Turo is a peer-to-peer car rental marketplace that currently lists about 150,000 vehicles. The way it works is simple. As a consumer, I don’t need to go to Avis or Budget to rent a car—I can rent my neighbor’s vehicle for cheaper. And as an owner, I can make money to pay off a car’s cost just by agreeing to share it. Turo (formerly known as RelayRides) estimates that renting out a new Honda Civic for 14.5 days a month earns enough to pay off a standard car loan over 72 months. Turo thus claims to be “changing the economics of car ownership.
The only catch is that, as a owner, I still need to give up a fair amount of economic value. Owners “typically receive” 75% of the amount paid by renters, according to the website, which means giving one in four dollars of everything I might earn to Turo. As with much of the sharing economy, you have to be willing to share a lot with the platforms to share with your friends. Just ask Uber drivers. They will typically sacrifice 25% of what customers pay just for the privilege of being part of the car-hailing giant’s digital matrix (perhaps more).
To true believers in the blockchain community, these sort of transaction fees are unreasonable and, perhaps in the future, unnecessary. They envisage a world where sharing would be more frictionless and where the platforms would play less of a role than they do now. In fact, we might do away with some companies entirely. By moving the sharing economy to the blockchain’s decentralized network, we would in effect own the platform ourselves.
Blockchain is best known as the technology underpinning the cryptocurrency bitcoin. First sketched out by bitcoin inventor Satoshi Nakamoto in 2008, it’s since been adapted as a way to track the movement of all kinds of digital assets, from insurance contracts and loyalty points to electrons on electricity grids. Blockchains are decentralized ledgers spread across thousands (or more) computers, and they have no singular authority. Each transaction within a time period is recorded in a block, which refers back to a previous block, creating chains of blocks. As such, they are thought to be highly secure and trust-promoting; the record is permanent and inviolable. If anyone tries to alter the ledger, there’s a record on all the computers making up the blockchain.
“Blockchains have the potential to reduce the transaction and trust costs that prevent car owners from monetizing their vehicles and driving data,” says Chris Ballinger, director of mobility services at the Toyota Research Institute (TRI) in an interview. “The ability to monetize their car could potentially provide greater financial security and better options to car owners facing financial difficulty or in need of extra cash.”
To be sure, this future is some way off, but TRI wants to make it happen. It recently formed a working group with several startups and academic institutions to explore applications of blockchain technology in the mobility space, and it wants to bring other manufacturers along with it. In the long term, it sees automakers creating a sort of secondary market in sharing. As you buy a car, we would be able to share it out when we don’t need it.
To find out about how shared mobility, like peer-to-peer car rentals and hailing, could move to blockchains I sat down with the team from Oaken Innovations. Oaken is an early-stage startup that’s part of the TRI group. It’s working on ways of fusing the internet of things–that is, networks of machines–with blockchain systems. They have a prototype for car sharing where Raspberry Pi devices (representing cars) have their own identity on a blockchain and where vehicles and people interact autonomously. The system is coded on the Ethereum computing platform, which is similar to the bitcoin blockchain but has better processing ability for large volumes of transactions and incorporates “smart contracts”–protocols that authenticate identity and enforce pre-negotiated contractual terms.
In the case of car sharing, a smart contract might verify that you actually own the car, state that you’re willing to share it with people with reputation scores of, say, 90% and above, and that the car is available on Tuesdays and Thursdays. Someone wanting a car would need to meet this criteria, then the protocols would unlock the doors for rental, and allow you to start the engine. The contract would also facilitate payment, perhaps using a dedicated currency for the purpose. That would allow participants to avoid financial transaction fees that come with using normal money–for instance, the fees we pay to Mastercard and Visa for more or less everything.
“On the software side we have tools to graphically monitor and manage smart contracts–the pieces of code on the blockchain that allow for these seamless transactions and rules to occur without a middle party,” says Oaken cofounder Hudson Jameson. “The back end would be vastly less expensive for the consumer to use because there wouldn’t be an entity taking a fee to run the service. It would be run by everyone using the service.”
Then, of course, there’s the question of automation. We may not be driving cars at all for very much longer. When we talk of a future of automated vehicles, we should talk about automating more than the driving system itself. The automation could also occur around the shared ownership of the car, the services associated with it (like insurance), and all the data that’s produced from the car. Ballinger hopes that manufacturers will collaborate in building a blockchain-based car-sharing network (he argues if the automakers don’t do it, other companies will) and also in the development of automated cars. It’s likely that such vehicles will need to be tested over hundreds of billions of miles before producing enough data to demonstrate their safety and reliability. If the manufacturers share their results through a blockchain network, they can move more quickly into the future and create “economies of scale,” he says.