In our last post, we introduced our first paper on how tokenization can transform markets for user-generated goods (i.e., free stuff you get online) by solving problems of profitability and allocation of productive resources. This is achieved through introduction of a theoretical type of token called a "Content/Bounty Coin," which is used to rewarded producers of free goods, and which can be used by consumers to set bounties for production of the goods they desire. We believe the same tokenized economic model can be applied to markets beyond user-generated goods. In fact, we believe this new model has the potential to transform markets for paid goods and services into markets for free goods and services in a way which benefits both consumers and producers. Here's one possible use case: replace Uber with free rides.
tl;dr
What we like: The convenience and price-point of riding with Uber. Driving for Uber to supplement or earn a living.
What we don't like: Public transport with limited routes and operating hours. Expensive cabs that are difficult to come by outside busy areas. The barriers to entry to becoming a cab driver. Government shutting down a useful service that we rely on without any input from us.
What we can do about it: Give free rides instead of charging for them. Reward the drivers with Content/Bounty Coin type tokens. Anyone can get a free ride, and drivers who give the most rides and get the best feedback get the most tokens. Riders can use tokens to set bounties to prioritize their rides.
Would it actually work? You tell us! While there would certainly be challenges, we think it could work. We welcome your feedback.
Goodbye, Uber. Hello, free rides.
No license?
On September 22, 2017, Transport for London (TfL) announced that Uber's license to operate in the city, which expires tomorrow, would not be renewed. This has left both riders and drivers surprised and upset. At the time of writing, over 800,000 people have signed a petition urging TfL to reinstate the license. Riders depend on Uber for a cheap, convenient means of transportation. Drivers depend on Uber as either a supplement to their income or, in many case, as their primary source of income.
The primary reason cited for the denial of license renewal is a failure by Uber and its drivers to comply with various regulations. While this may be true, Uber fills a crucial gap in the transportation systems and labor markets of London and many other cities. As a Londoner myself, I am dreading the loss of a transportation method I relied on. According to prime miniser Theresa May, TfL's ruling has put 40,000 jobs at risk. Simply put, there is nothing that can take Uber's place.
Or is there?
No problem.
Licensing is a problem for Uber, becuase Uber/the drivers charge riders money for their rides. You don't have to be licensed to give your friend a free ride. You don't need a license to give a stranger a free ride, either. The reason licensing is an issue is that the riders are paying Uber/the drivers for their rides.
That said, most people who are Uber drivers cannot just give free rides. Some people could do it some of the time, but it's unlikely that we could find 40,000 Londoners who could spend the time and money required to give rides on a regular basis without getting paid. Furthermore, it's not good for riders either if there's no way for them to pay for rides. Even if we had 40,000 altruistic drivers out there, if there was no way to pay for a ride, there would be no way to prioritize your ride. When you got picked up and how far drivers were willing to take you would be left to chance. Uber loses a lot of its convenience if riders can't get the rides they need when they need them.
So, what we need is a way for drivers to profit from giving rides without charging riders, and a way to allocate these rides in priority to the riders who need them the most at any given time.
Enter, the Content/Bounty Coin.
In our last post, we introduced the Content/Bounty Coin, a theoretical type of cryptographic token which is rewarded to producers of free goods/services and which can be used by consumers to set bounties for the goods/services they desire.
A Content/Bounty Coin could be integrated into an Uber-like platform to solve the problems discussed above.
Rather than have riders pay drivers for rides, the platform could mint new tokens to reward to drivers who give free rides. The rewards could be allocated between drivers based on some combination of total distance driven and feedback from riders (e.g., stars in Uber). This is very similar to how Steem rewards bloggers with tokens based on reader feedback.
Token rewards for drivers (assuming the tokens have some value to their holders) will increntivize drivers to give rides free of charge, but will not incentivize them to pick up any particular rider. To prioritize their rides, riders can set bounties for drivers to pick them up. The higher the bounty, the more likely drivers are to prioritize the ride. Riders along the same route can even pool their bounties together (like Uber Pool). Just like dollar voting in market economies, bounty-setting will ensure that rides are allocated to the riders who value them most. Riders who don't have a pressing need for a ride can just wait until they get picked up by drivers seeking the general token reward for giving free rides.
You may be thinking: "What's the difference between paying for Uber rides in fiat and setting bounties for rides using tokens? Eventually, governments will regulate both activities." This may be true, and drivers who wish to pick up bounties may need to get licensed to do so. However, there will still be an incentive for unlicensed drivers to give free rides to earn the general token reward. Furthermore, those drivers who do get licensed and give bountied rides will add value to the entire system through the positive value feedback loop between ride-rewarding and bounty-setting. Since the ability to prioritize rides thorough bounties is valuable for consumers, this will increase demand for the "Free Ride Content/Bounty Coin", causing its price to rise. As the prize rises, there will be more drivers giving more free rides to pick up the general token reward, benefiting all free riders.
Overall, even if drivers who want to pick up bounties need licenses, and even if some riders cannot afford to set bounties, the result is a platform for rides that's much better than Uber. With a tokenized free ride platform, at the very least, you will get a free ride if you wait long enough. On the other hand, if Uber loses its license or you cannot afford to pay for an Uber ride, you don't get any rides at all.
Furthermore, although there will be challenges, this may be a relatively easy use-case for which to implement a robust and scalable bounty system, since:
- ride criteria is objective (was rider taken by driver from point A to point B in x minutes), and
- satisfaction of ride criteria can be efficiently validated by machines using GPS tacking.
Other, non-tokenized methods for implementing a free ride system are not as viable:
- Ad-based monetization would be difficult, since it would be costly to install ad display screens in the car, and it would be unpleasant for riders. Furthermore, drivers would not have an incentive to get riders where they need to go, since they would probably earn more for keeping riders in the car longer. Nor would there be any way to prioritize rides by their value to the rider.
- Tipping/donations place a lot of risk on the drivers, meaning less rides would be given and the system would not be sustainable.
- It's somewhat difficult to imagine how freemium rides would be implemented, but in any event, since the riders would need to pay the drivers to access the premium features, all drivers giving freemium rides would likely need to be licensed.
So, what do you think? Would it actually work? Let us know your thoughts in the comments, or contact us through any of the methods below. Your feedback and participation are greatly appreciated!
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Cover image by David Holt. Licensed under CC BY 2.0.