blockchain reputation system

A Peer 2 Peer Blockchain Reputation System For Travel

Blockchain FinTech


The P2P economy is a market place economics that allow consumers to engage in monetized exchanges through peer to peer service. People market their excess resources in order to make maximum use of existing resources and adjust supply depending on the current demand. This economy is seen in peer to peer lodging sites like Airbnb or car booking portals such as Uber. The P2P lodging industry is undergoing huge transformation but the breaking point of this industry lies in how well it manages its users’ reputation. Trust between the buyer and the seller determines whether a sale will take place or not. Documentation of users’ every activities and transaction can be a challenging task, but this can be made efficient by use of a blockchain reputation system.

A blockchain system offers a mechanism to save users credentials. This authenticates users’ identity and reviews their past behavior. Moreover, blockchains create a system that is tamper-proof and an honest way of recording and saving user’s reputation. Therefore, it creates a secure system that offers information with almost 100% accuracy. This builds trust and reputation of P2P lodgings. P2P lodging sites are already experiencing steep growth, but the use of a blockchain system can increase their rate of growth even further. This case study will evaluate the opportunities that blockchain systems have on sharing economy sector especially how they can increase adoption and growth P2P lodging sites. This study will first analyze how P2P lodging sites operate and how the incorporation of a blockchain system can make them more efficient.

P2P lodging sites creates a platform where guests can post the apartments they want to let. These posts include photos of the apartment, a short description, the pricing and the host’s contact details. When a potential guest signs into the site, he explores the different listing until he finds what matches his interest. Then, he initiates an online conversation with the host to access his credibility and the quality of the apartment. The messaging that ensues also assists the host to find out about the guest’s background. After both the guest and the host reach an agreement, then the guest checks into the apartment for the duration of the payed stay. Most P2P lodging sites require the guest to send the entire deposit of his payment before checking into the booked apartment. The money is then disbursed to the host 24 hours after the duration of the stay is over. The guest is allowed to leave a short review of his experience during the stay at the listing on the site. But this model has so many deficiencies. First, a lot of time is wasted when the guest and the host are having the initial messaging. More than 24 hours may elapse before the host sees the message and reply back. Secondly, it’s very difficult to assess the quality of the guest, the nature of the host and the conditions of the apartment. While past reviews may provide these imperatives of the host, he doesn’t have the same information about the guest. That notwithstanding, most reviews are not factual, with most negative reviews deleted or hidden. Also, paid reviews are common in many online market places and this can often lead to erroneous conclusions. Hence, a lot of discussion has to take place before the guest and the host can gain trust of each other and complete the transaction.

These challenges may be reduced drastically with the use of a blockchain system. A distributed record of every guest and host activities on the site are documented and kept tamper free. With every transaction, the record is added to every distributed database which has to achieve congruency with the existing data. Blockchains can introduce efficiency in how a guest chooses his host. The reputation of the host can be accessed more quickly through a quick review of his past activities. This can eliminate the time spent in message conversation to get this information. Also, the host can be able to trace the conduct of the guest through the same process. Authenticated Users government IDs can be stored in the blockchain database. These IDs can be used to link with the users other online accounts, eg social media accounts like Facebook or even other personal information like work place and place of residency. This creates the sense of online identity that is at par with the individual’s real life persona. Consequently, trust levels between users increase. Blockchains can also improve the online payment model. The users are required to re-enter their credit card details every time they need to book an apartment. This can be eliminated by tying every user payment details with his authenticated ID. This can reduce cases of forgery since the information has to be consistent with details given in the past. Moreover, payments are only released automatically to the host after every part of the digital contract is fulfilled. Blockchains systems can increase of credibility of the reviews left on the site. First, reviews cannot be accepted unless they are digitally signed with the associated IDs of both the guest and the host. The reviews must also be authenticated by past historical paid transactions and stay in the apartment to be reviewed. These reviews are available for every user to see and can help shape the reputation management of the P2P lodging sites. This can lead to accelerated growth as the users get assured of their security with a verified reputation management system. Thus, the potential of blockchain is huge in peer to peer lodging sector and the accelerated growth will only be possible with the trust of users achieved through a distributed data recording system.

The use of blockchain reputation systems has the potential of disrupting the hotel industry through the adoption of P2P lodging. This could lead to a shift in pricing and supply dynamics. This could also have great impact especially on leisure oriented hotel and low charged hotels that focus on people in the lower earning bracket. But the system may have little effect on high end luxurious hotel and suits whose customer pay for the exclusivity, class and quality that P2P lodging sites cannot guarantee. That notwithstanding, blockchain tech could potentially lead to a huge adoption of P2P lodging. This can be driven by the fact that P2P lodgings site have significantly increased the supply of the hotel industry. Also blockchain systems use in the P2P lodging can lead to a reduction of market competitors due to the low room costs. In time, blockchain systems will continue to improve users identity and reputation management



(Source: Goldman Sachs Blockchain Research Report – Putting Theory into Practice).