As a technology company, we’re always following the latest innovations; it’s fascinating to see the potential that it can bring both at a personal, business and societal level. It allows us to reimagine the way that we do things for the better.
Blockchain has been around for a while and it’s a technology that certainly has potential for mobility-as-a-service (MaaS), so we thought we’d take a look at what blockchain is, the pros and cons as well as some of the future possibilities for the transport sector.
What is blockchain?
Blockchain is what’s known as a distributed ledger technology (DLT). It was first conceptualised in 2008 by Satoshi Nakamoto and formed the backbone for Bitcoin, which has received a great deal of publicity over the years. Today, it’s the foundation for many alternative cryptocurrencies and applications.
Essentially, it’s a decentralised database that’s distributed across many computer ‘nodes’ all reflecting an identical ledger. This database is made up of blocks of information which are ‘chained’ together using cryptography. Only ‘approved’ new blocks can be added to the chain. Immutability is a major part of the technology, with the blocks time stamped for auditability and traceability.
Why is it being considered for MaaS?
Blockchain is mostly synonymous with the financial industry and is starting to be used in stock exchanges with the Australian Securities Exchange (ASX) rebuilding its CHESS settlement system and the Swiss Infrastructure and Exchange (SIX) looking to launch a blockchain platform to speed up trading, according to CoinDesk.
But now other industries are exploring blockchain too. Indeed, it’s being researched and piloted in the transport sector – particularly freight and logistics – as there are several potential benefits, which we’ll discuss below. Catapult Transport Systems in collaboration with the University of Sheffield believe that it will make supply chains more transparent and be an enabler for MaaS platforms, as noted in their concept paper ‘Blockchain Disruption in Transport – Are You Decentralised Yet?’
The current problem for MaaS is that it’s a fragmented market place with lots of different booking, ticketing, and other proprietary systems that are not consumer-centric. Everyone is vying for control – and that usually means centralised systems. Blockchain may allow us to take a different, more favourable approach.
The pros and cons of blockchain
It’s the fact that blockchain is decentralised that makes it so appealing. It’s a totally different paradigm, one that could make an open ecosystem for MaaS a reality. That’s one of the essential factors to making MaaS work on a vast scale. But there are other potential benefits for the transport sector too:
- It allows data sharing between stakeholders that don’t know or trust each other. This could support greater collaboration between competing transport providers or even open up new business models.
- There’s no need for intermediaries such as finance or legal due to smart contracts. This means no middleman, which could potentially lower costs and make the process faster and more efficient. E.g. if someone was entitled to a refund for late running transport, they could get a refund easily without the need to manually verify.
- Transactions can be easily audited and traced as data is tamper-proof; it can’t be changed or deleted once it has been committed to the blockchain.
- It provides one, single version of the truth – within seconds, not hours or days (as it is at present). What does this mean for the sector? Real-time analytics and reporting on capacity issues and transport disruptions, as well as the opportunity to optimise the system. This is critical regardless of whether you’re moving people or goods.
- End users, for example the traveller, could own and manage their own data – in addition to the benefit to the customer, it could also help to support the General Data Protection Regulation (GDPR).
Blockchain has the potential to open up MaaS for both large and small players, bringing more choice to the end user whilst avoiding the current fragmented marketplace. If regulators also view blockchain from a customer-centric perspective that will further help to ensure outcomes are in the users’ best interests.
Whilst Craig Fuller, managing director of The Blockchain in Transport Alliance (BiTA) was specifically talking about logistics and supply chain, his comment in a Forbes article is also true of MaaS, “Blockchain is a technology that’s ideally suited to the transportation industry and one we believe—insist really—will prove transformational in its impact. Fundamentally, it’s a technology that allows people/companies who often don’t really know or trust one another naturally to engage in commerce.”
Of course, with every upside there are potential issues that will need to be addressed as well. Firstly, it’s still relatively untested in the transport sector although clearly there are pilot projects underway. Some of the potential issues could include:
- Throughput and latency: information blocks need to be added promptly to the blockchain. The mechanisms used to ‘approve’ data impacts the computational cost. Proof of Stake for instance is less expensive than Proof of Work.
- Legal implications: if data can’t be erased, that conflicts with current GDPR legislation where an individual has the right to be forgotten. If data is immutable what happens when a user wants to erase their MaaS or ride hailing account?
- Cybersecurity issues: because it’s early days, the risks and consequences of the technology is difficult to gauge. In theory the blockchain is supposed to be very secure but its still unknown. Privacy is also another key concern.
- Organisational mindset: businesses aren’t used to working in a decentralised manner. Control is part of their ethos. The change in mindset that blockchain would require could be a challenge for many organisations.
And therein is a major part of the issue with blockchain. Yes, there are technological, legal and security concerns but organisational willingness to be open to new ways of working is a must. You only have to look at how long it’s taken many organisations to move to the cloud. It’s understandable in some respects as a great deal of time and money have been invested into existing systems. Change or piloting new ideas can seem overwhelming too.
As travelspirit points out in its whitepaper, TSio Protocol: The Internet of Mobility, “Complex legacy systems, for booking, ticketing, scheduling and journey planning, built around data and transport supply, are creating barriers to innovation and a seamless user experience.” Coupled with this, is the commercial tendency to want to retain control and hold onto the status quo for fear of losing ‘their’ customers. It goes on to point out, “This is not a future we look forward to, and it does not fit with the wider trend for decentralised market places, that is being enabled by the Internet of Things and Blockchain technologies.”
A future of possibility
Whilst we can’t underestimate the complexity of enabling blockchain, it certainly has the potential to reshape MaaS to create a better future for transport. And despite the issues there are companies across the automotive and transportation sector who want to change the way that we think about and use mobility with blockchain at the heart, such as the Mobility Open Blockchain Initiative (MOBI), which aims to make mobility safer, less expensive, environmentally friendly and improve accessibility for all.
And that’s what the majority of us in the industry want to see. As highlighted in the earlier Catapult and Sheffield University paper, “Blockchain represents an opportunity to mitigate against centralised platform issues, with open, transparent and decentralised principles. It could shape new markets in new ways and push MaaS innovation in a different direction.” It’s these underlying principles that are core to the success of MaaS, that makes it vital that we take technologies like blockchain seriously and step into unchartered territory. After all, open access to data, APIs, mobility offerings and more will only help to bolster MaaS and hopefully move us closer to providing integrated travel experience our users truly deserve.