Using blockchain to power Africa’s mass-transit.
Our first posts in Matatu Mobility focussed on the root cause of Africa’s “messy” mass-transit. We discovered what most initiatives so far, have been missing and even came with an unexpected parallel between public transport and online search. We realized that Google’s page ranking approach could be inspiring for a revolutionary implementation of mass transit dispatch. One more similarity is a critical decision Google took in the very early days and that lead to one of its main competitive advantages, still today: an exceptional, initially hand-made infrastructure, built from hundreds/thousands of cheap PCs, efficiently assembled to rival IBM supercomputers. Today, the search engine handles billions of search requests per month, and in more than a decade, very few users have ever experienced a single downtime.
Blockchain to the rescue
Having successfully deployed AyWa in a few countries for scheduled, inter-city transport, we realized how infrastructure can either boost or kill in the egg, even the best designed dispatch.
Blockchain offers features that unexpectedly come handy in Africa’s context when running a mission-critical service like mass-transit dispatch.
- Unreliable connectivity vs always-on transport. The general intuition is that users expect the highest level of availability from Mobile Financial Services, for their funds are at stake. It didn’t take us long to realize that users are ready to re-issue money transfers, re-attempt a dropped call and even accept few hours of downtime…but when it comes to transport, they set the bar far above. Riders can’t understand missing their bus/train because of some technical or connectivity issue. A train/bus will not wait for passengers having problems booking, receiving or validating their tickets. Mass-transit requires much higher uptimes performances than what most carriers can offer in Africa: GSM sites disruptions, core network equipment downtime, Mobile Money incidents, sometimes geopolitical crisis.
Blockchain decentralized approach offers a natural solution, in our case, nodes distributed across multiple MNOs in the same country and beyond. The problem here is slightly different from crypto-currencies’ initial target: malicious or untrusted parties, but the solution just fits.
- Privacy while sharing mass-transit data: City’s trending hotspots indexed and ranked, should be the core data on which urban planning, real-estate development, mass-transit dispatch and even local business foot traffic predictions etc…should be based on. This requires modern data sharing infrastructure while protecting riders/drivers privacy.
Blockchain ledger comes handy in this case, so that the data can be used by authorised parties, with some additional encryption to protect riders real-life identities.
- Chicken & Egg problem. Mass-transit, just like all dual sided markets needs to overcome the famous chicken & egg problem. Without enough riders, drivers have no reason to be engaged in the dispatch. And riders need to be sure there are enough drivers, to start booking. Many valuable startups died trying to solve this problem. Some of the successful ones today had to hack through the most dangerous routes: PayPal had to “throw” itself into the eBay’s ecosystem, at times, fighting with eBay’s own payment system. PayPal could have died multiple times, back then.
Crypto-currencies offer one of the most elegant solutions to this problem. While coins are used for transactions, they can also be are traded just like assets. Most are issued programmatically with limited supply, driving their value up as the ecosystem becomes more and more popular. Pre or post issued initial coins offerings reward early community contributors (developers, miners, investors…) that highly benefit from the coin’s appreciation. A Bitcoin is valued at over $1 000, from mostly $0 just few years ago. The Ethereum ecosystem is already worth more than $1 B after less than 3 years. This creates a powerful incentive at day one that kicks off the ecosystem.
We expect to leverage a similar mechanism with a “miles” tokens that riders can earn or buy with mobile money and pay drivers with. Miles will be tied to local fiat (not a floating currency on their own) and without any limited supply (no speculation). We believe that our creative bonus program will have the same effect and reward the initial community (riders, drivers, etc….) with clear liquidity milestones as the ecosystem grows. The difference between this approach and traded currency coins is that the tokens have a natural utility in the target sector. Miles are useful in transport just like airtime is in communications. Here are few closed-loop tokens projects backed by real-world utility: Storj, Chrono-Bank, Gyft Block .
While investors’ appeal drives coinApps valuations, we believe that external parties (i.e local businesses attracting mass-transit’s foot traffic) will contribute and expand the bonus program.
Aside from the initial reward, it is also a form of fair-trade where the actual users creating this data also benefit from the revenues generated from external players using it. Imagine Google sharing a fraction of its Ad revenues with online users, for sharing their “intentions data” (in search keyword) with online Advertisers. This is valid for Uber, Facebook and many other centralized marketplaces.
No transport. No industrialization.
Transportation is certainly challenging to fix but highly critical for countries. Beyond simply making it easier to navigate cities, it also determines the ability for a nation to connect its labor/skills/resources/production with its markets. It is the first building block in the road to industrialization.
Mass-transit is barely managed today in Africa. We believe that a major overhaul is needed, with a new mobile dispatch algorithm and modern infrastructure (blockchain) to handle the massive and growing urban demand.
Post by Toffene Kama & Michael Kimani
