Opinion: Airbnb needs to watch its back, as blockchain disrupts rentals

Photo credit: Keresi72.

Airbnb has changed how people find shelter. Since its rocky start, the platform has risen in popularity among travelers and long-term renters alike.

While the platform has accomplished its goal to disrupt the rental industry, it’s still just a more streamlined version of a stale business model. To Airbnb’s credit, they’ve removed the middlemen from a traditional rental agreement and sped up the verification and payment processes. This, by itself, created a large “couch surfer” market. However, what the company didn’t do was change the inherent business model: landlords renting to short-term renters.

There is still much room for improvement, and blockchain is helping to flip the status quo once more.

Blockchain and the rental economy

Among other things, blockchain allows companies with a digital service to offer it in a new way. Instead of hosting users on a single server, blockchain applications can draw power from a distributed network of participants. It also uses cryptocurrency as an incentive to run the network and allows participants to use the platform to pay for other services.

The technology has astounding implications. This is especially true for business models that involve the exchange of money for services.

The rental economy could find itself in a particularly vulnerable position with this potentially disruptive infrastructure, as there are still many complications and obstacles in even the most progressive platforms like Airbnb.

Airbnb leaves a lot to be desired

Airbnb is designed for more short-term stays and is a competition to hotels more than property leasing/renting agencies. However, some have booked Airbnb stays for months on end. These situations aren’t as stable (nor as cheap) as they should be.

For hosts, the lack of a security deposit system (besides the platform’s slow and unreliable resolution process) puts them at undue risk. When a property is damaged, it can be hard to get an accurate timeline and know which tenant is responsible. This gives Airbnb no choice but to offer bad compromises instead of reimbursing the host fully. Disputes are also left to the discretion of individual customer service representatives who may not be the most equitable.

Getting their listings noticed is another problem hosts have to deal with, as the platform has an unclear and opaque algorithm of presenting listings on their local page.

The platform has also been under threat of legal action in certain jurisdictions for what some government officials view as anti-competitive activities. The company has faced the wrath of policymakers in Barcelona and Amsterdam. Japanese authorities have also recently raided the company’s local offices on suspicion of antitrust law violations. Speculations that the company actively attempted to prevent users from listing their available properties on other platforms have also put them squarely in the crosshairs of regulators.

Startups already at work

Some blockchain companies are already looking to capture a piece of the rental market from services like Airbnb and disrupt the real estate rental ecosystem even further.

Rentberry is one such company. Its smart contract functionality gives tenants and landlords a portal to interact with each other remotely but in a more verifiable manner. Smart contracts, in this case, can handle transactions like rent, bills, and security deposits. This makes the agreements clearer, as the conditions surrounding these are recorded on the blockchain ledger. The platform also allows tenants to crowdsource some portion of their security deposits from other users. This will then be repaid with interest using cryptocurrency.

Stayawhile is a blockchain platform that takes advantage of similar capabilities. It hosts a network of furnished, luxury apartments for medium-term rental. Using STAY tokens, the platform facilitates a global renting economy but focuses more on smaller markets like New York.

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