Trust is the foundation of all economic transactions, in the real world and on the Web. The crucial difference between the two is that in the real world, we have ways of judging whether our counterpart is trustworthy, whereas on the Web, we usually transact with people we have never met. Especially in the growing sector of peer-to-peer (P2P) platforms, users share very valuable assets such as houses and cars, exposing them to higher risk than in classic e-commerce. According to a recent study by Campbell Mithun, trust concerns are the number one barrier to sharing on collaborative consumption platforms. This indicates that as the sharing economy grows, a foundation of trust between users is necessary to lower their perceived risk of participating in P2P marketplaces. 

I investigated this topic further in my bachelor thesis titled Building Trust in P2P Marketplaces: an Empirical Analysis of Trust Systems for the Sharing Economy. I received many interesting insights by interviewing people from across the globe such as researchers, social innovators, P2P platforms as well as startups attempting to create online trust systems. 

A number of tools that help users judge each other’s trustworthiness online already exists. Five-star rating systems as popularized by eBay are a very common type of feedback system. These ratings are often accompanied by user comments and reviews to provide descriptive information about a transaction. On platforms such as Taskrabbit, identity verification by phone and email as well as background checks are tools used to ensure safety. Further tools that verify identities and let users tap into their existing social networks when joining a new site are social media connect buttons (for example Facebook Connect). Several startups such as TrustCloud, Briiefly, Legit and PeerTrust are attempting to merge these tools into one trust system that allows users to take their online reputation with them wherever they go. 

Apart from these tools my findings suggest that online communities can also foster trust. According to an interviewee, tight-knit communities of people with similar interests, tastes and values can function as a type of trust system. This is the case at the German ridesharing company Carpooling.com, where most users have in common that they are current or former students. 

Guest Blogger: Francesca Pick 

Francesca studied Communication and Cultural Management at Zeppelin University in Friedrichshafen, Germany. To read more of her research, please visit the full thesis.

(Source: tradepal.com)

Just in case you have been procrastinating on your spring cleaning, ButtonedUp has created a list to assist you and offers advice on hosting a virtual yard sale. While Tradepal provides a great service when de-cluttering, it is also useful when:

• moving
• selling art 
• reducing your fashion collection
• upgrading to the latest electronics
• reducing your collection of videos
• trading baby items, and much more

The best features include the ability to list a variety of items, share them with connections who, by the way, use their ‘real identities’, and this process requires only a minute from loading the image to completing the listing. Yes, only a minute!

As varied as the items offered by each user, are the variety of ways for users to transact. While the traditional buy and sell transaction is one option, users may also offer giveaways. For users seeking a trade, they may barter for items by selecting Make Offer to entertain a trade for items listed within their tradepal profile, or maybe a trade plus cash. It’s up to the two parties to decide and the transaction is done privately via their tradepal dashboards.

To read the list, visit ButtonedUp offers 10 easy spring-cleaning shortcuts

Trust is the building block of any peer-to-peer relationship. The emergence of a universal online reputation index will be instrumental in the growth of collaborative consumption. 

The excellent piece “Aggregation Not Algorithms Is The Key To Establishing Trust Online” by @kusti raises a key debate. 

The Internet is winner-take-all: this debate almost reminds us of FBConnect vs. OpenID in the online identity war of 2009.

It’s not about aggregation vs. algorithms, it’s about aggregation within the algorithm of choice.

It’s not about transparency, it’s about whose algorithm is dominating.

It’s not about the risk of gaming an algorithm, it’s about the ability of the keeper of the index to be constantly engineering the algorithm while everyone is trying to game it.

It’s all about PeopleRank.

Does the general public argue about the semantics of credit scores? They actually follow suit and work to better their scores as it impacts their financial well-being. Their “social score” will impact their online reputation and allow them to participate in the sharing economy.

When it comes down to building an index, the Dow Jones Industrial Average is a good example. It’s a price-weighted average index of the 30 largest publicly traded companies in the United States. The reputation index that will win it all, is the one that will be able to select the most relevant types of actions in the social web, and weigh them in a secret algorithm reflecting their relative importance.

That’s serious big data engineering, and this exercise cannot be done in a collaborative way by multiple players: one dedicated startup, whose core business is to build that complex algorithm will dominate the space. 

Blog entry by @karimguessous

Source: http://www.flickr.com/photos/suteki/475093875/

(Source: tradepal.com)