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Startups Want to Use the Blockchain to Take Our Data Out of Uber's Hands

Plenty of blockchain startups are overhyped, but some see transportation as an area where they can thrive.

Tracey Lindeman

Tracey Lindeman

In the future, delivery drones like this could run on the blockchain. Image: Flytrex/Wikimedia Commons

Imagine using an app to summon an aerial drone to deliver you a late-night snack. Running low on battery after a long day, the machine needs to recharge on the way. It finds a nearby rooftop charging station to refuel, then drops your General Tso's on your balcony. The drone pays the charging station, and your digital wallet pays the drone. It all happens automatically, and the transactions are pseudonymous and recorded on a decentralized public ledger known as a blockchain.

It sounds futuristic, but an Israel-based non-profit called the DAV Foundation is aiming to accomplish this drone-charging-delivery scenario by the fourth quarter of 2018, according to its new chief communications officer, John Frazer.

With at least 2,000 blockchain-related startups all promising to disrupt and revolutionize whatever industry they cater to, blockchain technology is extremely overhyped. Yet some say transportation is an area where it can thrive, for two particular reasons: automation of vehicles and the growing importance of shared mobility and resources.

“The blockchain has so many ramifications that we’re still sorting through, but the promise is tremendous,” Frazer told me on the phone from southern British Columbia.

Short for Decentralized Autonomous Vehicles, the DAV Foundation and its proposed blockchain-based platform (called the DAV network, based on the Ethereum blockchain) seek to establish a “commons” for shared mobility, for both manned and unmanned vehicles. It’s meant to fight the current trend of automakers and transportation companies creating a thousand different proprietary ride-sharing programs by offering a single platform on which everyone can operate, explained Frazer. But what does that actually mean?

DAV in a Nutshell. Video: DAV Network/YouTube

In the past decade, the sharing economy was built on a “peer-to-peer” promise of connecting people with cars, homes, and other things to those seeking fractional usage of those resources. This has created many billion-dollar tech companies. Think of Uber, Lyft, and Airbnb: These companies won customers’ trust via ubiquity of service, user reviews, and seamless payment. But these companies are far from perfect. They charge substantial user fees, they usually require users to have a credit card and a smartphone, and they consolidate vast amounts of your data to offer their services and, at the end of the day, boost their bottom lines. This setup isn’t really peer-to-peer, since it requires a central authority like Uber to act as a clearinghouse that processes data and payment, and matches riders and drivers.

“We think of Uber and Lyft as P2P marketplaces, but they’re not. They’re peer-to-giant-monopolistic-company-to-peer marketplaces,” said Josh Fraser, co-founder of Origin Protocol, another blockchain startup that, like the DAV Foundation, will use smart contracts to facilitate peer-to-peer sales.

“As we continue to see companies have more monopolistic positions, we’ll see them abuse their power more and more. That wasn’t the original dream [of the internet]—but it’s become that,” he continued.

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Origin Protocol aims to take data out of the hands of private companies and store it using the Ethereum blockchain and the Interplanetary File System (IPFS). Decentralized apps can then interact with these data repositories to create any number of “Uber for X”-style services, all without a private company holding people’s data ransom for a profit.

It sounds utopic and downright revolutionary: a world of benevolent social enterprises and non-profit organizations seeking to empower consumers and give them back their privacy rights, and maybe save them some money too. So what’s the catch?

“The idea that mainstream consumers will directly interact with blockchain technology—or any piece of code—without intermediaries is completely silly,” wrote Arvind Narayanan, a computer science professor at Princeton who studies blockchain, in an email. “I think that success in these markets will be driven primarily by economies of scale, and the openness of the underlying technology is irrelevant to consumers.”

“Perhaps the new intermediaries will take a smaller cut compared to Uber or Lyft, but that will mean they will have less to invest into improving their service,” said Narayanan. Indeed, both DAV and Origin claim they won’t take a cut from transactions on their platforms.

Instead, the non-profit DAV foundation plans to fund itself through proceeds from an upcoming token sale called an initial coin offering (ICO), which Origin is also planning. In an ICO, investors buy digital tokens from startups, often with the promise that the tokens will appreciate in value in a speculative aftermarket, making them extremely controversial. Fraser of Origin said though the company’s technology is open-source, it sees several revenue opportunities, such as fees for “identity verification” or helping businesses develop using their protocol.

All of this is partly driven by a few key assumptions: that blockchain technology will usurp tech goliaths, that the technology they use doesn’t get regulated into submission, and that future generations will continue to hate turbo-capitalism as much as millennials supposedly do.

The future of blockchain may be nebulous, but autonomous vehicles are coming. They’re going to deliver your food, drive you to the airport, and even mow your lawn—and they’re going to need to get paid. We just need to figure out if the effort is worth owning our own data.

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