sharing economy is:
“an economic system in which assets or services are shared between private individuals, either for free or for a fee, typically using the Internet.”
Examples of sharing economy
This is the most commonly noted example of the sharing economy, perhaps because the way the business started seems to be the purest version of the model, where Person A owns something that they don’t constantly use. Person B gets to use it in return for a fee. In 2007, two San Francisco flatmates heard that attendees of a local conference were struggling to get hotel rooms, so they bought air mattresses and small desks for their loft and advertised the space for rental, priced lower than the hotels. The business is now worth $130 billion and has expanded its offering from shared rooms in someone’s home to whole properties for exclusive hire.
This London-based start-up refers to itself as “the Airbnb for storage”. They allow users to generate revenue from their unused storage space by lending it out to those who need it.
The founders wanted to reduce reliance on single-owner cars, so they created a car-sharing platform where you can rent a car by the minute, hour, or day. Zipcar was later bought by Avis Budget Group for approx $500 million, allowing the latter to gain a foothold in the sharing economy world while retaining their traditional car rental business too.
There can be blurry lines on what is the sharing economy, which prompted Diane Coyle and Shane O’Connor to establish a more precise definition of the term as part of their research for the Economic Statistics Centre of Excellence. Unsurprisingly, they say sharing is a fundamental part of the sharing economy. Individuals can monetise assets that they own, but aren’t always using, such as a spare room, a driveway, or even a dress. A community that shares the costs of an investment, plus the responsibility and the benefits of maintaining it, is also part of the sharing economy.
The history of sharing
Sharing resources has happened since the beginning of time. It’s thought that hunter-gatherers shared pretty much everything. According to Sam Bowles, an American economist, and Professor Emeritus at the University of Massachusetts, ownership only came about when humans started to farm and declared certain land, animals, and buildings as their own.
But throughout history, there have been times when a community that was facing adversity reverted to some form of sharing, such as community allotments in 19th century Germany and rural electric co-operatives in America a century later.
Another crucial part of the sharing economy, Coyle, and O’Connor concluded is trust. Without this, the collaboration will fail. So while lending someone something in return for something else is a tale as old as time, the addition of the Internet and mobile phones assists people in finding what they are looking for and feel confident in the transaction itself. Feedback and rating systems pioneered by online platforms like eBay help create this trust. Although no one’s mastered a successful standardised peer rating system yet (so you have to start from scratch on every new platform), blockchain technology could change this, building trust even further.
How blockchain builds better trust for sharing
Intermediaries like lawyers and banks historically provided trust in a transaction, but they come at a cost.
Connecting business partners directly holds many benefits. Blockchain cuts out any middlemen by storing data in blocks that are “chained” together instead of in a centralised location.
The data — which can be any business information — cannot then be tampered with, as every computer in the network would need to check the transaction was valid. It is this technology that creates trust. The integration of blockchain creates a decentralised network run by the people and guarantees total privacy.
Access over ownership
Consumerism has been the dominant trend globally for the last 100 years, so this switch to being content with accessing something rather than owning it feels like a return to our ancestors’ ways, but with the difference that digital technology makes. Those of us in countries with Internet access are happy for our photos to be stored in the Cloud, to choose tonight’s film from Netflix, and to stream our new favourite album without owning it.
Reducing cost through the sharing economy
I guess it depends on why people are doing it. There is the obvious financial benefit; people can acquire something, albeit temporarily, that they wouldn’t have either wanted to spend the money on or been able to afford if they were paying the full price rather than the rental price. So those who do want to drive a particular sports car, or wear a specific label, can now do so, as long as they’re willing to give it back.
That being said, Coyle and O’Connor’s findings revealed that another critical factor for those involved with sharing economy platforms is non-financial motivations. They remarked that people expressed various sustainability and community-related reasons for choosing this method on both sides of the transaction.
This shows that the shift isn’t just about money; it’s about wanting to make choices that are beneficial to the world we live in.
Sharing economy is more environmentally sustainable
Owning less “stuff” is better for the environment, and apps have sprung up that encourage the rental of clothing rather than more fast fashion, and rental of other household items, as well as unwanted food waste. The most significant contributor to climate change in the US is transportation emissions, so in cities where the population density is increasing, sharing vehicles can positively impact this.
Sharing economy and a sense of community
The other benefit is more personal. It’s the sense of community and connection we feel when involved in a peer-to-peer transaction. Research done by PwC found that 89% of people familiar with the sharing economy agreed it was based on trust between providers and users, and 73% agreed that it helped build stronger communities. And these figures are pre-pandemic; the social impact of COVID-19 has made most of us value community and connection now more than ever.
What’s next for the sharing economy?
Whilst there is still no clear-cut definition for the term, this isn’t holding back the industry’s success. Sectors such as transport, accommodation, and entertainment are predicted to continue growing, but it’s not just products available to “hire”. It’s also people’s time. Peer-to-peer platforms like TaskRabbit allow users to book people to help them with tasks, from picking up your dry cleaning to assembling your new flatpack furniture. The blockchain platform Cardano — on which the World Mobile Token is one of the first native tokens — is another example of a peer-to-peer model, allowing the whole network to be decentralised.
Financial services and energy are also areas expected to thrive, seeing more projects like the Brooklyn Microgrid, allowing residents to sell green energy to their neighbours through blockchain and smart meters.
Some saw the coronavirus pandemic’s effect on supposed sharing economy brands such as Uber, WeWork, and Airbnb and questioned if it was the end of this boom. But as mentioned above, the pandemic actually reminded us all of the importance of both digital technology and community. And as this is what the sharing economy is based on, then companies who are genuinely focused on that, rather than those just trying to make money, should (ironically) be able to get themselves a piece of that $335 billion pie.
How World Mobile uses the sharing economy to connect the unconnected
In our mission to connect the unconnected, which is nearly 4 billion people worldwide, anyone can own a part of the World Mobile network and share the rewards. Introducing the sharing economy reduces current operational and maintenance costs that traditional telecoms face and shares the responsibility for bridging the digital divide.
Since the World Mobile distributed network runs on World Mobile Token (WMT), the model is highly scalable from a deployment perspective. Rather than relying on a centralised network operator to analyse the constantly changing capacity and demand, the growth of the network becomes demand-driven by the communities that need it the most. These communities and businesses become node operators, having a share in the profits and earning from providing local coverage — allowing World Mobile to go the extra mile and connect the unconnected.
To learn more, read the White Paper, World Mobile Chain: A blockchain based solution to empower a sharing economy for telecommunication infrastructures.
Interested in connecting the unconnected? Learn how you can join our mesh network and earn rewards.