Arcade City: Decentralized, Blockchain-Based Answer to Uber

The city of Portsmouth, New Hampshire passed an ordinance regulating ride-sharing services that took effect in September of 2015. The ordinance made driving with Uber and other ride-sharing companies illegal within the city limits. Christopher David, a former Uber driver, launched the Free Uber campaign using Bitcoin prize pools to incentivize activism protesting the ordinance.

Now, in the wake of protests by Uber drivers over the company’s decision to cut fares, David is launching his own blockchain-based ride-sharing platform, Arcade City. To promote the new platform, he and nine other drivers gave 100 rides on New Year’s Eve on a donation-only basis.

Cointelegraph spoke to David about Arcade City.

Cointelegraph: You were an Uber driver before. How does this system contrast with traditional ride-sharing services like Uber and Lyft?

Christopher David: Imagine a decentralized Uber that connects drivers with customers peer-to-peer using the Ethereum blockchain. When we hit $2 billion in annual revenue, it won’t go to line the pockets of investors or sustain a corporate hierarchy. It will be reinvested in our drivers, and in improving the customer experience.

Driver engagement is key. Thanks to our Free Uber campaign, I got to connect and speak with Uber drivers all over the country. Dealing with government regulation is definitely an issue for drivers, but an even bigger issue has been drivers being mistreated by the distant corporate HQ. I’ve been a driver myself, working sometimes 50 hours per week. I’ve been to the meetings. I've seen firsthand how drivers are treated and how feedback is ignored.

Uber and Lyft are run by nerds in San Francisco. To them, drivers are just numbers. The fares that determine drivers' livelihood are just levers to push and pull to maximize profit. The driver uproar and mass protests following last week’s rate decrease tells me this is the perfect time to launch a decentralized alternative.

Arcade City is beginning with a grand conversation with drivers. Our question: If you had to design a ride-sharing app that best met the needs of riders and drivers, what would it include? The amazing ideas contributed just this week will keep us busy for years.

Christopher David, a former Uber driver

CT: How about newer ride-sharing platforms such as La’Zooz?

CD: La’Zooz ran a great experiment with their proof-of-movement token, and we will look at integrating similar ideas down the road. We are in touch with their team and expect to work together with them moving forward.

But our approach to the critical mass problem is a bit different. We are taking a hybrid approach, combining distributed dynamics with the type of service people expect today of a company like Uber. The objective is total decentralization on the blockchain, but we are starting with an emphasis on driver engagement and integrating driver feedback.

There are countless thousands of angry Uber and Lyft drivers looking for an alternative. We’ll start by building what they want, then move in the direction that we know will maximally benefit both drivers and customers over the long term: decentralization on the blockchain.

CT: What are the technical aspects of the platform you're using?

CD: In February we are launching a simple MVP app for Android and iOS. Nothing complicated, just simple ride requests with basic gamification to build the Arcade network, using the same referral-based promotional tactics that got us 500 drivers signed up in our first week. Ethereum integration will begin in the spring.

The key technical differences between Arcade City and the big ride-sharers stem from how our operation is structured. Not like the hub-and-spoke model of Uber and Lyft, with a headquarters in San Francisco centrally setting rates for a number of independent contractors that border closely on employees. We’re building a peer-to-peer network like a mesh, and taking a page from Rick Falkvinge’s book Swarmwise by pushing the relevant decision-making authority out to the edges of the network. For Arcade City, that means empowering drivers with tools to create their own recurring customer base and make their own decisions like any entrepreneur would.

The Achilles’ heel of Uber and Lyft is their centralized management of pricing. This week's uproar by drivers — and their willingness to join an alternative — shows the failure of that approach. You cannot build a long-term relationship with drivers if you are taking away their ability to set their own pricing. Arcade City will decentralize those decisions to the level of the driver and their customers.

In the end, Arcade City will be a protocol composed of Ethereum smart contracts supporting a global logistics network with an entire ecosystem of apps and businesses running on top of our infrastructure. What SMTP is to email, Arcade City will become for distributed logistics.

CT: How are drivers getting paid? Bitcoin? US dollars?

CD: At launch we will offer two payment modes: peer-to-peer and gamified. Peer-to-peer mode will let drivers accept whatever payment methods they want to work out with their customers. They can take cash, credit cards through Square, PayPal, Bitcoin, whatever they feel like supporting — and keep 100% of their fare. Or they can use gamification mode, which requires payment through the app and offers perks and prizes for ‘leveling up’ your driver or rider profile. Think Habitica meets Uber.

We expect most rides at launch to be peer-to-peer mode because we won’t yet have much built out in the realm of payment processors and the like. But by summer we expect most rides to be gamified, which will let us take a transaction fee. We plan to always have a lower fee than Uber and Lyft. They take 20% or 25%, we will only take 10%. About half of that 10% will go up the tree of referrals to pay whomever recruited that driver, and a similar referral tree for riders.

Down the road it will be interesting to offer drivers and riders the opportunity to pay in Bitcoin instead of USD and pay fewer fees. Can we make it easy and worthwhile for consumers to pay in Bitcoin, and drivers to request to be paid out in Bitcoin? By tying Bitcoin adoption to additional rewards in our gamification layer, we definitely think so.

CT: Are you worried about running into legal issues by using such a radical platform?

CD: Excited, not worried. Approximately all laws about ridesharing are outdated and in need of revision.

Uber’s approach is to push governments to regulate ridesharing in a manner favorable to their particular business model, stacking the deck against smaller competitors.

No doubt our more decentralized approach will come into conflict not just with existing laws, but also the laws Uber is pushing governments to adopt.

We are excited for the fight. And anyone who’s been following the Free Uber saga in Portsmouth, NH knows that our core group is up for any battle.

CT: How has the reception been so far?

CD: Amazing all the way around. The inbound interest from drivers, riders, developers, potential regional leaders and strategic partners has been overwhelming.

Less than two weeks ago we set a goal of signing up 100 drivers by the end of January to help test our app in preparation for a Valentine’s Day launch in two or three cities. Instead we’ve been averaging 100 drivers signing up every day since Uber and Lyft decreased their fares. We’ve had to hire part-time help just to deal with the influx of interest. We’re now in the process of scaling out our operation: appointing regional leaders, building our developer team, and crafting a strategy to absorb Uber and Lyft’s networks.

Drivers are excited, but so are other transportation companies. We even have a major taxi company here in Portsmouth already wanting to get all of their taxi drivers hooked up to the Arcade City platform.

Given that we had the idea for Arcade City about three weeks ago, I’d say we’re off to a strong start.