Technology

Decentralized Ridesharing - The Next Step

The decentralized ride-sharing business model proposes that two disjoint identities should be decoupled, meaning they should have a separate legal identity
Decentralized Ridesharing - The Next Step
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Guest Writer
Founder & CEO, Jugnoo/Click Labs
5 min read
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Many tech-driven ridesharing transport apps are facing criticism today because of the exploitation of people who are working on the platform. The biggest resentment seen is due to the centralization of resources and concentration of wealth which is been accelerated by few giants in mobility and ride-hailing space.

These companies seem to control the systems in future with no participation of people working on these platforms. It is believed that now is the time to change such business models, where societies are put at the forefront and businesses at second. There is a solution which we are working for when it comes to the problems of centralized markets in ridesharing industry.

Problem

The idea starts with the establishment of free markets where most of the biggest on-demand companies are working. It is assumed that these free markets are going to solve the problems by being efficient where all players are rational with minimal regulations by the govt. But today, tech companies are unable to adapt to this 'fair' model, because competition doesn't allow much space to play fair. Companies raise capital, build monopolies quickly by burning cash, spending quickly on driver and customer side and hence, exploit end users associated with the platform. And once the monopoly is created, customers and drivers are exploited with inflates fares/ rates resulting in higher profit margins. It is believed that for capitalism to survive, competition is essential, but this is not happening right now further creating a problematic situation.

Solution

We propose a 3 step solution, where marketplaces have to be tweaked looking at these important elements:

1. Decentralization

There are two major aspects to this element. First - sharing the ownership between company and driver working on the platform. Second- shifting the decision making power to the drivers with respect to pricing. The current scenario is biased where decisions are made by the company keeping in view the profit margins and drivers play no part in this process. Decentralization comes into play here where drivers can take the decision pertaining to the rides on the real-time consensus. Decentralization aims at shifting the focus from a central authority to the driver partners.

2. Dynamic

Every marketplace is unique, dynamic and there are some artificial limitations which can be removed. Today all the marketplaces are pushing the participating players towards a scenario where they are almost full time working. This makes their supplies smoother. In the decentralized ridesharing model, people working on the platform essentially should have the liberty to move to anyplace at anytime, making a market dynamic in the true sense.

3. Distributed

The final step in this solution is the distribution which means that all the marketplaces are fairly disjoint entities based upon region. For instance, London and Paris would provide very different and unique atmosphere in the market and a company doing well in London might not do great in Paris. Therefore, the decentralized ride-sharing business model proposes that two disjoint identities should be decoupled, meaning they should have a separate legal identity.

Establishing these tweaks and bringing the aspects into the model in the markets, we can change how the ridesharing business works and create a movement which changes the distribution of wealth among people who work on the ride-sharing platforms.

Solutions based approach

One is making a blockchain based ride-sharing app which is completely decentralized. The problem with this is that it is very expensive in terms of energy and computation to run a ride-sharing business on blockchain technology existing today. For this, either we wait for the platform to be matured or use it partially on consensus basis decision making

The second approach is going back to the traditional model of taxi companies which have worked as cooperatives and try to make them tech-enabled so that they are much more inclusive and dynamic

The third and the final approach proposed is the Wikipedia model. This means having a non-profitable organization built globally which owns all the IP and technology, being licensed for free or really minimal prices and sell this to the local entities. This means that technology can be used by anybody and at any place for free. The local corporate chapters in cities can be created, who are autonomous in their decision making but are still dependent on the parent company for technology and simple rules.

Risks

This model is not without its fair share of risks. First - nobody likes the idea or buys the idea which makes it dead but that is true for any risk at any platform. The only way to find out is to do it. Second - competitors start burning a lot of money on this platform without letting it go to the critical mass. This is what these traditional players are doing. In this case, if people or stakeholders are willing to take short-sightedness or short-term hits for long-term growth, we think it will work. Otherwise, it will fail. It is education and a fight between short term and long term thinking. And finally, it is about cartelizing of drivers. We have to make sure that it is supply-demand limited system and we have to make the rules so that nobody can really cartelize.

The crux is to set up a new kind of company which gives people, working on that platform, an access or ownership on that platform. When this company goes big, the people working with them will also get richer and bigger economically and socially. Secondly, they should be able to decide by consensus that in real time what are the most important decisions pertaining to that platform. This might be a social experiment at this stage but it surely is an evolutionary step in the on-demand industry in order to maximize the profits for company and people simultaneously.

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