Can the Blockchain Kill Uber? Free State Project Participant Launches "Arcade City"

Can a truly peer-to-peer Ethereum-powered rideshare app beat the big guys: Uber and government?


Christopher David was running afoul of local and state regulations regarding driving for hire using smartphone apps in New Hampshire, as I reported here.

Arcade City Facebook

He's decided to use Ethereum (Jim Epstein hipped you to that fascinating use of blockchain tech last year) to create a genuinely peer-to-peer means for drivers and passengers to find each other without a top-down company making rules and skimming huge percentages, which he's calling "Arcade City."

I reported on Arcade City's debut in the context of getting drunks home safe on New Year's Eve for a donation, something the city of Portsmouth, N.H., didn't love.

A detailed interview with David appears today at Cointelegraph. Excerpts and summation:

On "why use Ethereum"?

David: …..the vision of Ethereum aligns precisely with our own vision of peer-to-peer transportation and distributed logistics. Any problems that we'll need to solve to implement our decentralized business model—like identity, reputation, payments, cryptoequity—we know there will be brilliant minds working to solve the same issues….

….By beginning with a conventional 'minimum viable product' in the Android and Apple app stores earlier this month, we've been able to build a userbase willing to test new features and provide feedback. We are beginning immediately to build components of our ridesharing model in Ethereum, starting with identity and reputation systems. Our first goal is to deliver a working proof of concept of an Ethereum-based reputation system by the end of April. The many rules that govern reputation for rides will be encoded as smart contracts, editable by consensus. If in testing our drivers agree that too many driver reputation points are being lost after negative reviews by first-time riders, the relevant smart contract can be modified….

David believes that the things they learn and techniques they develop with Arcade City will have use beyond their own ride-share model.

What drivers should love about Arcade City vs. centralized Uber model:

David: Every day drivers for Uber and Lyft need to worry about decreased rates set centrally at headquarters in San Francisco, or the next enforcement action by a centralized government interjecting itself into peer-to-peer transactions. In that light, the appeal of decentralization is clear. If Ethereum remains the best way to decentralize power into the hands of the drivers and facilitate sustainable peer-to-peer transactions, then drivers will be happy to use it.

What are some of the more "real world" issues outside blockchain tech Arcade City has to cope with?

David: ….necessary capital needed to extend rideshare insurance coverage to our drivers: our primary obstacle to growth. Raising that capital would be relatively easy for a straightforward Uber clone that just happened to be friendlier to drivers, assuming that company planned to go down the standard VC track toward a sale or IPO. We don't want to do that. We want to build an asset for the community, an open platform for distributed logistics that any driver, entrepreneur or startup can plug into and have immediate access to all that we've built. Eventually Arcade City won't be managed by any company or our founding team; it will be essentially a public utility maintained by the community….

Compared to the problems and costs of driver acquisition that the big venture capital-funded Uber and Lyft face, David insists:

our cost per driver acquisition so far: $0. We're turning people away because we can't handle all the volume. How will Uber and Lyft sustain their revenue models when the lean and mean Arcade City swarm attracts away all their drivers?

Issues not addressed in the article very deeply: will this model pass legal muster in all the cities with all their regulations about for-hire driving? How will the decentralized "driver decides" payment system evade any such regs? And how well is it working so far?

A press release yesterday from Arcade City says:

Drivers have given more than 1,000 rides to customers in 100+ cities across 27 states, and Australia…..Arcade City quickly signed up more than 3,000 drivers, most of them current or former drivers for the 'big two' ride-sharers.

…..Approximately half of current drivers give rides on a 'pay what you think is fair' basis.

….Arcade City will use Ethereum to issue 'crypto-equity' to drivers, allowing them to own up to 100% of the company by 2020.

Arcade City drivers have so far given rides in 27 states and counting: Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Minnesota, New Mexico, North Carolina, New Hampshire, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington state, and Washington, D.C….

Before David was really trying to change the world, he tried running for Congress in California, which I interviewed him about. I met David while researching my book Ron Paul's Revolution back in 2011.

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  1. A thousand rides? So, like three or four seconds worth of Uber’s volume?


    1. Baby steps…

  2. Skeptical of this. You need a big guy like Uber in your corner for something like this as we’ve seen the taxi cabal isn’t going to go quietly, and they have plenty of hacks in local, state, and even federal governments who will launch attacks on this sort of service. Without some central hub to fight for it, it’s going to be tough.

    1. Uber isn’t “in the corner” for anybody but Uber.

      1. That’s probably true. But when Uber fights to preserve their profits, aren’t they also fighting for the ability of their drivers and consumers to keep engaging in these transactions? Don’t they have to stick up for the drivers and consumers if they want to keep the profits coming?

      2. Late response, but I didn’t mean that Uber fought for anyone else or won’t. I’d hardly be surprised if they turned around and started lobbying to squeeze out competition. My point was that the centralized corporate model of Uber is beneficial given the uphill regulatory battle anyone entering this market faces.

        1. Try to remember what the oft ridiculed or just bandied about “hidden hand” of Adam Smiths free enterprise concept means. When Uber selfishly cares about itself, and fights encroachment on ride-sharing, it helps all companies who want to ride-share. This even applies if it makes a sweetheart deal that says on Uber gets a break, not competitors like Lyfte.

          Such a deal would be like all temporary monopolies-not all business is good for everybody. But overall, let the gladiators roil in the marketplace. Our central theory says “go for it, kids, work it out of your system,” not “oh my, that’s not fair. It must be fair!”

    2. You are missing the point of Decentralized Autonomous Corporations which is what this is.

      Uber fights by trying to work with the government and regulations to make there business legal.

      Things like Arcade city fight by telling the government to fuck off and get out of private p2p transactions. The entire process is atonomous and exists outside of the governments control, you can’t sue the block chain or take it to court or fine it or shut it down. The block chain just continues.

  3. “Without some central hub to fight for it, it’s going to be tough.”

    And without some central hub to attack, it’s going to be tough to suppress.

    Jitney/gypsy cabs have managed to survive for decades in all the major metropolitan areas. Now that they have P2P mutual passenger/driver discovery and still no corporate office to sue, etc., tough luck for regulators who want to do anything other than pick off a few drivers with sting operations.

    1. For this they’ll do it like the do prostitution
      Pose as passengers on the service, seize vehicles that come to collect.

      Never underestimate how low they’ll stoop or the extent to which they will expend enormous resources to stop voluntary commerce.

      Harder to do with the gypsy cabs since they don’t have a convenient app for ordering one.

      1. For this they’ll do it like the do prostitution
        Pose as passengers on the service, seize vehicles that come to collect.

        Less prostitution, more drug war.

        They might impound low-level drivers, but the big ticket items will be finding out which servers run reputation and cryptoservices and shut them down. The FBI will show up at your data center and either they own the servers or you do. So, whomever ends up owning the servers will need to have employment records and payroll and will need to have their algorithms audited for tax purposes. They’ll be free to refuse at any point, upon which time they can shut down their business orl be charged for underpaying their employees, tax evasion, and/or money laundering.

        This already the M.O. for this sort of thing.

        1. There are no central servers to shutdown.

          The data is distributed among all the nodes. Eventually you would have tens if not hundreds of thousands of nodes all over the world.

          1. There are no central servers to shutdown.

            So, when David Copperfield made the Statue of Liberty disappear, you really though it had vanished, huh?

            Blockchain computations aren’t horrendously expensive, but they can’t be done with sand. So, you have to have *some* computing power. Serving plain old requests to a massive number of clients requires plenty of computational power and infrastructure. Cryptography doesn’t make any of this physically go away nor does it pry the infrastructure away from the hands that already control it. Even further down the line, you can’t decentralize your car or house or the gasoline to fuel them. You waiving your hands and saying ‘Distributed along the nodes…alaca-decentralized!’ doesn’t make it so.

            I’m not saying blockchain is worthless or that it won’t make us, in any way, more free. I’m just saying that the hype of ‘First blockchain, then libertopia.’ is absurd. Especially the number of rabid fanboys who say things like ‘Imagine all the possibilities of an entire economy conducted inside the blockchain!’ The outcome of paying onerous taxes without even realizing it is just as likely an outcome from any in vacuo blockchain hypothesizing.

          2. Eventually you would have tens if not hundreds of thousands of nodes all over the world.

            Google has over a million nodes in various places all over the world. Somehow, 1.35B people in China are largely prevent from using it.

            China and all manner of other oppressive regimes have effectively oppressed or eliminated practices and behaviors that were much less cumbersome than blockchain technology (bitcoin is hardly the first decentralized or non-fiat currency). Assuming and/or acting like blockchain will win because blockchain! is silly.

    2. If they block the apps from the Android and Apple markets, they’ll pretty effectively kill this. Very few people sideload apps on their smartphones.

  4. When I first started hearing about Uber, it was usually described as a “ride sharing” service. I was very disappointed to find out that it was basically a different (of course turned out to be better) version of taxis. But what I envisioned for a ride sharing app was something that allows parties who dont know each other to communicate “hey, i need to get from here to there, anyone going my way? I’ll chip in a few bucks for gas”. More like hitchhiking, with reputation to try to weed out the stranger danger factor that basically killed hitchhiking. It could be a great way to cut down on single person car trips in a way that is voluntary and without the huge cost and problems of carpool lanes.

    I like his idea, but not quite enough to subscribe to his newsletter.

    1. Marty Feldman’s Eyes: There actually are some open-source apps like what you’re describing (I went looking around for them awhile back and found one that has a source repository at github, and some other sketchier ones). They don’t seem to have really caught on, though.

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