Blockchain to disrupt Uber: Entering Ride-Sharing Industry

A cab company, Uber has nowadays become synonymous with the public taxi system due to its portals in almost all the countries of the world. From providing the rental cab to the personal cab, carpool, bike rides, and luxury cab services, Uber is offering every possible conveyance system to lure their customers. But the current ecosystem has many loopholes due to the centralized approach to manage the business operations. Like other industries, blockchain is all set to bring disruption to Uber and other cab service platforms.

With the increasing use of smartphone and internet connectivity, the on-demand transportation industry is expecting to grow eightfold by 2030. In the USA alone, more than 5 billion rides were completed in 2017. Users of taxi services are supposed to get increased to 500 million users by 2021.

Despite the high demand for cab services, there are countless problems with the existing platforms. Therefore, creating a decentralized platform for drivers and riders can help both the parties to connect with each other without requiring mediators.

Before going ahead deep into the impact of the blockchain, let’s have a quick view of the pain points in the Uber or other taxi service platforms.

Author’s Bio

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Akash Takyar

CEO LeewayHertz

Akash has built over 100+ digital platforms used by millions of consumers. Akash is a core member and ambassador of Hedera Hashgraph and Hyperledger. Akash has invented a reverse geocoding algorithm used by Uber and Twitter. Akash is a technical architect and has been a consultant to McKinsey, 3M, Simens and Hershey’s. Akash holds a masters degree in computer applications.

Here are some of the pain points that exist currently in Cab Service Platforms:

  • High fees due to intermediaries:
    As of now, when riders book the cab, the notification is first sent to the company and then the driver is allocated for a specific ride. The cab companies charge 10-20 percent of the total ride’s pricing, costing high to the customers.
    Therefore, the involvement of intermediaries between a driver and a rider may result in the additional costs.
  • Lack of Transparency:
    Also, due to the lack of transparency in the current ecosystem, it is impossible for the riders to understand how companies function.
    If you have ever used cab services, you must have come across a problem of surge pricing. Riders don’t have a clear understanding of the reason behind the sudden price rise because of the unknown company’s functions.
  • Lack of Safety Standards:
    One of the significant issues faced by cab companies currently is to take care of the safety of both rider and driver. Taxi organizations are spending millions of dollars on verifying the users, but despite their efforts, incidents of fraudulent identities and crime are still touching the skies.
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How Uber Platform works currently

Uber acts as a centralized clearinghouse to connect drivers with riders in need of the cab services. The user experiences of Uber platform might look decentralized as it seems like you connect directly with the drivers. However, the entire infrastructure including software and servers and the mechanism for making transactions are managed by the platform.

The Uber ecosystem works as follows:

1. Riders submit the ride request on Uber’s app and the company receives that request.

2. Following the user’s request, a vehicle and driver is assigned to the rider.

3. Riders complete the ride and they send payment to the company.

4. Uber sends money to the driver by cutting a specific percentage of the amount as the commission fees.

Therefore, we need a decentralized approach to overcome the above pain points in the current platforms.

Imagine you want to book a cab from Irvine to Los Angeles and you can directly find the drivers going in the same direction without the involvement of cab companies. What if it becomes possible for the riders to see on what basis the ride pricing has been fixed. Blockchain can make this happen by bringing more transparency and efficiency to the system. Read further to understand how.

Ride_Sharing_Diagram

First of all, it is essential to discuss the user personas that can be involved in the blockchain-based cab service platform.

User personas in the blockchain implementation of the taxi service platform

  • Drivers
  • Riders
  • Legal Authorities

Technical components for the users in the system

Front-end Technology:

  • Mobile App for Drivers and Riders
  • Web Portal/Mobile app for Legal Authorities

Backend Technology:

  • Permissioned Blockchain Component
  • Microservices programmed using node.js

Step1: Driver’s Profile Creation

Drivers sign up to the platform with the following information:

  • Government-approved Identification Documents
  • Driving License

The information provided by the drivers while registering on the platform will be saved in IPFS, with addresses hashed and stored on the permissioned blockchain.

As soon as the driver adds the basic information, the legal authorities are notified through smart contracts to perform background checks on the created profile.

Authorities would diligently conduct the profile checks to ensure the non-indulgence of the driver in legal cases and to confirm if he has paid any traffic fines in the past.

On the basis of the information gathered by the authorities, smart contracts would trigger the rules to generate the rating for the drivers which can help riders decide if it is safe to take a ride with a specific driver or not.

Since the driving license may get expired after a certain period, it is essential for the drivers to update the new license from time to time.

Smart contracts send a notification to the drivers within the 30 days of expiry date to upload the new one. If they fail to update it, their rating may go down, affecting their credibility in the network.

Step2: Rider’s Profile Creation

Riders would also have to sign up to the platform with necessary information like name, phone number, email id, and an id proof. Similarly, the legal authorities would conduct the same due diligence checks for the riders to ensure the safety of drivers as well.

The rating for the riders will also be generated through the smart contracts, helping drivers to decide if they want to take a ride with them or not.

Unlike the existing cab service platform, the blockchain-based platform could be more like a mutual agreement between the drivers and riders as they both can decide to start a ride with the help of automated rating.

Step3: Drivers sharing the ride information

A driver can create a ride with the information including source and destination location using Geolocation API, number of available seats and the time of departure.

Information provided by the driver will be stored on the distributed ledger, which is visible to all members of the network.

Dissimilar to the existing cab service platforms, the pricing of the ride in the decentralized taxi service application is generated through smart contracts and on the specific factors discussed below:

  • Traffic Information fetched through Geolocation API
  • Standard Price per Mile
  • Type of Car Engine (Petrol/Diesel/Battery)

With smart contracts, riders will be able to know on what basis the ride cost has been fixed or decided.

Once the driver shares the ride information, it can be made available on the search results of the rider’s request.

Step4: Riders request for the ride

Riders search for the nearby drivers on their mobile apps by entering the pick-up and destination location using Geolocation API.

A rider will be automatically assigned a nearby driver with the details like rating, gender, and car type (Micro/Mini/SUV). Since it will be a mutual agreement between both the parties, either of them can either accept or reject the ride.

If the rider does not want to take a trip with an assigned driver, he or she may look out for the other drivers by applying specific filters.

After the riders input the data, smart contracts are triggered to fetch the details of nearby drivers saved on the blockchain. Users will be able to access the desired results with the fixed cab fare so that they could make the informed decisions.

Once the riders send a request for the ride, the driver receives the notification and can decide if they want to start a trip or not.

Step5: Drivers accept the request

If drivers accept the request, the ride is started. Smart contracts are triggered to enable riders to track the real-time status.

With the help of geolocation, smart contracts would help riders send the notifications related to the real-time location of the cab and the status of the ride, whether the trip has been started or completed.

Step6: Auto-payment through crypto wallets

The driver, as well as the rider, could have the crypto wallets for the payment of the cab ride.

When the rider reaches the desired destination, the ride will end automatically. The payment from the rider’s wallet will be deducted automatically through smart contracts and transferred to the driver’s wallet.

Companies like Dacsee, Arcade City, REV and CarTaxi are implementing the blockchain to directly connect riders with the service providers without having the need for a centralized entity.

Uber using blockchain could have the following benefits:

  • Cost Reduction:
    Blockchain would enable riders to directly connect with drivers through the decentralized platform, reducing the additional costs incurred due to the involvement of too many intermediaries.
  • Transparency in the pricing:
    Due to the ability of the blockchain to offer transparency, riders would be able to know how cab company functions.
    The pricing will be fixed on the basis of specific criterion defined in the smart contracts, bringing trust and transparency to the system.
  • Safety and security standards:
    The rules defined in the smart contracts would ensure the non-involvement of drivers in any sort of criminal activities by generating an accurate rating for them. It will help riders decide if they want to take a ride with a specific service provider or not.
  • Environmentally Cleaner:
    Ridesharing could be one of the great use-cases of the decentralized cab service platform, leading to the pollution-free environment.
    Since people will be able to share the ride seamlessly, fewer cards might be required, decreasing the metal and plastic amount that has various harmful effects. It will helpĀ the world move towards a cleaner approach with every car removed from the road due to decentralized ridesharing platform.
  • Economic Opportunity:
    With the approach of decentralized car sharing platform, anyone can earn income using their personal vehicle. The removal of services fees due to the elimination of intermediaries can increase the business opportunities for everyone with a smartphone and a safe modern vehicle.

Blockchain holds a promising future in the coming years. Since cab company like Uber is an integral part of the current public transportation system, the blockchain comes as a solution by decentralizing every operation and eradicating the need for a third party.

Our team of blockchain developers at LeewayHertz has an in-depth understanding of how blockchain could disrupt Uber or other cab-sharing platforms. Contact us and discuss your requirements.

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