How much can we really trust a trustless gig economy?
By Alissa Fleck
When you hire a babysitter, order an Uber or pay someone to assemble a dresser, it’s important to know whether or not you can trust that person. A generation ago, we relied on friends, family and neighbors to vouch for caregivers and handypeople. When we hailed a taxi, we held accountable the local taxi commission to stand behind its licensed drivers.
Today, we turn to Care.com, Uber, Yelp and countless other apps and platforms that collect feedback from their communities of users. These services are meant to provide a certain level of security and peace of mind. In addition to user reviews and ratings, some require background checks for their workers and have strict behavior guidelines that, when broken, may lead to disciplinary action. We rely on these centralized governing protocols to protect our time, money and safety.
With the arrival of blockchain technology, a new generation of startups is promising to replace Uber, Fivrr, TaskRabbit, et al, with fully decentralized sharing economies. In these peer-to-peer networks, we will interact directly with other users without the oversight of intermediaries, regulatory agencies or supervising bodies of any kind. Relying on game theory to weed out underperforming vendors, these blockchain-based sharing startups promise better relationships between buyers and sellers.
Such P2P trust is fine when you’re selling collectibles on eBay or reviewing restaurants on Yelp — the stakes are relatively small. But is it wise to welcome strangers into your home based solely on an algorithmically determined trust index, for which no one is centrally responsible? In other words, how much trust is possible, really, in a trustless economy? (Blockchain is referred to as “trustless” because, in theory, trust between parties is not required for the system to function.)
“What’s troubling about the concept of decentralization is that it means less regulation,” said Lawrence Kobilinsky, chair of the department of sciences at John Jay College of Criminal Justice. “Regulations are meant to do two things — protect the consumer and protect the service provider.”
In 2015, Kobilinsky served on a panel tasked with developing best practices for conducting criminal background checks for taxicabs and for-hire rideshare services — a small but representative segment of the gig economy.
Kobilinsky said decentralization sounds like a good thing for three reasons: It decreases bureaucracy, takes out the middleman and reduces costs and prices. “But it also presents new dangers,” he said. “Regulations are meant to protect and — with decentralization — you’re not allowing that to take place.”
Decentralizing the On-Demand Economy
Take the blockchain platform Mycro, which anticipates an ICO in Q1 2019. The start-up is building a platform that uses algorithms to match local job-seekers with local hirers. The core idea echoes that of TaskRabbit, one of the original vampires of the global gig economy, founded in 2008.
(There are countless other proposed blockchain projects similar to Mycro, with varying levels of legitimacy and feasibility. We looked at Mycro for this story because it’s generally had positive ratings on ICO-ranking sites.)
According to the company’s white paper, Mycro uses smart contracts to ensure funds are distributed fairly, and they rely on a token economy to reward the site’s top users. For example, high-performing job-seekers acquire tokens they can use to increase their visibility on the site and gain other advantages in competing for plum jobs.
Positioned as a competitor to TaskRabbit, Fivrr and other on-demand workforce platforms, Mycro seeks to democratize the matchmaking process. It promises more money in the hands of workers and better results for those who hire them.
But their white paper and website say nothing about ensuring the public’s safety. Indeed, the issue of “security” is concerned with money, not people, and verifying the identity of Mycro’s workers “is carried out by an external partner.”
Danger of the Human Element
The gig economy, we know, comes with dangers.
An investigation by CNN earlier this year found 103 Uber drivers have been accused of sexual assault in the past four years — so many, in fact, that there are now firms dedicated solely to getting compensation for rideshare passengers who have been sexually assaulted by drivers. According to research conducted by Kobilinsky’s panel, Uber drivers routinely pass background checks despite criminal histories and go on to assault passengers. That panel has called for increased and more standardized regulations.
And that’s just Uber.
When we reached out to Mycro about these concerns, their ICO advisor, Ivan Jelić, agreed that there’s no way to offer 100 percent security against malicious actors. “Nevertheless, we have to strive to minimize the number of this kind of participant,” he noted.
Every user profile on the platform is linked to their Ethereum address, Jelić explained, and all participants have the option to publicly evaluate each other.
“This will definitely help in decreasing the number of ‘bad’ participants, stopping the rating manipulations and ruling out fake ones,” he added. “Job provider and jobber will be incentivized to give each other better ratings.”
Mycro believes its rating system is an improvement on the status quo because it can’t be manipulated. But, says Kobilinsky, this common refrain about blockchain should not lead to complacency when it comes to building trust in decentralized systems.
“Any rating system can be played with,” Kobilinsky said. “Even if you have a good rating, it doesn’t mean you follow normal rules of activity. There’s a first time for everything.”
History shows that Koblinsky is correct to be wary. On every platform with a rating system, pay-to-play or not, and no matter their size — Yelp, Amazon, TripAdvisor, Angie’s List — people have found ways to manipulate the system.
Fortunately, in most cases the stakes are small: Amazon’s rigged rating system might lead to regrettable purchases; Yelp’s biased reviews can reward sub-par restaurants. But when the transactions are IRL, strangers are welcomed into homes based on community reviews, there’s cause for concern. What’s more, these transactions often involve already vulnerable populations, like women and children.
As yet, none of this new generation of blockchain-based gig economy enterprises has convincingly addressed this problem. Mycro is far from the only player in this field. There’s Dylyver (ride-sharing, delivery), GigECoin (freelancer workplace), Vanywhere (task-matching) and many more.
Putting your workforce’s historical data on a public blockchain may ensure trust in that person’s job performance, but it does nothing to guarantee trust where it matters — in real life. If these blockchain-based start-ups truly believe that DLT is the sharing economy’s future, they need to take responsibility for the safety of their users.
The idea of a governing authority of course runs counter to blockchain’s ethos of decentralization. But, when we’re discussing safety in the real world, perhaps there’s no way around it.
“Regulation keeps people in check to follow the rules, and that protects everybody,” Kobilinsky said. “Unique situations get taken advantage of, and people will always be people. When regulation fails, people get hurt.”