Let’s start by looking at Equifax. This is a U.S. company, and one of only three, that provides credit reporting on American citizens. Last year there was a massive security breach, which meant that the personal information of at least 143 million was in the wrong hands.
The problem here is that your personal data is centralised when these big credit-rating companies have it, and that means it can be manipulated; by them or by other parties through theft.
If Equifax stored consumer data on a blockchain-based system, the information would not only be better protected, the company itself wouldn’t be able to mess around with it in any way.
The blockchain uses cryptographic hash functions that both encrypt your data and track historical changes to it. Therefore, at any point in time, if any piece of your data is tampered with, you personally will be able to immediately see where and when the information was changed.
However, security isn’t the only advantage decentralised storage of data can bring. The communities using decentralised ledgers are incentivised to show more respect and this contributes to more efficient operations.
The incentive of having a stake in the business
Some platforms, especially those decentralised ones that have utility tokens, engender a sense of community, because every person involved has something to gain by making sure the platform runs for the benefit of all. It also means that they literally have a stake in the company just through token ownership. Also, all the community members can see how a platform uses their personal information and the steps taken to protect it.
There will always be bad actors in any company, and sharing economies are no different, although you’d think that in this particular sector, people are less likely to take advantage of other community members, but we’d be naïve to believe everyone really gets the idea of ‘sharing’. However, in decentralised communities, any bad actors are actively disincentivised, because if things go well, the stakeholders all benefit. If a bad actor contributes to making the company less successful, then they are shooting themselves in the foot.
If you take the example of Uber, which is s centralised company; none of the Uber drivers have a stake in it. They have no incentive to act in a way that makes the company more successful, because all the benefits of success go to the founders and shareholders. If Uber was a decentralised business, with drivers having some form of stake in it, it would be a very different story.
We may see an increasing demand for companies to adopt a decentralised approach, because ultimately it benefits the consumer, and they could be the driving force that increases the use of a new decentralised business model.