Since the inception of bitcoin, blockchain technology has taken over the world by storm. Earlier the properties of the blockchain were believed to be limited to creating a corruption-free currency system, but people quickly began to see the industry-disrupting potential that the blockchain possesses. One of those industries happens to be the peer-to-peer home sharing industry.
How is the blockchain disrupting it?
Before we understand that, let’s look at what the problem with centralised peer-to-peer share economy is.
Traditional “Peer-to-peer Share Economy”
Peer-to-peer share economy was seen as a welcome breath of fresh air. In an act of collaborative consumption people can now rent out things that they are not using eg. house, bike, car etc. to someone else.
The rise of peer-to-peer share economy lead to a rise of millions of micro-businesses. Now anyone could in essence be an entrepreneur and have their own micro business. Your aunt with that extra room in her house can now make some money through AirBnb. Your uncle can now use his car to generate some extra income via Uber.
So, all this sounds pretty good. Where is the problem?
The problem lies with an issue that plagues all centralized institutions, middle-men and commission fees.
Commission In The Middle
As the Bee Token whitepaper states, the current business climate is rife with misaligned incentives. As companies like Uber and Airbnb grow to become billion dollar industries, the incentives for the drivers and home owners do not increase congruently, in fact they have marginally decreased. Uber drivers now earn far less than what they used to even though the cost of upkeep has not gone down that drastically.
As their network increases, companies and VCs end up pocketing more of the revenues, while the drivers and home owners, the people who build the actual backbone of the company get left out.
One of the ways how these incentives become increasingly skewed is by the commission rates taken by the middle-men. Most of the centralized home sharing platforms rely on multiple middle-men to conduct their transactions.
Each of these middle-men add a cost, and the guests and hosts end up paying these. In fact, these “transaction fees” range from 10%-22%. The Bee Token whitepaper breaks down these costs as follows:
- Platform Fees (3% — 15%): The centralized home sharing platforms charge a commission to use their platform. These fees are paid by hosts and guests.
- Financial Institutions Fees (3%): Visa and Mastercard charge fees for managing transactions.
- Foreign Transaction Fees (3%): Transactions made from a country outside of the country where the debit/credit card was issued are charged an extra commission.
- Currency Conversion Fees (1%): These are the result of DCC (Dynamic Currency Conversion). This a fee charged to see the transaction cost in your preferred currency denomination!!
Imagine that you live in India and your are travelling to Japan for a vacation. You are trying to book an Airbnb, and you have to end up paying a mountain of cash in transaction fees alone.
How is that fair?
Why do you have to pay so much unjustified commission?
This is the problem that most of us face everyday with centralized institutions, and this is the reason why the blockchain can give us a far better and far more economical alternative.
Bee Token plans to solve the middle-man problem via the use of smart contracts.
Bee Token And The PAR Protocol
The Bee Token functions via the PAR protocol.
P = Payment Protocol.
A= Arbitrage Protocol.
R= Reputation Protocol.
All these three are connected to each other like this:
The payment protocol basically means that you will get to send and receive tokens until the end of the service. Beenest uses the Bee payment protocol to enable guests to pay their hosts for bookings. This is how the payment procedure goes:
- Both guest and host send Bee tokens to the smart contracts.
- When the checkout date passes, the tokens are sent to the required address, provided everything went without a hitch.
- If there is some dispute, then the token gets held up for arbitration.
- In case of cancellation, a fee will be moved from the cancelling party to the other party. If suppose the guest cancels one day before the move in date, then the host will get the entire sum.
As you can see, the smart contract makes sure that there is absolutely no middle-man interaction. There is only a slight transaction fee to cover up for gas costs. This is how the gas costs go:
- 1% transaction fee if you are using BTC, ETH or any other utility ERC20 tokens.
- 3.99% transaction fee if you are using Fiat.
Now, any system which includes payment transfer between two parties will inevitably have some form of dispute. This dispute must be resolved by an unbiased third party.
All the participants in the Bee network can take part in arbitration by staking their Bee tokens. They get a significant boost to their reputation score (more on this later) for doing so.
Suppose a dispute arises, this is what follows after that:
- The two parties i.e. guest and host stake fiat arbitration fee to create an arbitration smart contract.
- Arbiters stake their bee tokens and join the arbiter pool.
- When a dispute arises, at least 5 arbiters are selected from the pool.
- If the arbiters fail to make a decision, then their stake is slashed off. However, they are not penalised for incorrect decision.
- Arbiters vote on a scale from 1–5 specifying the percentage (corresponding to 0%, 25%, 50%, 75%, 100%, respectively) of the disputed amount the plaintiff should be paid.
- Once a decision is made, the contract gives an aggregate of the majority voters’ reward offering to the winning party, and the rest goes to the losing party.
- If either party chooses to appeal, it will halt the payments again. However, this time the parties will have to stake at least twice the amount that they staked earlier. This is done to discourage frivolous appeals.
- The final verdict is the median of the dispute amount that the arbiters come up with. Along with that, they must leave feedback as to why they made that decision.
The reputation protocol is the the ultimate reward mechanism in Bee Nest. The idea is simple, if you act nicely, you get high reputation points. Act badly and your reputation points get docked.
This is how the Bee Token whitepaper describes this protocol:
“As an analogy, the reputation score is similar to credit score, and fetching the reputation score is similar to a credit pull. Unlike credit scores, the reputation score is backed by transparent algorithms defined in smart contracts and accessible to the masses. A reputation score is an integer between 0 and 100, that number being the average of multiple reputation scores”
The protocol has been designed to keep track of the reputation score of all the members involved and to continuously update them as and when required.
Updating The Bee Token Review System via SpringRole’s System
The Bee token review system is definitely a lot more transparent and honest compared to the review systems in centralised institution. Centralised institutions have the power to modify and outright remove reviews. This often begs the question. Can any of the reviews in a particular institution be trusted?
Hosts and Guests are encouraged to review each other post the checkout dates. The reviews are passed through a filter that uses Machine Language and pattern detection to make sure that no racism or profanity is being used in the review. Once that is done, the reviews are linked to the host’s and guest’s IDs and then added to the blockchain. Once it is in the blockchain, it is immutable
While the review system is definitely more transparent, we believe that it can be made a little better with slight modifications.
Let’s do a thought experiment.
If you are renting your house out to someone, and you have two choices: Alice and Bob.
Suppose Alice has 5 review from people you don’t know and Bob has 3 review but 2 of them are from people you know. Who are you going to favour?
Bob of course!
We believe that Bee Token can get a lot more juice out of their review system if they made these two changes:
- Give preference to reviews given from people who are known to the parties.
- Give the guest and the host a chance to know any and all mutual connections that they may have.
In SpringRole we are making the world’s first online reputation network powered by artificial intelligence and the blockchain technology. We provide a platform where people can view, share and get attestations on their professional profile, thereby creating a verified resume that they can share and use.
Attestation of a person’s skill happens via crowdsourcing.
People in the user’s network endorse his/her proficiency in a skill. The number of people endorsing it and their individual scores in the particular skill that they are endorsing lets us compute a score for each user per skill.
We believe that the Bee token can use something like to give more weightage to certain reviews over others. This will definitely enhance the user experience.
Draft White paper: here