Blockchain technology has the potential to simplify the carsharing business to instant and secure transactions, but its successful and widespread adoption is still limited by the weak growth of the innovation industry.
The revolution in this industry is already happening, although people who are not familiar with modern technologies may not notice it.
In China, you can rent a car using a street vending machine. It will scan your face, find the required information about you in the database, and a few minutes later, you can get a car for temporary use. All information about the transaction will be recorded on the blockchain, which guarantees security and transparency for each transaction party.
Hu Xianhe, CEO of Wukong Car Rental, which provides the service, speaks of a fundamental shift in modern consumer society.
In the future society, cars are no longer an asset. It is transformed into a service.
At the same time, the traditional field of car rental and leasing in the world seemed to be frozen in anticipation of the fatal blow from blockchain technology, like a gladiator knocked down.
New Consumer Philosophy
A secure, decentralized ledger, protected from withholding information and forging records – serving as such, blockchain has the potential to come to the forefront among existing technologies that are changing the way most industries work. This technology has proven to be very timely for the emerging and expanding carsharing market. The development of this market is affected by the significant transformation of the modern customer.
Why spend fabulous sums, denying yourself pleasant things for years, only to become the owner of a new car model at some point? Knowing that besides it you have to take care of its components and units, the need to timely undergo expensive maintenance, the obligation to pay transport fees and parking space.
Why would you want all this, if at any time and for the required period for an affordable amount you can become the owner of a high-quality car. Let it be for a while, but this time will be enough for you to pick up your daughter from school or visit parents in the country. The benefit of using transport as a service becomes even more obvious if the need for it is occasional.
If you own a car yourself, have you ever thought that while you’re sitting at work or sleeping, your car could bring you additional income? Idle time is essentially money you lose.
It is estimated that renting out one Honda Civic for 14.5 days a month earns enough money to pay off a car loan over six years.
Peer-to-peer Service Rental
Existing carsharing companies, in most cases, are centralized organizations with a large fleet of cars and staff. Renting a car from such an organization means paying not only for the depreciation costs for using the vehicle, but also for the activities of the entire company.
Vulnerable points in the work of such companies is the lack of transparency in documentation. As a result, the consumer does not always know the actual technical condition of the vehicle, whether the car has been in an accident, and whether he will be charged for the damage of others.
In addition to large carsharing companies with their fleets of cars, in recent years, the popularity of platforms that act as a link between car owners and renters has skyrocketed. Such as Turo or Getaround. These are peer-to-peer rental services, working on the P2P principle — person-to-person.
However, they keep about 25% of the profits from the transaction, just like Uber. They are also at risk of fraud and withholding information.
P2P Blockchain Platforms
The concept of blockchain in the car rental industry works like any other blockchain transaction.
Both car owners and their customers, registered on the blockchain, can sign digital smart contracts that fulfill the terms of the arrangements based on pre-agreed rules, similar to a conventional rental model.
The smart contract must contain all the necessary information. Such as tenant information — the availability of a driver’s license, insurance, and credit card information. As well as data from the owner — the vehicle registration number, the current cost of the car, the mileage, rental duration and the credentials of the car owner. All rent financial transactions can be done either by card or using linked cryptocurrencies and tokens purchased for registration on the blockchain.
India, Moldova, and Mongolia have already successfully implemented the UNDP carsharing project, and the move to blockchain technology in this service was described in 2020 as “towards a state of readiness”.
The Protracted Revolution
The year 2018 was a breakthrough year in the transition of carsharing services to the blockchain. In this article on hackernoon, you can get acquainted with ten revolutionary startups in this field at that time. And here, after reading just the first and last pages of the discussion, you can witness the rise and fall of the ambitious Helbiz project.
An intriguing beginning…
…and a typical forum review after a year
More or less successful, in addition to the Chinese Wukong Car Rental mentioned at the beginning of the article, can be considered the Indian Drivezy and the ShareRing project, which reached more than $190 million in market capitalization and expanded the network of services from carsharing to shared use in the tourism.
High requirements for the technological component of the platform, difficulties in organizing a productive community for successful implementation, low awareness of the benefits of blockchain in the mass consciousness — these and other problems of growth so far act as constraints in the development of the industry.
However, these are surmountable challenges, allowing some analysts to predict an average annual growth of over 30% for the vehicle blockchain market between 2020 and 2030. At the same time, Asian countries, primarily India and China, are mentioned among the most promising regions.