Blockchain-backed taxi service aims to kill Uber
US-based ride-share company Arcade City is taking aim at Uber and Lyft with a blockchain-backed decentralised platform for its drivers, which allows the company to offer its drivers more control over the rates they charge, rather than have rates decided centrally by the Uber or Lyft main office. Blockchain company Ethereum is behind the technology enabling these more lucrative driver contracts. It plans to deliver a working proof of concept by the end of April, with as many components of its business model, including governance, financing, and eventually insurance and adjudication, moved to the blockchain.

A new player has entered the ride-sharing arena and it plans to take the industry by storm with a new approach. The company, “Uber killer” Arcade City, eschews Uber’s centralized control for a decentralized, driver-driven approach. The company has just begun integrating Ethereum into its system.

The founder of the company Christopher David, an activist and entrepreneur who innovatively used Bitcoin to crowdfund Free Uber. The swarm-based activism campaign was organized against the city of Portsmouth for banning ride-sharing,

Cointelegraph spoke to Christopher David, Arcade City’s founder, about integrating the Ethereum Blockchain into the operations of a ride-sharing company

Cointelegraph: What made you decide to use Ethereum?

Christopher David: Ethereum offers the whole package: a platform with everything we need, plus a strong community with solid governance. More than any particular set of technical features, the main deciding factor was that 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. Sealing the deal for us was the tremendous support we've received so far from Ethereum early adopters, even despite our early stages of integration. We know the Ethereum community will be great partners for us moving forward.

CT: Will Arcade City use Ethereum extensively? What will integration look like?

CD: We intend for Arcade City to be one of the first large 'mainstream' Ethereum companies. That will require tailoring its implementation to our userbase of non-technical users — riders and drivers — who will be engaged in peer-to-peer transactions all over the world. 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. Obviously that brings up other considerations of governance and consensus. We’ll want to learn all we can from others in the community, and maintain an open, well-documented process to communicate our experiences so others can learn along with us. Later we will extend the reputation system with an eye toward abstracting away from ridesharing-specific structures, moving toward interoperability with other systems in other industries. Piece by piece, we’ll go through a similar process of Ethereum proof of concept, testing and iteration, and abstraction. We’ll do that for as many components of our business model as we can feasibly move to the blockchain, including governance, financing, and eventually even insurance and adjudication.

CT: Has it been at all difficult in getting your drivers to understand such a new and radical technology? Any pushback, internal or external?

CD: Our drivers have been receptive to learning about the technology, some more than others, but no real pushback. Understanding the technology itself is one thing - and something I myself still struggle with - but for many drivers, the significance of decentralizing technology is increasingly apparent. 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.

CT: What challenges do you anticipate with Ethereum integration?

CD: Our primary challenges will probably stem from our attempts to bridge the divide between two worlds: the abstract realm of pure decentralization on the blockchain - which we aspire to manifest in reality as soon as possible - and the real world of regulations, governments, outdated insurance models, safety concerns, background checks, lost items, customer service, and all the rest. We’re intent on keeping one hand solidly in each camp, pulling them ever closer. In the short term, we need help to articulate the business vision and raise the 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. How do we get to that point? Between here and there probably should be some tokenized financing model that allows the early drivers and builders to be rewarded handsomely, years down the road, for contributing to the growth of the network. Could or should we crowdfund all of this in Ether? How should we structure it? For these questions we have ideas but not answers. So as we near the end of our bootstrapped runway, we need to ask the community: How would you structure a decentralized Uber on the Ethereum blockchain, ticking all boxes above? What would have you excited to participate here and now? We need your feedback and your help.

CT: Other ride-sharing companies are cropping up to compete with Uber and Lyft. How does Ethereum give you a competitive advantage?

CD: Why do Uber and Lyft raise hundreds of millions in venture capital from companies like GM? Because they are perceived to be building logistics infrastructure that will support future fleets of self-driving cars. There’s a problem with that approach: those investments only make sense given the continued relevance of centralized intermediaries like corporate Uber and Lyft. The 'big boys' can only justify taking 20-25% per ride because drivers do not yet have an alternative at scale. Uber and Lyft already spend huge on driver acquisition, with sky-high turnover rates thanks partly to poor treatment of drivers, partly to the race to the bottom in driver fares. Compare that to 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?

CT: Is Ethereum really necessary for the project to work? Or is the cryptoequity scheme just for profit?

CD: We could build a reputation system and other components on conventional client-server technology, or even our own blockchain, and open-source the code in an attempt to replicate the network effects of the Ethereum ecosystem. But that would silo us away from other developers working to solve the same issues. We don’t want to sacrifice the interoperability of that shared standard. Contributing to and benefiting from the Ethereum ecosystem will create other opportunities, like a shared reputation market that spans industries outside the scope of Arcade CIty. And the cryptoequity route would not profit a founder near as much as the typical venture capital route. Just look at the $6 billion net worth of Uber's CEO. I’d never want to see that much wealth concentrated in the hands of one person while the drivers scrape by with peanuts and no ownership stake. Cryptoequity allows for a more even distribution of wealth, and a rising tide that lifts all boats. The reign of the unicorns is ending; now is the time for swarms.