An overview of peer-to-peer ridesharing using blockchain

What is peer-to-peer ridesharing?

Peer-to-peer (P2P) carpooling can be an affordable alternative to traditional taxis or cars, especially for people who don’t want to own a car or need to travel long distances.

Peer-to-peer ridesharing, sometimes called carpooling or ride-sharing, is a mode of transport where people share a vehicle with one or more other passengers traveling in the same direction. Instead of professional drivers, this carpool uses private individuals who share trips.

A rider and a driver agree to share a ride in a P2P ride-sharing system, usually via a smartphone app or website that connects them. The driver offers a ride, and the rider pays a fee to share the cost of the trip. The fee often includes the cost of fuel, maintenance on the car and any tolls or parking fees.

Peer-to-peer ridesharing has grown in popularity in recent years, especially with the rise of mobile apps such as Lyft, Uber and BlaBlaCar. It can reduce traffic congestion and parking requirements while offering a more cost-effective and environmentally friendly alternative to traditional taxis or private vehicles.

What is the role of blockchain in ridesharing?

Blockchain technology can improve ride-sharing services in several ways, including a decentralized ride platform, secure identity verification, smart contract-enabled payments, transparent and auditable records, and token-based incentives.

A blockchain-based ride-sharing platform can connect riders and drivers without the need for intermediaries, such as travel agencies. This could offer a more economical and efficient way for drivers to earn money and for passengers to obtain transport.

Blockchain technology can securely verify the identity of passengers and drivers without relying on conventional identity verification techniques that can be subject to hacking or other security breaches.

By automating payments between drivers and passengers, smart contracts can eliminate the need for intermediaries and increase payment accuracy and speed. Furthermore, blockchain technology can provide a visible and immutable overview of all travel, payments and other transactions, reducing fraud and increasing accountability.

Tokens can be used as rewards on a blockchain-based ride-sharing platform to promote positive behavior from passengers and drivers. For example, drivers who provide good service can be rewarded with tokens to exchange for various perks or benefits.

How does a blockchain-based carpooling system work?

A blockchain-based ridesharing system uses distributed ledger technology to facilitate peer-to-peer transactions between riders and drivers without the need for a central authority.

This is how it usually works:

• Registration: Riders and drivers register on the blockchain-based ride-sharing platform by creating a digital identity. The platform may require users to provide personal information, such as name, phone number and payment information.
• Ride Request: When a passenger makes a ride request, a passenger must include the pick-up and drop-off locations, the vehicle they need and the price they are willing to pay. This information is stored on the blockchain.
• Driver Selection: The algorithm matches the rider with a driver that fits their needs. The ride request can be approved or declined by the driver.
• Ride confirmation: The smart contract is activated to start the ride if the driver agrees. The rider is informed of the driver’s arrival and expected arrival time.
• Ride completion: The smart contract automatically determines the price when the ride is completed based on the distance traveled and time required. Digital currency is transferred from the rider’s digital wallet to the driver’s digital wallet to make the payment.
• Assessment and evaluation: After the trip, the passenger and the driver assess each other on the platform. The reputation of the driver and rider is affected by these ratings, which are stored on the blockchain.
• Dispute Resolution: The Platform may offer mediation services to resolve a dispute if there is one between the Rider and the Driver. If the issue cannot be resolved, the platform may refund the rider.
• Withdrawal: The driver can withdraw his earnings from his digital wallet to his bank account.

Smart contracts and digital currency can streamline payment processes, reduce the risk of fraud and do away with the requirement for a central authority to monitor transactions. Disputes between riders and drivers can be resolved through self-executing agreements and a decentralized arbitration process.

An independent arbitrator or panel of arbitrators will be used in this proceeding to reach an award based on the provisions of the smart contract and any relevant data or evidence. The smart contract then automatically executes the arbitrator’s ruling.

What are the benefits of peer-to-peer ridesharing with blockchain?

P2P ridesharing with blockchain has the potential to create a more secure, transparent and cost-effective platform that benefits both riders and drivers.

One of the main advantages of using blockchain technology for carpooling is the possibility of building a decentralized network that connects passengers and drivers directly without using intermediaries such as ride-hailing platforms. This can dramatically lower the price of carpooling services, reduce costs for passengers and increase profitability for drivers.

Blockchain sharing can further improve the security and privacy of driver and driver data by providing an open and secure data transfer and storage platform. For example, the risk of data breaches and identity theft can be significantly reduced by adopting blockchain technology to store driver and rider data.

P2P ridesharing with blockchain can offer trustless transactions processed by a decentralized network of nodes rather than by a central authority. By providing a clear and immutable record of each transaction, blockchain can also help prevent fraud and guarantee that drivers are paid fairly.

What are the challenges of implementing blockchain in ridesharing?

While there are many potential benefits to implementing blockchain technology in carpooling, there are also significant challenges, including regulatory and security risks.

The current infrastructure may not be able to manage the volume of transactions needed for a significant ride-sharing platform due to the resource-intensive nature of blockchain technology. This can lead to longer transaction delays and higher costs.

In addition, integrating a blockchain-based ridesharing platform with existing systems and technologies can be complicated and require significant investments in infrastructure and resources. Also, the integrity of the platform can be compromised by security flaws such as 51% attacks, even though blockchain technology is believed to be secure.

Related: What is a Smart Contract Security Audit? A beginner’s guide

The regulatory environment for ridesharing and blockchain technologies is intricate and dynamic. Regulators may need some time to develop a regulatory framework that supports the use of decentralized ride-sharing services and fully understand the potential benefits and dangers of such platforms.

Because many customers may not be familiar with blockchain technology and may not be willing to trust a new platform with their personal and financial information, the adoption of blockchain-based ride-sharing systems may be gradual.

Are there any blockchain-based ridesharing platforms?

Ridesharing applications such as Arcade City, DAV Network, Ridecoin and Jolocom are a few examples of platforms that use peer-to-peer ridesharing technology. They demonstrate the potential of blockchain technology to revolutionize the ride-sharing industry and create a more efficient, transparent and secure platform for riders and drivers.

Arcade City

Arcade City is a decentralized ride-sharing platform that uses blockchain technology to connect riders and drivers. The platform enables payments between passengers and drivers via smart contracts and offers customer reviews after the trip.

DAV network

Using this blockchain-based platform, anyone can create and manage their own transportation services, including carpooling, delivery and logistics. Using blockchain technology, the platform facilitates secure, peer-to-peer transactions between users and drivers.

Ridecoin

Ridecoin is a blockchain-based ride-sharing platform that uses its own cryptocurrency, RideCoin (RIDE), to facilitate payments between riders and drivers. To guarantee that drivers and passengers are secured during the transaction, the platform also uses smart contracts.

Jolocom

Jolocom is a blockchain-based identification platform that enables users to securely store and exchange data, including identity and payment information. This can potentially be used to enable a more secure and decentralized carpooling platform in the future.

What is the future of blockchain in the ride-sharing industry?

The potential for blockchain technology to change the ride-sharing sector by bringing improved transparency, security and efficiency is promising.

By incorporating blockchain technology into ride-sharing services, it is possible to develop decentralized networks that connect drivers and passengers directly, reducing the middleman. This could result in a more egalitarian system with lower transaction fees and requirements for third-party payment processors, which would minimize driver and passenger expenses.

Furthermore, by leveraging blockchain’s tamper-proof and secure platform, drivers and riders can trust the system, leading to increased participation and greater user adoption. For example, blockchain-based platforms such as Arcade City offer trustless transactions and secure payments between riders and drivers, improving the overall user experience.

As blockchain-based ridesharing platforms face several hurdles despite their potential benefits, they need to demonstrate that they can scale, guarantee data safety and security, and offer interoperability with current systems. Overall, a more efficient and fair system for all users can be created by introducing blockchain technology in the ride-sharing sector, changing how people travel in the future.