Shared Economy + Blockchain = Pure Magic
By: Verified On Chain
Tags: Economy, Blockchain, Blockchain Technology, Ethereum

What hasn’t yet been done, will be done. What hasn’t yet been imagined, will be imagined. What hasn’t yet been possible, will be possible.

How? Blockchain.

I have by now written about potential limitations and shortcomings of Blockchain so many times people have started suspecting if I really am a Blockchain entrepreneur or not! This is my attempt at correcting perceptions. :) Kidding. However, this is not one of those doom-and-gloom posts, this one celebrates a advances that Blockchain will help us make. This post aims to understand how Blockchain will give wings to shared economy.

Imagine a world where you could give your extra network bandwidth for the month on rent to someone somewhere unknown. Imagine a world where you could buy ammos on PUBG by exchanging your AOE development cards. Imagine a world where you could use Amazon points at Alibaba.

It would be lovely, isn’t it? Let’s see how.

Let’s first understand a few important concepts of a public Blockchain. I will use Ethereum as being synonymous to Blockchain for the purposes of this post.

Ethereum Account

An account on Ethereum is a collection of an address, a public key, and a private key. You will often find it being compared to login details of a bank account. I beg to differ. It is a lot more powerful than the mere login details of a banking software. Ethereum is a platform. A protocol. Not just a software. An account on a platform, a protocol holds a lot more weight.

Why? Think convergence. In the non-Blockchain world, you hold different credentials for every aspect of your life- heck, sometimes multiple credentials for the same aspect. All your bank accounts, investment accounts, email accounts, social media accounts, social networking accounts come with their own credentials set. If I am connected to you on LinkedIn, it does not mean I am connected to you on Facebook. And even lesser, if I am connected to you on LinkedIn, it definitely does not mean I can send you money. For which, there is Paypal. And if I am connected to you on Paypal, it definitely does not mean I can see your creative portfolio. For which, there is Behance. You get the drift, don’t you?

What if you have to maintain just one credential and that would work magically on all your applications. That’s what an Ethereum account gives you. Out of the box. You could get into all distributed applications built on Ethereum using your single set of credentials

It may feel similar to Google’s Play Store or Apple’s App Store. There are millions of apps on these stores and you can install the ones you like on your mobile device. The difference here is that the stores act just like a library of apps. There is no common gateway to these apps. Ethereum has.

Benefits of having one account

Let’s say, you are using three apps on Ethereum and have used the same account across these apps. Let these apps be a payment app, a loyalty rewards app, and a gaming app. With one account, you form a unique persona. Since you are using single account to interact and transact on DApps (Distributed Applications), all the activity across the three apps gets built across your single address.

DApps are nothing but a face or layer on Ethereum. The transactions are actually happening on Ethereum. DApps submit transactions to the Ethereum network. The Ethereum network validates the transaction and puts it in a block. DApps get the receipt of the transaction. That’s about it.

Ethereum maintains the transactional activity for each account. Think of it like a place which maintains what all have you done across apps on Ethereum using that address. This place is called the State Trie.

Ethereum goes beyond being an authentication service. It is also a common database for all the DApps built on it. If you have ever transacted on the above three apps, Ethereum would know how much balance you have, how many loyalty points you have, and what ammo do you have in the game.

Before we move further, let’s explore two more key concepts of Ethereum.

Tokens

Tokens are the fuel for a Blockchain network. In Ethereum, the token is Ether. In a DApp, its creator can define the value of its offerings in Ether. Let’s consider the loyalty rewards app. Its creator can define the number of reward points you will get for an exchange of 1 Ether. Or vice versa. Similarly, the creator of the gaming DApp can define how much ammo you can buy in exchange of 1 Ether.

Let’s talk about one more concept of Ethereum.

Smart Contract

Smart Contract is a piece of code which has a set of rules defined. It sits on Ethereum itself. It is typically used in cases where a command needs to execute given a certain event has occurred. However, it is not just bound to it.A sSmart contract, much like a transaction, once a part of Ethereum, stays there forever immutably. This is a powerful feature, if put to use imaginatively. DApps use it quite extensively. Your loyalty point accumulation on a DApp based on your purchase is done via smart contracts.

Any function invocation of a smart contract from outside of the smart contract is treated as a transaction in Ethereum.

So far we have established that

· you can manage all DApps on Ethereum with a single account

· DApps can define a value for its assets in terms of Ethers

· DApps can leverage smart contracts to take action based on a triggering event

Shared Economy

Now, let’s say someone writes a smart contract which talks to the above three DApps. This contract can have an “exchange” function. It could take an attribute and amount of it as an input and return another attribute. What this means is you can send 20 loyalty points to this smart contract and the contract will send 10 bullets of the gaming app.

Let it sink in.

One more time. You were able to buy 10 bullets of a gaming DApp using your loyalty points which you earned while shopping. Beautiful, isn’t it.

Once this transfer is successful, you would notice a deduction of 20 points in your rewards DApp and addition of 10 bullets in your gaming DApp.

How did it happen? Think convergence, again.

When you sent the exchange request to the smart contract, it could figure out your address as you are the sender of the transaction. It could check the balance of loyalty points on your address. Once validated, it translates 20 loyalty points to Ether as prescribed by the smart contract of the loyalty rewards DApp. Let’s say it resulted in 0.5 Ether. It then translated 0.5 Ether to ’n’ number of bullets. It calculated ’n’ based on the communication from the smart contract of the gaming DApp. Let’s say it resulted in 10 bullets. It then deducted the points and sent the corresponding bullets to your address.

Let’s extend it further. Let’s not restrict the exchange of attributes to a single user. Let’s open it to the whole world.

There can be a smart contract which can broadcast your selling of 20 loyalty points to the world. Anyone willing to exchange their bullets for loyalty points could take you up on your offer. And we will have two happy folks.

A task for you

How would you design a system where you could rent out your “extra” Internet bandwidth for the month to someone unknown, to someone sitting in a completely different geography? Think about it and you will be in awe of Blockchain.