Understanding the Sharing Economy

The social context of the economy.

The economy, like all other human endeavors, is a dynamic aspect of social interaction that changes with time. There are many factors that can shape the way we communicate economically with each other, but technology has a very specific role to play.

The current economic model was mainly shaped by the industrial revolution and is predicated on ownership, this is due to the scarcity of resources which we faced and are still facing to an extent today.

The industrial revolution gave us the power to manufacture goods at a higher pace and with lower costs. But this was not done in a sustainable or equitable way. The unimaginable technological advances were monopolized by existing power structures or by the newly emerging ones, thus the modern market was born.

We now live in a world in which supply is higher than it ever was and demand is also at it's highest, but there is still not enough to go around. This is mostly due to the intersection of consumerism with ownership, although there are enough goods and resources to around, this is not happening.

Companies have a tendency of producing and selling them to the highest bidder, leaving a large portion of the population out of the game. And the people that are able to afford those goods, hide under the umbrella of ownership and keep them to themselves.

The reason for both ownership and the higher pricing of goods is scarcity, which basically is the assumption that we don't have enough for everyone.

Scarcity vs abundance.

While it's true that scarcity is a constant reality that followed human evolution through the ages, this starts to be less and less of a problem due to the high technologization of the world.

In the very recent past, due to the high cost of technology as a good, only large corporations or governments were able to afford it. This lead to the monopoly is was mentioning earlier. But with this wonderful cyclical mechanism which technological advance make technology better and cheaper, gave way to the democratization of technology.

Research only corporations or governments could do 20 years ago, now can be done by high school students in an educational lab or by passionate people in community labs. This change from centralized to decentralized innovation shifted the incentive structure, whereas business researched for profit, communities search for the solution in order to better their lives and the lives of people close to them.

Combining this democratization and decentralization of innovation with the exponential growth that some technology sectors are experiencing, we can now see a totally different world, an abundant one.

And with this emerging abundance, we need to have a conversation regarding ownership and restructure our economic model to best suit this development.

The sharing economy.

The two flagships of this new economic model are Uber and Airbnb, both businesses that only match supply with demand, without owing anything than the platform on which this is done. Now we can see this model being replicated in several industries.

One of the first examples of such a model was the freelancing platforms that match freelancers with specific task demands, we now also have community financed loaning platforms and fashion platforms for renting clothes. One of the things I'm excited about relates to the production and distribution of energy, which is massively going to be disrupted by technological advances and this new economic model.

In the old scarcity driven economic model, the only way you can ensure you have access to a particular good was by ownership. But with the sharing economy, this concept of ownership is replaced by access. Why would you need a car that sits still more than 80% of the time, when you can get instant access?

The very interesting thing about this emerging new world is that we will have way better goods and services at cheaper costs and with the mass inclusion of people. The alignment of exponential growth in technology with the shift towards sharing and access will give birth to a more sustainable world. Goods and services will be cheaper and cheaper at an ever-increasing quality and because sharing is the norm, we will not need to create so many products.

So, what do you get when you combine a sharing economy with a cryptocurrency monetary system and the emergence of digital governance systems that are in the making? The answer is an exciting time to be alive with the prospects of a new world order, one beneficial to the masses.