Airbnb Has Implemented Smart Property

In one of Nick Szabo’s classic papers on smart contracts he gives an example of smart property:

Smart property might be created by embedding smart contracts in physical objects. These embedded protocols would automatically give control of the keys for operating the property to the party who rightfully owns that property, based on the terms of the contract. For example, a car might be rendered inoperable unless the proper challenge-response protocol is completed with its rightful owner, preventing theft.

Airbnb is close to achieving smart property. On a recent trip, for example, I booked online. Shortly before I was to take control of the residence I received a code which opened an on-site lockbox with a key. I left the key in the lockbox when I left–never having met the owner or any employee. At a hotel that I stayed in on the same trip, I still had to wait in line to check-in. The Airbnb process is more convenient and cheaper because there is no need to have staff to man a front desk.

The Airbnb process typically uses physical keys but I have also stayed at places that use electronic keys and digital door locks. An electronic key is more secure since it can be a one-time use that opens the door only during the rental period.

All of this may seem somewhat ordinary but that is the point. Smart property is becoming ordinary.

Addendum: The more automated the process becomes the more a decentralized protocol or platform becomes a competitive option. Smart property that can reach out to say a matching protocol and an identity protocol could rent itself.

Airbnb is a very good company that provides valuable services at reasonable prices so a decentralized platform may not have significant advantages but as more base protocols are laid down and stabilized (“primitives”) it will become easier and more natural to create these kinds of decentralized services. See my post Blockchains and the Opportunity of the Commons.

Comments

I suppose "smart" no longer means smart. Tabarrok likes disruption, disruption being another word for dynamism (or is it nothing left to lose?). Or disorder or even chaos. In my low country community, developers and builders can't construct poorly-built houses fast enough for non-residents to buy them and rent them short-term through airbnb. So what's the problem? The demand for the housing is artificial, the demand, along with housing prices, collapsing in the next crisis. In the meantime, the supply of medium and long term residential rentals has all but disappeared. In their place are the airbnb short-term rentals, almost all of them located in what are supposed to be single family residential neighborhoods, but operated as though commercial property. This has created gridlock on our streets, as airbnb rentals often have four, six, eight, or ten or more cars, several families sharing a single house and every member of each family with a car bringing the car to the airbnb. Cars filling the driveway and the yard and clogging the streets. I once had a house located next to an airbnb. My "favorite" memory is the time the renters hired a rock band to play by the swimming pool in the back yard. How nice. And I thought the cars and traffic were an imposition. Disruption, indeed.

Indeed. Airbnb/vrbo is introducing many homeowners to the reason for zoning regulations

To protect and increase the value of their home investments at the expense of the greater good?

A particular kind of rent, no?

No. To protect their investment from adverse impact by future uses.

Some would argue that enhances the greater good.

I aam extremely impressed with you writing skills and also with the layout on your blog.
Is this a paid theme or did youu customize it yourself?
Either way keeep up the excellent quality writing, it is rare to see a great blog like this one these days.

Smart properties are fairly stupid. Specifically in the context of Airbnb because each guest will have their own preferences. And creating a Her like interface is still further away. I might love to wake up to music every morning but if my kid was sick through the night, perhaps not. For now, more than smart property, it should be simplifying interactions.

"The demand for the housing is artificial,"

How is it "artificial"? It must be quite the artificial creation if people still want to bring " four, six, eight, or ten or more cars" to an area that has " gridlock on our streets."

Also, long term renters, and even owners , do inconsiderate things like hire rock bands, throw parties, etc.

#nimbyalert

Buy a cheap smart-lock, throw it on a parked bike or a motorcycle. Leave a note demanding $250 in bitcoin from the owner to unlock it.

A tool that can remove it costs less than $250.

Then try $200. There's a point at which it's easier to pay than to remove it... (and invest in such removal devices too).

14.99 https://www.harborfreight.com/4-12-in-43-amp-angle-grinder-69645.html

Yep, though you would probably need the $39.99 cordless version in most scenarios.

No way am I paying some crook, even if it's the most cost-effective option. I'm sure many people feel likewise.

Of course, my bike costs less than $200, so I'm not quite the target audience.

I know y'all are hipster internet libertarians and/or semi-professional trolls, but don't you think that the county clerk's office is the best place to handle the record keeping for who owns what property? Is it really that much worse to upgrade these existing centralized databases with APIs that allow for the same kind of smart contracts? Don't we have all sorts of issues with integrating decentralized and autonomous contracts with our existing legal structures for enforcement?

you had me at "hipster internet libertarian and/or semi-professional troll"

we know where you live

The county clerk's office is slow, expensive, and resistant to change that would improve its functioning.

> Is it really that much worse to upgrade these existing centralized databases with APIs that allow for the same kind of smart contracts?

No that'd be great. But, knowing our governments, it would take an act of god to modernize those systems. Integrating them intelligently, or standardizing them? Hell would freeze over first.

> Don't we have all sorts of issues with integrating decentralized and autonomous contracts with our existing legal structures for enforcement?

Give some examples I'm unsure as to what you're thinking about.

The county clerk's offices of the world do use computers, you know that, right? The problem isn't that public infrastructure is overly resistant to being updated. The problem is a lack of vision and that the generation with the knowledge to update the nuts and bolts of our basic public infrastructure have very little faith that things can indeed be changed. We're talking property titles. This is not an intractable Left vs Right kind of political morass. It just takes civil engagement. It takes a belief that change is possible along with the knowledge that these decentralized blockchain solutions are not the correct approach.

Let's say I have a smart contract for a time share in Florida. My week is up and the computer controlled doors lock automatically. I then proceed to replace the locks with a manual key and refuse to leave. How is this problem resolved? With the existing public infrastructure related to property ownership and enforcement. What recourse is there for rolling back erronenous transactions on a decentralized datastore? How do our existing courts enforce ownership changes for seized property on a decentralized blockchain? Courts need to be in a privileged position and the common-access of pure public key crypto doesn't make any sense for our society. When you really start to explore this issue you will realize that in order for any decentralized blockchain to interface with our current legal systems that we will basically need to create a set of override transactions that handle cases of property transactions involving lost keys or anything else off-chain, meaning that public infrastructure will have to maintain their own digital rights management software regardless, and at that point it is cheaper and way more efficient to use centralized datastores.

Its libertarians themselves that make local government afraid of its own shadow; risk averse, unable to make upfront investment, and unwillling to stick its neck out and undertake substantial change implementation

"Its libertarians themselves that make local government afraid "

If only. There aren't that many of us.

"On a recent trip, for example, I booked online. Shortly before I was to take control of the residence I received a code which opened an on-site lockbox with a key. I left the key in the lockbox when I left–never having met the owner or any employee"

Real-estate agents have been doing this for about 40 years. The only change appears to be someone sending you the code at a certain time, which is not in any technological advancement. At least with the real-estate agents though you know they haven't copied the key, or simply not returned it to the box.

Alex is a major dumb-dumb. He should sign up to work at a company like Accenture and be a sales pitch guy I don't know what he's doing in academia.

Only Tabarrok is able to describe the technological equivalent of putting a key under a doormat as some sort of cutting edge innovation.

Have you considered that in a hotel with easily accessible lobby, comfy chairs and clean bathroom there are reasons to have someone at a desk making sure that people in the hotel are guests?

Perhaps it is because I bathe regularly, but I've never been kicked out of a hotel lobby for not being a guest. When I used to live in a neighborhood full of nice hotels, I not only hung out in them, I pretended to be a guest to get free toothpaste from the concierge. They never asked me to show a card or anything.

"Only Tabarrok is able to describe the technological equivalent of putting a key under a doormat as some sort of cutting edge innovation."

Well. I think we all know innovation Alex is really interested in is how to cut somebody out of a job. And in that sense, this particular application of technology is somewhat innovative. (Though, as others have pointed out, not really "smart.")

I would not find this excessive technological evangelism so problematic if he did not consistently pair it with a similarly zealous preference for policies that primarily benefit those who already own capital. (Like owners of surplus housing, for example.)

There has for many years been a hotel in Japan staffed entirely by robot dinosaurs.

"The Airbnb process is more convenient and cheaper because there is no need to have staff to man a front desk."

"Smart" seems the wrong word to describe this process. This is fundamentally the same as an ATM replacing a bank teller. I would use something like Automated Check In.

A real smart property would have a bluetooth controlled lock tied to your AirBnb app that only allows access during your scheduled time.

Tabarrok says that in the post.

I thought he was just referring to an electronic lock that allows you to enter with a code, which I don't think qualifies as 'smart'

It exists. It wasn't directly an AirBnB app, but a different one that connected to AirBnB to know my schedule (arrival and departure), then could trigger the lock at the right time using bluetooth from my phone. Pretty annoying since I had to install a new app for it -- which wanted another account, etc. -- and it didn't work well with multiple users with multiple phones since only I had made the reservation. A lot easier to use a keypad lock where the owner can change the code for each set of guests.

Hilton has a form of smart property. I stayed at a Hilton hotel a few weeks ago and was prompted to use the Hilton Honors App and download a smart key and check-in using the app. While I could have by passed the line and use the smart key, I still prefer to have a physical key. I wonder if other hotels have the same thing, but people who prefer to stay in a hotel use

The Hilton app also lets you choose your room. While the ability to bypass the front desk is a good thing for me as a frequent traveler, I know it makes my wife uncomfortable for security reasons. It also opens up the possibility of discrimination due the staff having to exercise judgement on who to challenge walking through the hotel.

Their ‘innovation’ also means hosts make race-based decisions and guests are subject to the humiliating state of ‘applicant’ for a commodity service. Despite their hand-wringing and hiring of the NAACP, they refuse to do the simple and real fix of removing profile pictures and allowing blind approvals. Hotels.com doesn’t ask my race when I make a reservation, so I’ll stick with them.

I get the security feature of a photo, since at times you are just renting a room in someone's house, but yes, it does have its downside to it.

What is interesting is the way that Car Rental companies work, in theory everyone who makes an internet reservation could get a car like the priority pass system - basically you see your name on the board and can directly collect your car and just show your driving license at the exit. But the car rental companies use a system to differentiate between business travelers and the tourists/personal travelers. They make the expedia bookers stand in line to go through paperwork so as to make their experience as poor as possible (as well as to try to fleece them on insurance and other extras) to encourage the business travelers to book using their priority passes, where the rates are generally higher. It surprises me that this system hasn't been threatened yet by a Uber like competitor because it must be much more expensive to keep all these clerks around, as well as being intensely annoying. One issue is the lock that car rental companies have on airports, but AirBnB is managing to deal with that issue on hotels.

The car rental model sounds similar to the airlines themselves, a combination of archaic legacy systems, high manual intervention, deliberate pain inflicting on lower class customers, relentless upselling, opaque pricing, and smatterings of 21st centuryesque perks for the elite classes

"Smart Property"? Because "smart property" sounds better than "digital rights management"?

When comes smart property, you will need a code to open your refrigerator door as well as one to open your front door. And another to operate your kitchen range and microwave so you can cook whatever you just took out of that refrigerator.

Were you late paying the mortgage/rent? No access for you!

Hmmmm couldn't control of these codes this also be used by governments or insurgents to compel compliance?

O Brave New World!

This is a feature that comes up in some of Philip K Dick's stories.

I work in the industry and the difference in airbnb versus Vrbo and the others, is that Airbnb takes on being the merchant of record and will handle a lot of the other small headaches for a host starting out.
Their platform has a lot more trust in its users than the other platforms.
Additionally the Airbnb market is still profitable on the very low end since they have no upfront cost like listing fees that would keep someone with a $20 a night place from even listing in the first place.

Not directly on point, but because it just came out on The Information today: "A growing share of new homes on Airbnb are year-round rentals owned by hosts who never live in them. These rentals now surpass private rooms inside a house occupied by the host, one of Airbnb’s traditional offerings, according to company data for a week’s worth of listings from June obtained by The Information. This shift towards “professional” hosts—real estate investors or property management firms that own homes rented out full-time—symbolizes how Airbnb’s growth is evolving. Professionals are becoming as important as mom-and-pop hosts, a shift that puts Airbnb in further competition with Booking.com and Expedia’s HomeAway."

Sometimes I think the word DISRUPTION is as over-used as the word CONVERGENCE is under-used. Uber (essentially a taxi) becomes more like a traditional taxi firm, AirBnB becomes more like a hotel chain....

"An electronic key is more secure"

Given the deplorable state of software security -- often an afterthought implemented by people unqualified to do so -- it most likely is much less secure.

I'm willing to bet nearly all of those properties can be broken into in less than 2 minutes with a crowbar. So, more than likely, the electronic key is just fine.

Breaking in with a crowbar, and the resulting broken things, draws attention. Hacking the lock so you can just open it makes it seem like you are a lawful user. No one will remember you once the theft has been discovered.

The key-lockbox system has been in place for vacation rentals for many years (before AirBnB existed). We always get vacation rental instead of a hotel whenever we can, and I don't think I've ever met an owner in person.

There are more advanced locks that operate with time-barred keycodes. No physical key, just a number pad on the door lock. The landlord or property manager sets up a keycode and limits the time window in which the keycode will be functional.

As a renter, you go to the property and your keycode will let you in once the time window starts. When your time window ends, the keycode no longer works.

At the same time, workers and cleaners can have different keycodes in the event they need access to repair or clean the rental.

This system lets a manager track how many times the keycode is used. It lets the manager allow time-limited entrance to different people. It prevents folks from having a physical key they can go copy and pass around.

Not sure how the battery works exactly, but I am assuming it needs to be changed regularly. And I gather the lock is connected to the IOT if you are remotely instructing it to accept a new keycode and a new time window? Or maybe the keycodes have to be entered when you are physically connected to the lock? Not quite sure which. If it is online, I assume hacking is a vulnerability.

The ability to track your keycode usage is also slightly unsettling.

Also, a whole bunch of hotels already use self-check-in software, for example:

https://www.clock-software.com/hotel-kiosk.html

https://www.clock-software.com/company-aboutus/our-clients.html

Not taking anything away from AirBnB, but they are neither leaders nor followers here.

My friend's company Latch allows you to take deliveries from Amazon even when you are not home through a smart apartment door lock -- https://www.latch.com/press/latch-raises-70-million-series-b-led-by-brookfield-ventures

Pretty exciting stuff.

The AirBnB model is possible because, by renting entire properties, they don't have to police hallways, lobbies, or care about noise issues. Make an entire building a set of AirBnB rooms and you suddenly go back hotel expenses unless you are happy with drugs and muggings in your hallways, and prostitutes offering their services in the lobby.

When your AirBnB is in a condo instead, you just get neighbors complaining about how they don't want you renting the apartment out like a hotel, as they are the ones stuck with the negative outcomes: This leads to sneaky AirBnBs. I've been to one in San Francisco that was 2 blocks away from where it was advertised, where I was asked to only use the back door to the building, and the keys were provided by a Russian lady at a liquor store, who seemed to manage key deliveries for a good dozen airBnBs in the neighborhood.

Smart contracts indeed.

I can’t believe I’m the first person to mention that Airbnb is destroying communities across the world by removing stock of apartments for long term rental and turning whole neighbourhoods into hotels. See: Amsterdam, Barcelona, Lisbon, Berlin and more.

F1 hotels have offered smart entry for thirty years. Turn up at midnight, stick your card in the slot, you get a code which lets you into the building and your room.

Comments for this post are closed