Bogus hosts, fake reviews and managing reputation are big issues for online sites touting vacation rentals, but can blockchain solve the problem? Pamela Whitby has been finding out
Just a week after launching CryptoCribs, a blockchain-based, crypto-backed answer to Airbnb, the platform had its first African listing – in Kampala, Uganda. When co-founder Erasmus Elsner saw where the listing was based he was, given the rise of spam originating in East Africa, immediately suspicious. One of the biggest challenges for online lettings companies, and CryptoCribs is no exception, is identifying bogus hosts, and Uganda seemed an unlikely destination for somebody living in Switzerland.
As it turned out, Elsner had no need to worry. The property owner happened to be an Airbnb ‘super host’, and the reason for his listing on CryptoCribs was that he preferred to be paid in Ether. This would mean he didn’t have to bribe corrupt officials to keep the proceeds from his letting his apartment on an ad hoc basis!
Nevertheless, weeding out fake profiles, dealing with spam, and verifying reputation are among the puzzles that Elsner and cofounder Serge Birri have been trying to solve.
In April last year, an investigation by consumer association Which? said it had taken just minutes to create eight scam listings on Airbnb and TripAdvisor, and at no point was there any request for proof of ID or, indeed, any proof that the accommodation actually existed.
Of course, given the importance of managing reputation, firms like Airbnb are taking measures to rout out scammers. Airbnb, for example, now warns users to only make payments through its own platform, and requires two-step verification for account holders. It has also invested in artificial intelligence better detect fake listings. Yet, there is still a way to go, as the case of the ‘Shed in Dulwich’ proved. Perhaps less easy to achieve, but still worryingly possible, over an eight-month period Oobah Butler, a reporter from the magazine Vice, last year managed to propel a restaurant, which literally did not exist, to the top spot in London on TripAdvisor.
I would be lying if I told you that I’d figured everything out 100% yet
Elsner admits: “I would be lying if I told you that I’d figured everything out 100% yet.” But he is trying. At the moment, around 90% of CryptoCribs’ hosts are already on Airbnb, so they can be manually verified, but that’s just too time consuming. So Elsner has been working closely with the open source community to address the issue. Although it still very early days, one developer is apparently working on a video-chat app that integrates the Turing test, which was developed in 1950 by British computer scientist, Alan Turing to establish whether a machine’s behaviour could be indistinguishable from that of a human.
Getting reputation right
Airbnb may still have trouble with bogus hosts, but it’s done a pretty good job of building a brand that people trust. A recent Brand Finance Hotels 50 report, found that Airbnb’s brand value exceeds all but that of one hotel – Hilton.
Elsner understands the importance of this: “A crucial thing, is that you have a trustable source of information about the reputation of whom you are choosing to stay with.”
Currently, the idea is that the first ten transactions go through CryptoCribs’ platform. After that, the plan is to issue users with an access token that allows them to enter into a ‘smart contract’, a term first coined by computer scientist Nick Szaboin 1994,with each other. The reason for requiring users to transact a few times before they are given so-called ‘trusted nodes’ status, is that Elsner wants them to build a reputation, which they eventually stake through this smart contract.
A crucial thing, is that you have a trustable source of information about the reputation of whom you are choosing to stay with
The real innovation of blockchain is the smart contract, built on the Ethereum network developed recently by another computer scientist, the 23-year-old Russian-Canadian programmer, Vitalik Buterin. This allows transactions to take place without a third-party intermediary, like a bank, and for Elsner, who did his PhD thesis on financial disintermediation at the Swiss Federal Institute of Technology, if you consider that Airbnb has had to build banking relationships in 80 countries, then the potential becomes clear.
Although it will come, CryptoCribs has yet to move onto Ethereum because, says Elsner, “it’s not a plain vanilla solution”. And for moment, at least, the focus is on integrating CryptoCribs into Coinbase’s Toshi, an app for digital payments, which will “give us much greater reach”.
Elsner is keen to get it right, and developers at Coinbase, one of the biggest cryptocurrency exchanges, are also “providing a lot of support to make my product better”.
The longer-term vision is, however, to create a decentralised trust layer, through smart contracts, which can then be used for other applications and use cases.
But, Elsner wants to stress that, “since I never censor messages between guest and hosts, technically users can pay each other directly at any time.”
Something that is, and never will be possible, on Airbnb.
Not that Elsner is trying to launch the next Airbnb! Clearly! The ‘crypto-tribe’ he is targeting is a pretty elite crowd. It just so happens that 90% of them happen to be early adopters of the Californian platform that has effectively become now effectively another distribution platform for property managers.
Instead, the thinking is more along the lines of creating a Craigslist-Couchsurfing type combo, where there is an initial payment and vetting process to become a trusted member (node in the case of CryptoCribs), and from then on in it’s no fees and real community. Elsner wants to pay more than lip service to ‘community’, which he believes Airbnb is doing today.
With over 800 listings and growing daily, he’s starting to notice, however, that this is easier said than done, and particularly at scale. As emails ping in and more hosts try to sync their Airbnb calendars to the CryptoCribs platform, he knows that if this continues he may need to think about raising money. But, he is not in any rush, and certainly not to launch yet another overhyped coin.
I don’t mind being the equivalent of a corner coffee shop on the web
Already, Elsner has rejected a $1.5m offer for the platform, and have had TUI, the world’s biggest travel company, on the line exploring the possibility of listing its inventory. And aside from the Coinbase integration, both Google’s headquarters at Mountain View and its San Francisco office have been in touch, and want to support the platform going forward.
However, for the moment, thanks to successful investments in crypto-assets, the duo doesn’t need to make the platform work financially.
With the right partnerships, Elsner believes CryptoCribs but he isn’t deluded either. “It will definitely be hard. But even it doesn’t work out I don’t mind being the equivalent of a corner coffee shop on the web. I feel deeply and passionately about this product, which I built first and foremost for myself, because I feel strongly that it should exist in the world.”
Join us for an upcoming webinar on blockchain where Lennert De Jong, COO, CitizenM Hotels, Peik Martin, CIO, TUI (Nordic), Pedro Anderson, COO, Winding Tree, Erasmus Elsner, co-founder, CryptoCribs will be joining us
October 2018, Las Vegas