Services Based on Geolocation in the Age of Blockchain: Scenarios

16 Aprile 2020 0

The great power of the internet platforms whose actual services rely on geolocation, such as Uber, Google, Airbnb and Amazon, risk being redimensioned by the arrival of blockchain.

The blockchain “system” promises to be able to redimension to a large extent the “power” of the internet platforms which base many of their current services on the geolocation function. These sites include companies like Uber, Google, Airbnb, Amazon, Alibaba, just to name a few.

In the future, our personal identities will also move online and presumably, through blockchain, the tracking of professional credibility will be performed independently from the platforms offering those services today. This will hopefully increase the degree of reliability of that information and provide guarantees which will become transparent and accessible to everyone.

In the Beginning There Was Geolocation

Historically, the most significant technological innovations have also been the source for many economic revolutions, opening the horizons for the development of new, never imagined scenarios. In turn, these new economic scenarios draw new parties to the scene, whether workers or entrepreneurs, whose very arrival redraws the map and alters relationships between social groups.

In the internet age, such relationships have taken on virtual forms in addition to physical ones leading to the enlargement of socio-economic networks to a global scale.

In terms of market, this process has upended the traditional perspective: having the right “product” is no longer as important as identifying the consumer most suited to it. This is because connections spanning the globe have had the incredible effect of making even minor markets appetizing because they increase the opportunities for market presence: a small number of a peculiar kind in a limited context and in a limited area may, on the contrary, become significant, not proportionally but rather numerically, when taken on a larger scale. A substantial amount of solid data generates statistics. These, in turn, lead not to mere predictions, but rather to a scientific approach of a sort, and allow us to speak in macro-numbers with a certain degree of confidence.

Let’s look at a concrete example of what we have said so far: the invention of geolocation. Although public opinion partially underestimates the power of such technology, this function still represents a spark of propulsive energy, like that of the steam engine or even of electricity.

In the past one trusted in the sky and the stars to determine one’s position. In reality, there were only a few who knew how to do so, whereas today, thanks to the widespread use of GPS systems across various devices, anyone can identify with a modest degree of certainty their location. That also means the opportunity to be within reach of an infinite array of services, and therefore products, specifically tied to one’s own geographical location. Google maps can show the closest restaurants, pharmacies, museums and so on. Similarly, at that moment we, as potential clients, are important simply based on where we are; any action we take causes us to interact with real-life business establishments.

Geolocation, therefore, cannot be entirely removed from the market that it is linked to. To give a widely-recognized example, think of Uber’s platform, which has masterfully been crafted to match these demands with these opportunities.

Uber, a Success Story

The company was born in 2009 out of an idea from Garett Camp and his collaborator Travis Kalanick. In the beginning, it was named UberCab and then later it simply became Uber. Set up with an initial investment of only 250, 000 dollars, its success was immediate and in 2010, just one year later, the start-up was worth 4 million dollars.[1]

The mission and goal of the company lie substantially in providing passengers and drivers the chance to contact one another through a mobile application. In addition, clients are offered the opportunity to see in real-time the position of the auto they have booked and, afterwards, to leave feedback on the quality of the service.

The company’s platform went viral and its success was exponential. Thanks to the improvements made to its smartphone application, dated 2011, the company attracted large investors who increased the capital by dizzying figures and so, in a very brief time, Uber recorded planet-wide development and a success which made history: in 2017, so just 8 months after its birth, it was operating in 77 countries and in 616 cities in the world. In 2019, its IPO brought in 8.1 billion dollars.

But what effectively is Uber’s business and what value does it have? Surely it has an effective ability to manage, and surely an exemplary administrative structure, but in two words its real treasures are information and connections.

Beyond the Sharing Economy

These two concepts, which in many ways characterize the new era developing out of capitalism as we have always known it, share a base structure, that is to say the internet. Initially one spoke a lot about the sharing economy but, to say the truth, the monopolies which the internet platforms have constructed bit by bit for themselves run the risk of betraying the expectation of “sharing” which forms its very own name.

The physical property does not really enter into the capitalization of these giants: Uber puts other people’s autos on the net for those who are looking for urban mobility services; Airbnb puts other people’s homes on the net for those who are looking for places to book; Amazon, Alibaba, and Ebay put other people’s products on the net for those who want to purchase them; Google puts other people’s information, and so on.

The novelty, as opposed to the past, is that the value of these companies doesn’t correspond to material assets (machinery, patents, production, etc.) but rather to the intangible assets of the platform which, with the aid of Big Data – or rather through the collection of information which we generously leave behind –, is designed to create connections and facilitate interactions between those looking for services or products and merchants or operators furnishing them.

What is the role of these platforms in terms of input and output? In the digital age, their structures permit the transmission of information, classified by “type”. As for input there is the identification of the user, that is to say the one searching for a product (taxi service, a vacation house, an air-conditioner delivered at home and so on), a starting point determined by the packets of data which we, perhaps not even entirely consciously, leave when performing internet searches and which are then processed by Big Data providers. Registering for a certain service endows the client with a sense of “belonging” and signing up to be a member of a specific platform ensures the suitability of the service to the client.

But, in relation to such globally widespread systems, what guarantees are there for the information about the services provided and those who provide them? In substance, the founding principle is that our economy is characterized numerically, and thus statistically –  with the exception of a limited percentage related to the actions of the truly dishonest, those whom Carlo M. Cipolla calls the “perfect bandits”[2] – by the need to survive by repeatedly performing a service in an acceptable way. From this economic standpoint, the feedback and online tracking systems can give a boost to, or on the contrary, may harm our futures and individual identities as tracked by those very same platforms.

The Importance of Feedback

But is this completely true? And what are the real guarantees for end-users? Sticking with Uber as an example, even as a pure simplification, there is careful screening during registration, with the aim of verifying, within appropriate limits, personal identity and registering as much information as possible about the auto and driver. In reality, however, the monitoring and the quality of the service provided will, in fact, be entrusted exclusively to the subsequent feedback entries left by the clients who comprise that particular driver’s history. At this point, it is worth mentioning the report published by Uber which refers to the number of accidents and instances of deplorable behavior which occurred during service over the two-year period of 2017-2018. This report is a reproach of the personal identification process upon entry since it is not a thoroughly exhaustive security check a priori. This assessment is valid for just about any platform one belongs to since the same processes of checks and guarantees apply to all.

Taking for granted that there is a connection between the client and the provider by geolocation, let’s concentrate on the second value that the platforms claim to offer, that is to say credibility: if I am trackable through Uber then I am a driver with credibility; if I am trackable through Airbnb then I am a landlord with credibility; if I sell through Amazon, Alibaba, or Ebay I will be a credible merchant. In reality, as we have already said, the monitoring and the quality of the service provided are linked to the results of the client feedback, which constitute the personal history and the real profile of the driver, landlord, merchant or service provider.

Another example can be found in the world of Ebay. Even in the second-hand market where the parties are not necessarily professionals, credibility is everything and credibility is built through the overall record of behavior which the platform collects and displays publicly. The untiring attempts of the sellers, especially professionals, to shelter themselves from negative feedback clearly attest to the essential importance of this criteria.

Once again technology is breaking up yesterday’s certainties and is opening up new vistas. The blockchain “system” may make the scenarios change; new consortiums for social and professional groups may be born. These may be organized around the links of blockchain, remaining open and public, and in some way this will be able to limit the overpowering reach of the internet monopolies.

Obviously, the pros and cons of this situation remain, because the Achilles heel of the system that is being outlined is that of a real community for supervision but, due to its complexity, this aspect requires a whole chapter of its own.

Giovanni Perani

[1] Cfr. A. Lashinsky, Wild Ride: Inside Uber’s Quest for World Domination, Portfolio, 2017

[2] In C.M. Cipolla, Allegro ma non troppo, il Mulino, Bologna 1988, passim.