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Blockchain could enable new peer-to-peer transport network

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Blockchain could underpin a future integrated transport system – without the need for large, costly, centralised control mechanisms, according to a new UK research paper from the Transport Systems Catapult (TSC) and the University of Sheffield.

A new decentralised, trusted, peer-to-peer model could emerge and shift ride-hailing and other on-demand transport services away from cut-throat competition and socially disruptive forces, and towards a new model in which everyone benefits, it adds.

In the concept report, Blockchain Disruption in Transport: Are You Decentralised Yet?, the  TSC urges government and industry to explore the technology’s potential uses in transport.

Transparent results

The authors carried out a survey of transport industry and public sector professionals. The results revealed that “respondents were in strong agreement that blockchain will make supply chains more transparent, be important in the future development of intelligent and connected vehicles, and enable mobility as a service (MaaS) platforms.”

The report continues, “Blockchain could help to increase collaboration, the sharing of trusted information and efficiency, reduce costs and risk, and forge new business models in the transport sphere over the coming years.

“The features that generate these proposed business benefits are: consensus, immutability, provenance, finality, a single version of the truth, customisable transparency, and decentralisation. These features enable traceability and auditability, disintermediation, and smart contracts, which also contribute to the business benefits.”

However, the paper adds: “We are not promoting blockchain as the answer to all questions, but wish to stimulate debate and the identification of real value. There are currently several technological, social, and legal challenges to the use of blockchain. We encourage the transport industry to explore its potential, initially through experimentation and demonstrations.”

Acknowledging the downsides

The report acknowledges that blockchain has as many naysayers as it does fans. The concept is “difficult to grasp, which means it is less likely to be proposed by professionals and pushed by decision makers”, it says.

“Blockchain is unique among emerging technologies in that there appears to be an equal amount of both positive and negative hype,” it continues. “Arguably, positive hype usually outweighs negative for nascent technologies. Such polarised views include ‘Blockchain is the answer, but what was the question?’ contrasted with ‘Blockchain is a useless technology’, and ‘Blockchain is dangerous’.

“These are not positions supported by the consortium (Transport Systems Catapult, University of Sheffield and collaborators). We have conducted a project that set out to cut through both forms of hype and explore where blockchain could add real value in the transport industry over the coming years.”

Stressing the benefits

The report found that, while the technology is still some years from maturity, natural synergies exist in areas like freight and logistics, autonomous vehicles, and on-demand mobility, where the technology could be applied in the future.

The report says this is because these areas typically involve multiple businesses with potentially competing interests. Players demand an environment of trust and transparency in order share data and work seamlessly – which plays to the strengths of blockchain and other distributed ledger systems.

In one example, the report highlights that the decentralised nature of blockchain could provide an alternative future for MaaS business models – one of decentralised ride-hailing, where transport is supplied on demand to subscription customers.

Blockchain could help avoid the situation where centralised platforms dominate and control service provision and data, leading to minimal competition. Instead, the technology could facilitate a decentralised network of transport operators by providing built-in trust, consensus, and immutability in data and information sharing, it says.

Passengers could also have greater control over their personal data, suggests the report.

“Recently we have seen issues deriving from centrally controlled ride hailing platforms. Powerful third-party intermediaries between vehicle operators (value creators) and passengers (value consumers) have executed automatic commission increases on drivers and had issues with public authorities. These issues have led some to question the longevity of this operating model.

The inherent attributes of blockchain technology could enable a decentralised peer-to-peer community where drivers can set their own fares and transact directly with customers, cutting out the intermediary.

“Members of the network would perform roles that enabled the system to operate, for example, ID verification and validation of completed journeys and enable the transfer of funds, all through consensus.

“Immutable and transparent driver and passenger reputation scores could be written to the blockchain, thus incentivising good behaviour. Customers would engage in the network via a portable blockchain mobility account, giving them control over their own data and identity, and providing their mobility preferences to relevant parties.”

The report goes on to suggest that blockchain could also help to integrate autonomous drone fleets into the existing transport network, without the need to establish large regulatory organisations to track and monitor their use and licensing.

Not there yet

Alongside these promising visions of consensus-based, peer-to-peer transport, the authors acknowledge the technology’s inherent limitations: “The limited transaction size constraint in blockchain is a function of design.

“Blockchain is not meant for large-scale data storage. Its purpose is to validate and share small pieces of trusted information across a network of members. Though it could be repurposed in the future with technological developments.

“Public blockchains, such as Ethereum use the computationally expensive Proof of Work [PoW] consensus mechanism. They use PoW as it helps to make the network secure. Private blockchains, such as Hyperledger15 do not use PoW. Instead, consensus mechanisms that have a fraction of the computational cost are used, such as those based on voting.

“The current transaction rate and latency is adequate for some transport use cases, but precludes others for the moment. As the technology develops more use cases could be unlocked.”

Real-world impacts

To put the current transaction rate in perspective in the transport sector, in 2016 all UK ports combined processed on average 16,000 container units per day, according to the report. If ten pieces of information for each container were added to a blockchain as they move through the port, this would result in a transaction rate of two per second – less than the average Bitcoin TPS of three per second, for example.

However, the average number of passenger journeys in England during the peak morning hour (8-9am) is 14 million. If five pieces of information were added to a blockchain for each journey, and evenly over that hour, this would mean 20,000 transactions per second – one thousand times faster than the Ethereum blockchain is capable of working, for example.

So could blockchain possibly deal with such a workload?

“There are projects underway which look to address the current constraints, such as the University of Sydney’s Red Belly Blockchain, which boasts 400k transactions per second,” says the report.

“BigChainDB aims to combine scalable distributed data storage with blockchain. The public blockchain Ethereum is also planning on moving away from PoW towards a new consensus mechanism called Proof of Stake (PoS), that is less computationally expensive.”

More, blockchain’s proponents challenge the view that a TPS measurement is the right way of looking at a system in which smart contracts, consensus, and trust are distributed across a network.

They point out that only those who operate network nodes incur the real costs of executing smart contracts, by being charged a fee that is proportional to the processing burden. Appropriately enough for potential transport deployments, this fuel is known as gas. In this sense, blockchain is a simple, proportional ‘pay to play’ approach, they claim.

Blockchain: Step on the gas

Overall, the report concludes that the business benefits of blockchain to the transport sector could be:

  • Increased collaboration: Sharing information and processes between businesses (B2B) and customers (B2C).
  • Increased sharing of trusted information: Enabling consensus-based validation of information, via a distributed, replicated database, to ensure data integrity.
  • Increased efficiency: Removing duplicated effort by maintaining a common ledger which can be used to manage smart contracts and dramatically streamline processes.
  • Reduced costs: Removing the need for third-party intermediaries, as well as the duplicated effort that is required for maintaining separate databases which contain the same information.
  • Reduced risk: Minimising errors and the risk of malicious tampering, with traceable transactions that can show who did what and when to both tangible and intangible assets.
  • New business models: Creating new commercial opportunities and revenue streams, as a result of decentralisation and disintermediation (cutting out the middlemen).

TSC CTO Mark Westwood said: “Blockchain is still a new technology, but it has the potential to disrupt parts of the transport industry in a similar way as it has in finance. Other countries and business are exploring its potential right now. The technology’s disruptive potential is such that the UK transport industry needs to start paying attention, so we are not caught out later.”

Professor Lenny Koh, director of the Advanced Resource Efficiency Centre (AREC), at the University of Sheffield’s Management School, added: “Our transport systems and their wider networks and supply chains are increasingly digitalised. The traditional ways of managing transactions and resources in-order to provide frictionless processes, mobility, products and services to users are no longer efficient.

“Blockchain as a disruptive technology. Used in conjunction with the Internet of Things and artificial intelligence (AI) in the cloud, it can add further value and have a transformational impact on transport, including the acceleration of the machine-to-machine (M2M) economy.”

Internet of Business says

To help unlock the potential value in blockchain for the transport sector and assist the UK to become a leader in blockchain-based transport solutions, the report makes the following recommendations:-

Government and industry should work to increase understanding and knowledge sharing of blockchain across the transport sector through the establishment of a Community of Interest (CoI).

The market should be stimulated through a dedicated future mobility collaborative research and development programme, supported by the government’s Industrial Strategy Challenge Fund. This will enable new service models and technologies, such as blockchain, to be tested in market, de-risk their development, and help prove the value of use cases.

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