Rideshare Looks to Blockchain for Truly Decentralized Sharing Economy

The sharing economy has made it possible to “share” virtually anything: from cars, homes, loans, to doghouses (yes, that’s a real thing, check out Rover or DogVacay).

Considered the trendsetter by many, Uber (see “uberization”) became synonymous with the notion of sharing economy, where consumers and service providers communicate among each other, on their own terms. Or almost: according to a recent paper by Paolo Tasca, director at the Centre for Blockchain Technologies, and Mihaela Ulieru, president of The Impact Institute, Uber offers “nothing more than [a] two-sided platform business model,” creating value exclusively for their owners “who control them.”

“To the novice, Uber-like networks seem to be decentralized. Yet, while Uber runs on a ‘smart’ phone, it does so via a quite ‘dumb’ application (app) which links into a centralized platform, which is completely controlled by and supports the goals of the company,” the authors claim. “Centralized innovation means slow innovation. It also means innovation directed by the goals of a single company. Finally, it means single point of failure.”

So, what would a platform enabling an authentic sharing economy look like? This is where blockchain steps in. The distributed ledger technology would allow drivers and riders, who do not have particular trust in each other, to securely share information through decentralized networks, eliminating intermediaries. This alone, can cut costs and time for every participant, according to the authors. From the paper:

In such a blockchain cooperative most people do not own cars but rather share vehicles in a commons. All revenue, except for the overhead would go to its members, who would also control the platform and make decisions. The communication is done peer to peer on the network via cryptographically signed messages. In the case of Uber, the drivers’ initial entry and registration would contain criminal records, record of previous driving, vehicle ownership, safety inspections and insurance, etc. Smart contracts would continuously watch for timely re-inspection/insurance and permit renewals. The drivers have thus created a blockchain cooperative and they receive all the wealth they create.

In the case of autonomous vehicles, blockchain provides a platform in which residents at a particular neighborhood could invest in an autonomous car, and be rewarded by discounted rides for a specified time period. “The car owns itself — or, more precisely, the operating computer program owns it. This program would pay the car’s running costs and take in its own revenue on blockchain,” the paper suggests.

This kind of decentralized sharing economy is not in the distant future, with companies like Arcade City and La’Zooz – a rideshare that runs on blockchain – already putting the work in. Uber might be catching this wave soon, too: the rideshare giant already allows payments in bitcoin for its riders in Argentina.

4 - Readers Like This Post