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.
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.