
doi: 10.2139/ssrn.3410634
The “Sharing Economy” and the advent of digital currencies can be attributed to significant and rising consumer debt, inequality, low savings rates, internet penetration and the perceived inefficiencies of regulation. During 2005-2017, the “Sharing Economy” (which includes Airbnb; Apple; Alibaba, Uber; WeWork; Liquidspace, Lyft; Ebay; Didi Chuxing; HomeAway, etc.) blossomed across the world, triggered structural changes in industries and significantly affected international capital flows primarily by disobeying a wide variety of statutes/laws in many countries and illegally reducing and changing the nature of competition in many industries often to the detriment of social welfare. Similarly, digital currencies have grown exponentially and are being used as currency despite the fact that central banks have publicly confirmed that they are not legal tender in most countries. Many sharing economy organizations (SEOs) and digital currency companies (DCCs) have evolved into fintech because of the significant amounts of payments that they cause, handle or facilitate. SEOs and DCCs also create significant Network Effects that illegally entrenches them in industries. Many SEOs such as Airbnb, Ebay, Alibaba and Baidu merely re-distribute income rather than create value; and their operations cause significant deadweight losses in both prices of goods/services, and in the demand for, and enforcement of statutes. The large and prominent institutional investors who made significant investments in SEOs and DCCs may have indirectly or directly caused the surprisingly slow and relatively very limited regulatory responses to SEOs/DCCs in many countries. Some persons have filed lawsuits against SEOs/DCCs and some governments have enacted new regulations to curb their illegal activities. This article explains the value-drivers and portfolio management considerations that pertain to SEOs and DCCs.
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