Blockchain-based Car Sharing

The success of the automobile has become its biggest challenge

Dieter Zetsche

I would like to start this post with a quote of Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. Everyone living in an urban area probably knows what Dr. Zetsche is referring to. Under the term “smart mobility” OEMs, startups and research institutes are reinventing our understanding of mobility. One approach that has gained increased popularity is car sharing. Although, many people would probably (still) hesitate to share their own car with a complete stranger, car sharing solutions such as car2go, where companies own the shared cars, are a great success in urban areas.

Smart mobility requires smart ideas and revolutionary, maybe even destructive approaches. This is why I would like to introduce you to blockchain-based car sharing. This idea came into my mind a few months ago when thinking about possible applications of blockchain in the mobility domain. Obviously, I am not the first one with this idea. When searching for blockchain-based approaches for car sharing on the internet, one can see that many big companies and even startups already work on concrete solutions. There even exist startups that specialized on exactly this use case.

So let’s have a closer look into how a possible blockchain-based car sharing solution could look like.

The blockchain provides a way to operate a bookkeeping system without a central authority while still maintaining a consensus regarding the one correct state of the bookkeeping among all involved participants. Traditional bookkeeping systems require a central instance to keep the overview and the correct order of all entries. Every participant can apply for a new entry. The central authority checks whether new entry is legitimate and adds it to the bookkeeping system. With blockchain no central authority is required anymore. The most popular application of the blockchain is the well-known cryptocurrency bitcoin.

When thinking about applications for blockchain basically every system involving multiple participants that exchange goods or services and that relies on a central instance managing those transactions, can be investigated. As I work in the mobility domain, car sharing came into my mind as one possible application. The transaction that has to be managed in this specific use case is a car rental. So, a car owner can offer a car for rental and renters can use the car for a period of time in exchange for a payment. There are several car sharing providers out there, such as car2go or DriveNow which all rely on a centralized backend system which authorizes rentals, manages the transactions and the payments. Also in the case of private car sharing, where anyone owning a car can provide it for rental to the public, is not new. Companies such a drivy provide a platform where car owner can offer their car to potential renters.

So the concept of car sharing is not new to the auto industry, but the use of blockchain technology to record vehicle ownership, track the use of vehicles, and issue insurance costs and other transactions is, in contrary, quite new. In contrast to solutions of today, car sharing would be much cheaper and accessible for a wider range of people. The intermediary would be replaced by an automated technology, leaving the complete earning for the rental for the car owner.

The startup darenta.io works on exactly that solution.

Darenta is a car rental service for owners who rent out their private cars. This project is a mobile solution based on geolocation, blockchain and technology of smart contracts. On this platform, any person or company can rent cars with insurance. Social carsharing works without a commission for car owners.

You can read their whitepaper here (PDF).

Not only startups, also big companies such as EY, are jumping on the train for a decentralized, blockchain-based mobility platform. EY’s solution is called “Tesseract”:

The platform facilitates fractional vehicle ownership, shared use and seamless multimodal transport and it will help lay the groundwork for how autonomous vehicle fleets can be owned in the future and provide access to a variety of on-demand mobility options.

At the end, what all those solutions have in common, is that blockchain technologies and smart contracts are used to build a car sharing platform without a central instance. In addition to that, blockchain gives complete transparency on who owns the car, and who has rented which car in what point of time.