GOeureka and Blockchain-Based Service Providers Reshape the Internet
Echoing most technological advances, the internet was created to solve a problem. The world needed a better, easier way to communicate that was more democratic and equitative. This led to a veritable explosion of internet-based services and commerce which culminated in the dot-com crash. As a result, the ‘wild-west’ mentality that prized freedom of communication and ideas above all else was replaced with a more profit-oriented vision.
As service providers found that consolidation worked better as a business model, companies like Amazon, Kayak, and other centralized businesses took off. However, this quick boom in convenience and online efficiency had an unintended side effect—market stagnation. As the centralized model becomes more entrenched, new stakeholders are constantly added to the supply chain that extract value, profits, and efficiency at every step.
Blockchain technology—the backbone of most cryptocurrencies—offers a potent alternative for the model. Built on the concepts of disintermediation and decentralization, it enables business models that emphasize P2P communication and the elimination of middlemen. Companies have already started using the new infrastructure, with service providers like GOeureka--a blockchain-based hotel booking platform--leading the way. The company has shown that it’s possible to offer a service that reduces intermediation and democratizes the platform, without also raising costs or removing utility. With an already strong record and immense potential for the future, blockchain is confirmed as the next innovation stepping stone.
The Great Unequalizer
The internet’s lofty initial goals notwithstanding, a drive for convenience and streamlined experiences has made centralization the dominant business model. Major companies control substantial portions of service chains, imposing inefficiencies that a more open market would not otherwise permit. Amazon, for instance, controlled nearly 44% of all US eCommerce sales, accounting for 4% of the entire retail sales market in the country during 2017 according to a study conducted by One Click Retail.
Consumers, who largely prize speed and convenience over other concerns, tend to ignore the less detrimental effects centralization has fomented. The centralized model encourages newer businesses to simply adopt the status quo, allowing the fast establishment of services and a quick turnaround to profits, but it is less sustainable long-term. Current paradigms encourage decidedly anti-competitive behaviors that a captive audience and market can’t avoid (such as Facebook’s data collection policies, for instance). The problem is similar across industries as well.
In the travel and bookings sector, online travel agencies—aggregator sites like Kayak, Travelocity, and Hipmunk—control almost 70% of all online hotel bookings. On the surface, this is not a problem; users need a fast solution to plan their travels, and these websites offer a service to meet that demand. The issue is that these services are so convenient thanks to several intermediaries, most of which extract value from the process rather than add it. The resulting situation impacts hotel and airlines’ profit margins significantly, but can’t be abandoned without also abandoning an enormous audience. Hotels can attempt to compete on their own, but it’s unlikely they’ll be able to sustain themselves without a strong enough infrastructure and significantly larger marketing budgets.
However, GOeureka is looking to disrupt this unsustainable model. The company is focusing on hotels, a high-value and high-potential industry, and seeks to remove the middlemen contributing to its widespread inefficiencies. Per CEO Manraj Rai, the goal is to “Provide an affordable and efficient platform for hotels and consumers to directly engage and transact with each other, removing the inequitable commissions to OTAs that ultimately decrease hotels’ margins and increase consumer prices.” This new dynamic will see hotels gain access to previously-locked demand, without being held hostage by the centralized entities who offer nothing more than the illusion of choice. Even the music industry can benefit from such a deal, with platforms like JAAK looking to offer a path that skirts the restrictive and expensive process of securing creative rights to original content and art.
Blockchain Punctures the Bubble
This is not to say the current model is completely useless. Aggregators offer small businesses an opportunity for exposure and access to a larger marketplace. Nevertheless, there is a price to be paid in the form of commissions, forced pricing models, data usage terms and other costly concessions. In the end, this results in operational inefficiencies that can’t be remedied. Removing this model is at the core of the change blockchain promises to bring.
Per research firm Frost & Sullivan, the available addressable market for blockchain is expected to hit $3.21 billion in the next three years. For the bookings and travel industry, as well as others, it represents an untapped new frontier. The benefits speak for themselves: the ability to shake off intermediaries and establish direct B2C communication; lower fees and costs; and a model that removes inefficiencies.
In the real world, blockchain has already demonstrated its potential in several industries. The advertising industry, long known as a highly gated market, is seeing its walls slowly surmounted by companies like BitClave. The platform’s search engine allows consumers to decide who gets access to their usage data and empowers them to monetize it, while giving marketers access to more precise, voluntary information. For the cloud storage industry, which is still largely controlled by a few major companies, newer entrants like Sia and Storj are upending the idea that services must be costly due to their inherent hardware needs. Sia’s token-based system lets users both contribute to and take advantage of the available cloud storage ecosystem, creating a closed value loop. The Sia network borrows users’ empty PC memory and pays them for connecting it to the blockchain, and letting others store their fractionalized digital assets in a more secure manner. With the SIA coins that they earn, storage contributors can use the network themselves or exchange them for fiat money via exchanges, thus closing the value loop.
Bringing Blockchain to Bear
The technology is still in its infancy despite bitcoin’s near decade of existence, and it is likely to be the next phase of technological revolution. From the democratizing goals of the internet which has fallen somewhat short, to blockchain’s decentralizing potential, the decentralized ledger will change the way online business is conducted. Even so, it requires buy-in, and which in turn obliges undeniable proof that it is a better option for all participants over the status quo. With a user base that grows with each day, blockchain is already cementing itself as the gateway for a bright future of innovation.