Two Peers in a Pod - a Peer to Peer Marketplace breakdown
This is Hannah. She’s my totally fab best friend and we share everything. You could say we’re like two peas in a pod… or two peers in a pod.
Welcome to your short peer to peer breakdown!
Okay, that was a little cheesy, but I promise this content is actually applicable (and can go far beyond blockchain). I’m going to walk you through a peer to peer marketplace by explaining a very successful blockchain company - Power Ledger.
Power Ledger is “the world’s leading peer to peer marketplace for renewable energy” using blockchain technology. Let’s break that down:
What is a peer to peer marketplace?
Peer to peer (P2P) essentially temporarily connects people who are looking for a “product” with other people who already have that “product” - but aren’t using it. Think about it a bit like Airbnb. If you’re the consumer you are the one who is going on vacation and needs a place to stay. On the flip side, let’s say there is family that lives in the place you are vacationing that has a daughter in college. That daughter’s room is just sitting empty - not being used. So, the family agrees to let you stay in her room for a cost. You and the family are sharing the economy - you’re looking for a bed; they have a bed. It’s a win-win.
Now, imagine that instead of looking for a bed, you’re looking for electricity. For sake of the scenario, let’s say that your neighbor is super eco-friendly, and has a bunch of solar panels on their house - so many solar panels that they don’t even need all of the electricity they generate! There is no reason that electricity should just go to waste, right? So why not use the neighbors “leftovers” by giving them a little $$?
BOOM. We’ve got a peer to peer marketplace for renewable energy!
How does blockchain fit into a peer to peer marketplace and more specifically, Power Ledger?
In a true peer to peer market, there should never be an intermediary (3rd party) who dictates terms/conditions or takes a cut of the payment. In peer to peer marketplace systems, the only way to keep them successful is to have a sense of security and trust. Uber, another peer to peer example, needs to make its riders feel safe when it comes to the drivers, cars, etc. or no one would agree to get in the car. Therefore, you often have to have some sort of governance, which some may argue takes away from the true peer to peer model as it no longer just a buyer and a seller, but also a person who “governs.”
Ta da! Blockchain gets rid of that person who governs! Being 100% secure and transparent the transactions between the buyers and sellers are obviously clear, making it a true peer to peer marketplace. This makes up one part of Power Ledger’s huge success.
Power Ledger also uses something called tokens… but that’s a discussion for a different day.
Uber and Airbnb aren’t blockchains… how and why is Power Ledger?
To be a peer to peer company, the company does not need to be a blockchain company. Just because it is peer to peer does not mean there are not “extra” fees (remember how we talked about the need for governance and security)… the fees that make companies like Airbnb, Uber, Poshmark, and more their money. If you’ve ever booked on Airbnb, for example, you know there is a service fee. The service fee does not go towards the host nor does it go towards the customer, so where does it go? We can probably guess at least a bit to Airbnb.
When using blockchain, however, there is no room for miscellaneous fees because there are no intermediaries. With Power Ledger, for example, the customer gives the supplier (the person with the extra power) the $ in real time. Power Ledger’s revenue streams come from the sales of their technology and the commissions - they are NOT a middle man taking a cut of the pay. In a sense, blockchain is a more holistic way to achieve a peer to peer market.
And yeah, while we’re at - reduce, reuse, recycle. Hug a tree. Use solar panels. All that good stuff. As a wise Paris Hilton once said – “That is Earth. It’s hot. Don’t pollute.”
P.S. Peer to peer marketplaces rock regardless of if they use blockchain technology or not!! Like hello, Uber you have SAVED my life! xoxo