Analyzing the use of distributed ledgers for micro-mobility
The challenge of having quickly-verifiable transactions with a level of data privacy represents an opportunity for DLT platforms to become the de-facto solution for the emerging micro-mobility sector.
Industry leaders have taken note of the potential of blockchain technology, especially in the automotive and mobility industry. Head of blockchain and distributed ledger technologies at BMW Group, Andre Luckow explains how blockchain can make it possible for consumers to take control of their data. The articles also mentions the potential for the technology when applied to the rapid growth of mobility services and the sheer number of interconnected vehicles and sensors we will have in the near future.
There are a number of applications of blockchain technology in this space. To name a few:
- Digital identity and data ownership
- Verifiable vehicle history
- Usage-based insurance
One idea in particular being explored by Helbiz is an open data marketplace — where users of services maintain ownership of the data they produce and are able to monetize it.
Any data produced by a person using the service is managed at the wallet level, only being shared with the rest of the network when the owner decides to. In this paradigm, users only grant access to their data to specific applications only when it is required or incentivized. Having this data available at scale would create marketplaces where, for example, anyone interested in knowing how many scooters were rented over the holidays between two city landmarks can purchase the relevant datasets and have the payments be automatically routed to the data contributors. Payments, the reference of data, and the automatic routing of micro-payments would be managed in a decentralized fashion. The exact mechanics of this can be thought up in a myriad of ways, but it would be fundamentally different from the client-server model of Web 2.0.
From Web 2.0 to web3
The term Web 2.0 was coined in 2004 to describe the second version of the internet, one where content was user-generated and websites were more dynamic than ever. However, this stage in its evolution gave rise to the tech companies that currently dominate the landscape. Some act as gateways and facilitators to the internet (Apple, Microsoft), while others provide services in exchange for data (Google, Facebook).
The explosion of activity in the blockchain space has given prominence to the term web3 which was coined by Gavin Wood, former CTO of Ethereum. It represents a monumental paradigm shift, replacing centralized applications with peer-to-peer networks and decentralized protocols. Every facet of web applications will be designed to manage data in such a way that makes it difficult for bad actors to participate. That being said, this goal of reshaping the infrastructure of the web comes with a large challenge of privacy — not compromising sensitive information in an environment of transparent transactions.
Decentralized data stores
To support the paradigm of web3, existing cloud architectures must use some sort of distributed ledger technology (DLT) to structure the data such that it is difficult to alter after-the-fact, while still having it available for different parties with varying levels of access. If we are to use the Ethereum smart contract model where all data stored on-chain is publicly available, we would need a way to store certain data publicly for immutability, while obfuscating some of the more sensitive and identifiable parts.
Ethereum is often described as a world computer, one with a global state that allows an arbitrary number of instructions to run on it. Using it as a database is very expensive, and although reading from the blockchain is free, updating its state is not. The larger the records being saved and the more storage is used, the more expensive the transactions are. Running intensive calculations on-chain are also not feasible. This is why using blockchains such as Ethereum as a data store is extremely inefficient when compared to current cloud services.
Moreover, token models simply don’t work for all real-world business problems; they are not a one-size-fits-all solution. While an ERC-721 is good representing a set of baseball cards or a digital asset in a game, it does not for an item in a supply chain where data is being accumulated and its ownership is continuously being transferred — all of which would require state updates. The same logic applies when managing user-generated and user-owned data that can eventually be exposed to interested parties.
IPFS offers decentralization as any data stored is distributed amongst nodes in the network. Files are not addressable by location (domain/IP-based) but by the cryptographic hash generated from their content. This makes the content tamper-proof as it would change the hash. Once a file is propagated by the network, anyone can access it using an IPFS client or public gateway. The problem with this solution is that the content of the files is publicly available, as long as the hash is known. The only way to mitigate this is to encrypt the file before uploading it, and share the private key with whomever needs to decrypt the file. Using this method of storage for sensitive information and the subsequent transfer of it is sure to have its set of problems when done at scale.
Any developers interested in seeing how data storage can be achieved using Ethereum and IPFS should check out this github repository.
Currently, many DLT projects are not mature enough to handle production usage. Some are good at some things, others not so much. It’s easy to envision a future where different technologies are used for different applications. Bitcoin can eventually be used as a store of value. Ethereum has paved the way for technology labeling itself decentralized finance. However, we have yet to declare a leading DLT solution for the Internet of Things (IoT) and the open data marketplaces that are guaranteed to follow. There are unique problems when dealing with interconnected devices, and perhaps it’s a combination of solutions that will be used in this emerging sector. If we track interactions between devices and human-generated events in an immutable and transparent fashion, the solution must be lightweight enough to circumvent problems related to connectivity, bandwidth, and low-power resources.
Alternative DLT projects
In the context of IoT and blockchain, the project with the most headspace is arguably IOTA. What stands out about their proposition is the use of a directed acyclic graph (DAG) they call the “Tangle”. With this data structure they claim a highly scalable network, where transactions are transparent but are able to hold encrypted data. However, the project has been criticized for lacking technical judgement, and the general performance of the Tangle has yet to be proven. In fact, a recent post of theirs discusses their new testnet which does not have a validator to verify whether transactions are valid or not.
Tupelo is a new DLT project by Quorum Control, with a different data structure of nodes being organized into what they call “chain trees”. This is fundamentally different from having blocks organized as a linked list because now each asset can be its own branch with its own set of transactions. This allows for a more efficient transfer of ownership rights for unique assets and data because it only requires verification of relevant transaction history. The network makes use of a Byzantine Fault Tolerant (BFT) consensus algorithm for resolving conflict sets, using a native utility token called Tuple for rewards, staking, and general payments. Although their technology hasn’t been used in production, they differentiate themselves from Ethereum and Hyperledger in that their solution is novel and built for individual objects, featuring a cheaper consensus algorithm (modeled at $0.0008 per transaction) with faster transactions and offline capabilities.
Mainstream blockchain technology in its current state might not be able support the wide variety of applications for the mobility sector. There are large-scale efforts to bring Ethereum closer to production via Layer 2 scaling solutions, but it remains to be seen whether they will be ready in time to keep developers on the platform. The challenge of having quickly-verifiable transactions with a level of data privacy represents an opportunity for DLT platforms to become the de-facto solution for the emerging micro-mobility sector.
