How Decentralized Technologies are Transforming Platform Economics

bloxMove | Harry Behrens | Nov 11, 2021

Decentralized peer-to-peer networks and platform economics

Blockchain, Distributed Ledger Technologies (DLT) as well as other decentralized technologies, such as Decentralized Identifiers (DID) provide technical mechanisms which lend themselves very well to building fully automated transaction platforms which can manage financial transactions from contract signing all the way to financial settlement without the need for intermediaries. The underlying peer-to-peer (P2P) principles, in which all participants are equal peers and operate identical nodes provide a technical analogue to a “commons” technical infrastructure which provides the transaction execution layer to those wishing to conduct decentralized commerce.  Decentralized platform economics are revolutionizing the way services and delivered, consumed, and settled.

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Blockchain-powered cryptographic networks (‘Cryptonetworks’) lend themselves very well to peer-to-peer governance models in which a common resource – the Cryptonetwork – is community-governed. A major leap between the world-wide web as we know it, is that cryptonetworks have a secure and trusted mechanism for incentivization and value transfer known as ‘token-economics’.  Token payouts are calculated as part of the smart contract layer and securely transferred as part of the Blockchain’s essential function, namely securing consensus. There is no need for an intermediary to manage and enforce terms and conditions, invoicing, payment and settlement.

bloXmove: a decentralized platform for Mobility as a Service (MaaS)

As an example of how this can be applied to real-world applications, take the market for urban mobility.  The “product” or rather “service” urban mobility offers, is neither this car nor that scooter, but rather seamless travel through a city – mobility as a service.  Users should be able to roam across services delivered by different operators. This means they only register their identity and credentials once and these verified credentials serve to unlock any service provided by any service provider in the ecosystem – this being the paradigm of “roaming”.  By using decentralized technologies such as Decentralized Identifiers (DID) and Blockchain technologies the complete service lifecycle can be orchestrated, executed and settled through a common decentralized infrastructure: bloXmove.

Cryptonetworks are digital communities of self-sovereign peers

According to the International Cooperative Alliance a cooperative is:

“…an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise.”

“In a cooperative ecosystem, companies interact with each other based on a digital trust infrastructure. The members can network their services and thus temporarily access resources of competitors. The bottom line is that they can better meet the customer needs. At the same time, all players retain their independence, their data sovereignty and have the same market opportunities.”, Thomas Müller, evan.network

Cooperatives have a long history. In their formalized and legal form, they appear in the 19th century.

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“These legal entities have a range of social characteristics. Membership is open, meaning that anyone who satisfies certain non-discriminatory conditions may join. Economic benefits are distributed proportionally to each member’s level of participation in the cooperative…(Wikipedia)”.

Prominent examples of cooperative business networks are:

• VISA, the well-known ubiquitous credit card, which in its pre-IPO form was a cooperative of banks who cooperated to create a new interoperable, customer-facing financial product.
• Star Alliance, which is not a cooperative in the legal sense of the word but rather an “alliance” of cooperating airlines.

See: 

How blockchain and cryptocurrencies can help build a greener future

CB Insights report features over 50 sectors Blockchain is transforming (beyond just banking)

Cooperative organisations are jointly governed by those who use or consume the cooperative’s services, hence:

• All members have an interest to grow the cooperative and make it profitable.
• The cooperative is built to provide services which enable the businesses of each community member and therefore provides direct benefit to each and all.
• The revenues of the cooperative originate from fees by the cooperative members.
• The revenues of the cooperatives belong to the members of the cooperative.
• Customer relationships and therefore access to demand and liquidity stays with the individual members.

This creates a self-reinforcing loop of checks & balances. Members of a cooperative are incentivized to fund the cooperative with their fees while at the same time being in control to keep those fees within a range sustainable to their individual core business.

A common infrastructure with the goal of achieving net-zero carbon emission

Here I quote what to me has become a manifest and gave me the inspiration for the name of the company I have the privilege of co-founding: Power & Mobility Ltd.:

“Making the EU the world’s first climate-neutral economy will require more than just an energy transition. To cut CO2 emissions by 2050, many sectors will need to make far-reaching changes. Two sectors that play a key role in society have the leverage needed to do this: power and mobility.”

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By creating a common infrastructure across these two sectors – sector coupling Power & Mobility – balancing of renewable power grids using vehicle-to-grid (V2G) technologies has become possible. By the economical and regulatory standards of Europe it should be obvious that such a platform can, may and should not be a centralized platform at the mercy of one centralized, profit-maximizing hyper-aggregator.  Rather, such a platform needs to be thought of, built and operated along cooperative mechanisms.  Decentralized technologies lend themselves beautifully to this!

Conclusion: Decentralized networks provide a commons for commerce to digital cooperatives

The last twenty years have shown us how software indeed is eating the world and have brought powerful new actors to the world of international commerce. Software platforms, have now entered a phase where they constitute a similar danger to competition and market balance as Standard Oil did in the early 1900s. Politicians and regulators are recognizing this and are addressing it with the means at their disposal.

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Blockchain and other decentralized technologies have emerged over the last ten years and provide a paradigm by which new cooperative platforms can be built, combining the advantages platforms offer; but with a more sustainable balance of power among market participants. Tokens provide a mechanism to program the flow of money into community operated and highly secure commercial platforms.  Combining the technical advantages of decentralization with the purpose and incentives of cooperatives, can create a powerful counterbalance to centralized platforms. As well as unleash new business models in which power does not necessarily accrue to centralized market makers but is jointly held by a community of equal cooperative members.

Authored by:

Harry Behrens, Chairman and CTO of Power & Mobility, bloXmove.com, founded and headed the Daimler Mobility Blockchain Factory until May 2021. He is a veteran Blockchain evangelist since 2012. In 2016 he co-founded the DFS Blockchain swarm and initiated the development of the smartVIN® Blockchain platform. Before starting his new position as “Mr. Blockchain” for DMO AG, he was Head of IT for Mobility and Digital Finance for MBAFC (DFS China). Harry has a Master (Diplom) in Computer Science from the TU Muenchen, with a thesis on Neural Networks, and a PhD in Information Engineering from the University of Tokyo with a thesis on Distributed Artificial Intelligence. He speaks six languages fluently and is trying to learn Mandarin Chinese. In his private time he enjoys practicing languages and reading about history.

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This article is featured in NCFA’s digital magazine, Fintech Confidential (Issue 4 Oct 2021). Click to read the latest thought leadership, insights and trends about Fintech in Canada:

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