For centuries, owning land or real estate has been an indicator of wealth and success for many, from Kings and Queens, to prominent CEOs and music moguls. The traditional real estate model has always favored landlords over tenants, with the power dynamic leaving tenants economically vulnerable, paying high costs in rent and utilities.
This exploitative system has remained the same today, with landlords renting out private homes and commercial properties at rates that most people can’t afford. This renting model implies that modern society has not only maintained an unequal distribution of wealth but is undemocratic and to a certain extent, discriminating. According to a report, the recent decline in home ownership is fueled by rising wealth inequality across Britain. Landlords are continuing to purchase and own multiple properties, simultaneously shutting out home-seekers who lack the funds needed to buy their own homes and are stuck with no choice but to rent.
While tenants are provided with some legal rights, they are limited at best. Rental laws have still not evolved to enable reasonable, fixed rental prices or allow for flexible tenancy agreements. Investigations have revealed that hundreds of thousands of people in England alone have faced eviction simply because they asked private landlords to address issues within the structure of their houses. Tenants are locked into contracts that favor those on the receiving end, and are now are at the mercy of landlords, realtors, and housing market misconduct.
The current ‘sharing economy’
The new sharing economy has transformed the renting model entirely. Those who participate in the sharing economy are afforded new freedoms and are empowered in a system that values community over profit. The ability to micro-rent (leasing a home for a day, rather than a year), has given people the flexibility to live wherever they choose and however they like, while sharing homes how and when they want to. Tenants of the sharing economy are also establishing an overall renting environment that is built on the spirit of community; not commerce.
The sharing economy model extends to a variety of business avenues; hot desking in office spaces, lending unused bikes (ie: Splinter), and sharing niche skills to those who wish to employ them (UpWork). However, in most cases, these ‘sharing economy’ businesses are all running to make a profit. They are middlemen who take a commission or cut, inadvertently bringing up the cost up for the end user. AirBnB, for example, gives renters flexibility and ease when choosing homes to stay in. The company does, however, still act as a “head” landlord, or a third-party who oversees and facilitates all transactions. The company provides contracts and conditions for every stay booked, which have to be met by the user or renter. Uber operates in a similar manner, charging people to rent rides directly from one another, without owning any of the cars it “shares.” These business models do not fit the ideal concept of sharing. Rather, we should see them as third-parties who facilitate and control renting transactions between members of the sharing economy community.
Creating a new sharing economy
There are ways to transform the sharing economy, though. What we need to do, as communities that rent and own properties, is shift the paradigm between landlord and tenant while destroying the capitalist model that favors the wealthy. Blockchain technology just may be the key here, by becoming the new foundation of this paradigm, and allowing tenants to own digitized property assets.
Using blockchain, we can explore tokenized properties all over the globe, merging real world assets with blockchain technology to ensure anyone can have a slice of the community’s real estate. Communities will be able to own individual tokens representing a share, and have access to use of all properties available on a blockchain-based platform. In this new sharing economy model, members can pool together their funds and buy a holiday villa without a third-party needing to be involved. No monthly rent needs to paid, and allotted time spent at the property itself would be the new commodity.
Resources being shared between a group of people automatically changes the original, outdated dynamic of the landlord and tenant model. When based on blockchain technology, the power becomes equally distributed between these owners or renters, removing exploitation and creating a fairer system for all. With this model, everyone has the opportunity to become a landlord or owner.
Blockchain technology has steadily become the most trusted center for those who invest, providing benefits such as equal wealth distribution, addressing the needs of a community, and access to real estate. Smart contracts on the blockchain, when combined with the new sharing economy model, would ensure complete transparency and accountability, with the possibility of minimal fees being charged to users. Utilization is the name of the game, and a necessity when reinventing a sharing economy. The new sharing model no longer prioritizes those with established wealth, allowing those looking to rent or become homeowners to do so without falling mercy to their landlords. Affordable home ownership would serve a community at large, as opposed to singular landlords, by providing a sense of economic stability in the surrounding areas.
A true, progressive sharing economy would not abide by exploitative, capitalist rules and would exclude itself from perpetual, growing inequality by serving a global community that gives everyone access to real estate. Blockchain has the potential to facilitate a more equal distribution of property ownership, so that people around the world can truly share with each other, without the need for financial leverage or business.
About Darvin Kunaiwan:
Darvin is the Founder and CEO of Crowdvilla, the newest venture of REIDAO, a Singapore-based company digitizing real estate assets on the blockchain. Crowdvilla is an NPO (non-profit organization) for shared holiday homes. Darvin has a strong background in business development, project management, and entrepreneurship. He was previously responsible for branding and marketing for Thomson Reuters Asia, and a former founder of multiple start-ups. Kurniawan’s passion for real estate started after his graduation, where he witnessed a huge property boom in Singapore. He identified many lucrative properties to invest in, however, the cost to enter such an opportunity was too big for him alone. Darvin felt he could solve this problem by pooling the resources of a few friends and families together to purchase property in a way that is trustworthy and effortless.
By Darvin Kurnaiwan, CEO of Crowdvilla.