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Blockchain in Ridesharing: 5 Practical Use Cases

  • 7 November 2018
  • Sam Mire

Uber’s net value in 2017 amounted to a whopping $51 billion, and their primary competitor Lyft also garnered an impressive valuation of $11 billion. In the taxi capital of the world, New York City, Ubers now outnumber yellow medallion cabs by a count of 14,088 to 13,587. With a global net revenue of $7.5 billion and an estimated 53% of the population having tried ridesharing apps, the cultural and economic imprint of ridesharing is indelible. And it’s a growth sector, with an expected eightfold increase set to push the ridesharing valuation to $285 billion by 2030.

This isn’t to say that the industry is without its problems — far from it. While growing, it’s been reported that ridesharing services accounted for only 1% of the vehicle miles traveled (VMT) in the United States in 2016. This suggests that there is a somewhat limited, short-distance use for ridesharing services, and that expansion into novel use cases would allow an even greater impact by ridesharing services. The rural market represents 25% of the ridesharing use cases that have yet to be fulfilled, and conceiving new ways to serve these markets more effectively can be helped along by the benefits of blockchain tech.

In fact, the aim of blockchain is in part to remove intermediaries and bring the rider and driver closer together logistically and economically. Such a driver and rider-centric vision may cater to rural populations where steady, full-time employment is often difficult to come by. Adding an unprecedented level of data security, driver vetting, and altering ridesharing for the age of autonomous vehicles also represents the potential that the blockchain offers for the future of ridesharing.

Blockchain for ridesharing - Practical use cases


Facilitating Payment Using Smart Contracts

Blockchain use cases in ridesharing - Facilitating Payment Using Smart Contracts

Most of us have experienced the dreaded Uber cancellation fee that comes through no fault of our own. Uber charges a $2.40, nonrefundable booking fee, plus a $5–$10 cancellation fee for not showing up on time to the vehicle’s location which, by the way, is completely at the driver’s discretion. Poor communication with a driver who cannot get into a neighborhood’s gate or simple lack of directional understanding can result in the rider being charged for a driver’s incompetence. For a company that raised $11.5 billion across 14 rounds of funding between 2009 and 2016, the system seems a bit unfair, even opportunistic.

In fact, it’s nothing short of a racket — tyranny by cancellation fee — and the blockchain is out to put an end to the madness. By basing payment on predetermined conditions and installing them in a smart contract, drivers will get paid only when they have delivered a rider to their destination. If a rider cancels, then this caveat would release a smaller portion of the funds to the driver to account for their time, creating a more logical system in which lack of adherence to the contract cuts both ways.

Companies Trying to Solve This Problem


True Peer-to-Peer Ridesharing

Blockchain use cases in ridesharing - Peer-to-Peer Ridesharing

One MIT survey found that, after expenses, 1,100 Uber and Lyft drivers took home $3.37 per hour as a median profit, and that’s before taxes. That means that approximately 30% of the ridesharing workforce is paying to drive strangers around. Even revised versions of the estimate found that approximately half of the drivers surveyed made less than half of minimum wage in their state. Uber drivers often seem unclear about the cut that goes to the company, too, with one driver claiming that Uber paid him $59 for a $127 fare.

Whether this less-than-50% cut is accurate or not, we know that Uber has profits in mind, and that means taking a significant cut from each ride. This is why an open ecosystem-type platform built on the blockchain by which drivers and riders could connect directly, view each others’ reputations, and ultimately provide qualified drivers a greater share of the compensation would be a welcome alternative to at least serve as competition in a marketplace with high barriers to entry.

Companies Trying to Solve This Problem

  • RideCoin Upcoming ICO designed to provide P2P ridesharing with no middlemen.
  • DACSEE Purely P2P Ridesharing App launched in Malaysia with $33million ICO.
  • Arcade City – Gamified ridesharing concept. 

Short-Term Vehicle Leasing for the Autonomous Age

Blockchain use cases in ride sharing - Short-Term Vehicle Leasing

Between August 2014 and June 2017, $80 billion was invested in autonomous vehicle technology. While 61% of respondents to a survey said they still felt safer riding (theoretically) in a human-controlled vehicle, the reality that 37,461 people were killed driving on U.S. roadways alone in 2016, coupled with the undeniable rise in distracted driving practices, lends a level of hollowness to the safety of the human driver. More than 90% of crashes are estimated to be caused by some form of human error.

Frankly, we know the autonomous vehicle age is coming, and some innovators are preparing for a future in which few individuals own cars and ridesharing takes the form of a driverless vehicle. Owners of autonomous vehicle fleets, according to these startups, will be able to lease out vehicles on a short-term basis — think rental cars or prolonged ridesharing — utilizing a blockchain-linked network of nodes and modules tied to the Ethereum blockchain for fleet tracking. Also utilizing GPS tracking, RFID processing, and smart contracts that could facilitate the return of and payment for leasing a vehicle, the future of ridesharing in the autonomous vehicle age is being prepared for as we speak.

Companies Trying to Solve This Problem


Preventing Data Theft and Abuse

Blockchain use cases in ridesharing - Preventing Data Theft and Abuse

The snafu that Uber’s Newsroom webpage refers to as the “2016 Data Security Incident” details the damage that was done when “two individuals outside the company…inappropriately accessed user data stored on a third-party cloud-based service that (Uber) use(s).” The compromised data included the names and driver’s license numbers of around 600,000 drivers in the United States as well as the personal information of 57 million Uber customers across the globe. In total, 25.6 million riders and drivers were compromised by the breach.

In response, blockchain aficionados began to ponder how their beloved technology could help ensure that Uber and ridesharing platforms like it wouldn’t serve as the thin, permeable line between our data and thieves. These new platforms would serve as blockchain-based Uber alternatives, where information is stored on a decentralized ledger, accessed only by decentralized apps to connect riders with drivers and execute transactions. 


Transparent Rider, Driver Identification

Blockchain use cases in ridesharing - Transparent Rider, Driver Identification

Once upon a time, getting in a car with a stranger was frowned up. Today, it’s a way of life. In 2016, Uber disclosed that between 2012 and 2015, five complaints of rape and, as they stated it, “less than 170” legitimate cases of sexual assault complaints were filed against their drivers.

Congratulations?

These facts bring up a concerning reality: we know virtually nothing about who we choose to get into a car with, and they know virtually nothing about us besides a (possibly fictional) first name and an unrevealing star rating. Ridesharing services assure users that their drivers have passed a thorough background check, but despite these checks, Uber and Lyft drivers have been responsible for deaths, assaults, felons behind the wheel, and a laundry list of other disturbing incidents. Plus, crashes involving for-hire vehicles tripled between 2014 and 2016, going from 534 in July 2014 to 1,672 in June 2016, despite yellow cab crashes going down. Point being, riders deserve to know certain information about who is driving them, and a blockchain record that allows individuals to see critical metadata about their potential driver — and vice versa — would be a mind-easing boon for ridesharing security measures.

Companies Trying to Solve This Problem

  • Chasyr P2P Ridesharing app promising more fair treatment for drivers using blockchain.
About Sam Mire

Data journalist and market research analyst focused on emerging technology, trends, and ideas.

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