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Could Ethereum Make the ‘Decentralized Upwork’ Happen?

Working online as a freelancer imposes many risks. Your identity could easily get stolen, your hours and pay aren’t guaranteed, and sometimes the simplest change could put you out of a job.

But the online freelancer industry is a lucrative one, and it’s taking off like a rising tide. Upwork (a merge of oDesk and eLance) reported $941 million in freelancer earnings in 2014 alone. The entire industry saw $3.2 billion that year. Upwork expects even greater growth — they predict the online freelance industry will grow to $10 billion within six years.

Without a doubt, there’s a big potential in this industry. Yet, it seems Upwork is failing to capitalize on some of the larger opportunities out there. And one would ponder, could Bitcoin and Bitcoin-like technologies fill the void?

The Problem with Upwork

Recently freelancers received an email about a change in the way fees will be charged to Upwork freelancers. Until now, you would lose 10% of what a client paid you to the site. Now it works a little differently — you pay 20% on the first $500, 10% on $501 to $9,999, and 5% on $10,000+ but there’s a catch: these fees are charged on a per-client basis.

This has a major implication on the average freelancer. Take a logo maker for example, they typically handle assignments for a half a dozen clients per day. In such a case, the 20% fee would be charged more often than not. This is a fifth of their pay gone to fees and that on its own is a reason for competition.

But really, what can Ethereum do?

Ethereum DApps – How Do They Work?

So an Ethereum DApp is simply an application that’s built on the Ethereum network — which gives you Solidity, a programming language made to simplify things for developers. This is all tied into the Ethereum network as, even if you create Ethereum-based tokens, you have to pay ‘gas’ fees with Ethers.

It’s a lot like the Bitcoin network. But the ability to build DApps makes for a more decentralized platform; yet, you can still implement a business on top of a DApp and a freelance marketplace is not out of the question. If you wanted, the business could be partially or fully automated and you could set the transaction fees for clients and freelancers to whatever you want.

By putting the marketplace over the Ethereum network, you will get:

  • 100% uptime
  • Escrows available through smart contracts
  • Tokens distributed on the network for you

A Freelance Marketplace DApp – The Requirements

If you want to pull this off properly, there are many issues that need to be figured out. Not all problems can be handled through automation. There needs to be some true problem-solving involved in such an autonomous product.

So here are some things that must be considered …

  • What kind of fee should you charge?

If the closest competitor charges around 10% on average, you have the ability to undercut them drastically with an automated platform. In fact, you could charge as little as 1% and still have a profitable platform behind you.

But, if a company created such a project and took it seriously they should charge around 5% at first. This gives enough credit back on any transactions that run through the network that upgrades could be made.

For crypto followers, think of this as the OpenBazaar for freelancers.

  • What kind of reputation do you want?

Comparing this type of project to OpenBazaar might not be a good idea. The latter allows for uncensored advertisements and this doesn’t sound professional. If you wanted to build a decentralized competitor to Upwork, you would want to do so under the face of a professional business.

So it is best to have people that will help out, and such a project can be ran with a team of service people if the money is there. That’s another big reason for charging a reasonable fee.

  • How would disputes be resolved?

Dispute resolution is the biggest interference in creating an automated freelance marketplace. If a client or freelancer could get scammed, it’s better if there’s someone of administrative authority that can try to resolve the issue.

Again, if there’s enough in the platform’s fee it is easy to assign some of those funds for service people to handle these things.

  • How would people’s personal information be protected?

All this talk about hiring people brings a lot of risk, especially if they gain access to private user information. There are ways to safeguard this sensitive data from the people that are paid to keep the marketplace running. But, that doesn’t mean the freelancers will always be safe.

For example, if you are an online author it is necessary to provide samples of your work. This means your bio will include your full name, some of your publications, and maybe even images of yourself. With this, an identity theft could happen.

Here’s an example: this individual claims to be an attorney in Orlando, but if you right-click his picture and select ‘Search Google for image’ you will find out he’s not who he says he is.

As it turns out, that face matches back to a different name.

In fact, the picture was pulled from someone else’s LinkedIn profile:

But why would someone pretend to be someone else online?

In this case, the identity theft occurred because some fraudster wanted a shot at high-paying writing jobs on Upwork. So they impersonated someone of authority to try and demand a $110 an hour rate for their work.

This puts the person on the LinkedIn profile in a compromising position. His reputation is on the line and people think they’re dealing with him (a “lawyer”) when that’s far from the truth. As he’s also an online persona, there’s a lot riding in his online identity staying clean.

In another example, copywriter Susane Greene discussed how her identity was stolen. It happened to her for the same reason; in that case, the identity thief managed to complete 55 jobs under her name before getting caught.

So it’s true, freelance identity theft is a serious concern. If you’re going to work online regularly, then reading a freelance identity theft prevention guide would be a good idea. There are just way too many tactics these fraudsters can pull against freelancers — consider yourself warned and plan ahead to keep your identity safe!

Identity Protection Naturally, Through the Ethereum Network

Interestingly, much of these issues can be eliminated if you implement an Upwork-like platform over the Ethereum network. This is because you can assign people to usernames without connecting the client to their true personal information. Instead, the “site administration” can manage the personal information and payouts.

Further, if one wanted, they could create the network so that interactions take place at the Ethereum address level. There does not need to be a personable interaction; to show reputation of users, external site feedback could be imported to kick things off.

That way, you could see a platform that’s more safe and secure for the freelancers. Payments can also be verified and secured so the freelancer no longer needs to worry. However, this does not protect against people stealing profile information. That’s something no one will ever be able to prevent.

Is a Decentralized Freelance Marketplace Really Needed?

It might seem like a silly need, and in a way it’s not necessary. But the current providers are failing to innovate and a decentralized platform might gain popularity.

The biggest benefit is really the decreased transaction fee. Plus, you could use smart contracts to escrow payments and so clients can prove to freelancers that they have the funds for the project.

There are many customized options that could increase the experience for both the clients and the freelancers. If such a project took off, the sky would really be the limit.

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