Uber recently received $1.2 Billion in investment at a $17 Billion valuation. Kudos to them. Fundamentally, they provide a great service. They could become much bigger, filling into the niche of every “transport as a service”. If so, $17 billion is still low. Even though it is only just 4 years old, it already claims huge revenue.
It comes down to our revenue numbers, the growth of those numbers and our business model itself. … The [numbers] are incredibly compelling.
But. And here’s a thought experiment… We have a company in the business of market-making: matching up people to transport. They provide additional services that make it a more compelling experience: a reputation system for drivers, decent cars, vehicle tracking & instant payment through an app.
Like Michael Arrington states in this 2010 post about Uber, it solves the following annoyances:
In my order, that’s flagging one down, finding the cash to pay, and being in a sometimes disgusting car.
It brings the hallmarks of the ‘sharing economy’ to the transport industry: identity/reputation systems, and ease of transferring value. The same with Airbnb. Bringing in an ID/reputation system with the ease of value transfer. Apartment/home rentals abroad were often confusing & unorganised.
Fundamentally though, the services these companies provide alleviate some of the inefficiencies in bringing it all together: tying in reputation to a specific subset of a market (past time/space constraints), being a trusted brand & being the payment processor. Rightfully so, they take a cut for their services.
On a smaller scale, you wouldn’t require a third party, as the market would be efficient enough. There’s enough trust between participants so that people would be content to use normal means of “market making”. Take the example of a small seaside town. If you have friends that want to come visit you over the holidays, local knowledge, know-how and connection to the locals in the area is enough to find out who has a place free for your friends to come and stay. Once the scale becomes larger, and larger, these efficiencies become too large, and internet-scale services such as Airbnb & Uber are required.
So, what it it comes down to: when the scale becomes larger, we need third parties such as Airbnb & Uber to help us in market making… and we pay them for it.
There thus exists a hole in the market. An internet-scale decentralized, reputation-based marketplace (for everything). Immense costs will be cut. A more globally efficient market.
Ever since, I heard Mike Hearn talk about the possibility of a “TradeNet” (slides), I’ve been keeping an eye on this problem. A decentralized marketplace for everything (including machines posting jobs for machines). I’ve been slowly educating myself in the esoteric parts of how such a system could function, reading up things like Kademlia DHTs. By no means am I equipped yet to understand how it would work technically, but thankfully there’s people considerably smarter than I am!
And it is coming. It’s called OpenBazaar. OpenBazaar is a fork of DarkMarket. DarkMarket’s slant is decidedly more political. I’m much more a fan of the neutral-sounding OpenBazaar. It’s not just about being to sell anything, it’s also about solving efficiencies in global scale market making. It’s not just about being to able sell drugs. The media already looks at DarkMarket like it is only for that.
Brian Hoffman, current lead dev on the project, puts it succinctly:
“The goal is not to make it simple to find drugs or guns. Period. I am not spending my time contributing to something to help others buy drugs, I’m trying to help sellers save money on transaction and payment processing costs, and open up new customer bases. There’s a lot more here than drug or gun sales.”
In short, it is a p2p market. Cut one part of the hydra off, and it remains alive. It will have secure p2p merchants, anonymous rating systems & 3rd-party arbitration.
Without going into too technical detail, it will hopefully be possible for someone to build a global reputation for a specific market need (driving people around), and won’t require a third-party to bring it together.
A decentralized Uber could thus use OpenBazaar as its “back-end”, and then someone would build the additional features such as tracking of taxis. Others could use the same back-end and innovate. It could all be open-source too.
Of course, this would be simplifying parts of the process, and perhaps it wouldn’t necessarily be as close to Uber, but it is definitely possible, and it is definitely coming. If market efficiencies make it better for the driver and the passenger: cost cutting & saving on fees, it could be adopted like wildfire. It could also mean that markets could become more efficient. Uber’s top-down “surge pricing” might not be the most efficient.
It’s going to create rippling ramifications in the political/legal sphere. Uber & Airbnb are already bashing against them. But what will happen when all this gets decentralized? And what happens when not only humans start using this OpenBazaar, but autonomous agents as well [self-driving cars picking up packages and delivering them]? Also, imagine a permissionless, global marketplace? “Permissionless innovation” is a buzz-word, but seriously, imagine the possibilities?
All I know is, it will most likely create a world that will be more cost effective, and bring people closer. And that’s an experiment worth trying. Now, I just need to copy myself, so I can work on more of these awesome projects!