UChain Founder & CEO, Ian Yu, Interviewed by Bo Yi Finance — The Ebb of Bike Sharing Uncovers
On June 13, 2017, Wukong Bicycle announced its withdrawal from the bike-sharing industry and became the first insolvent bike-sharing company in China. After that, the number of bike-sharing companies, which had originally been boosted, dropped sharply and set off a wave of bankruptcies.
In 2018, those leading companies were also unable to survive themselves — Bluegogo was taken over by DiDi; Mobike merged in Meituan; and on November 28, David Wei, the founder of Ofo, said in an internal letter: “We’ll live even with kneeling down”. However, no one seems to believe that Ofo can survive this winter alone; it will be its last decency to be acquired by one of the giants.
In fact, not only bike-sharing, a series of sharing economy entities including car-sharing, powerbank-sharing, umbrella-sharing and so on, have been deadlocked. The capital has been leaving even faster than it entered the sharing economy in the past two years. Ian Yu, the founder of U-bicycle China — who is still able to maintain a healthy development trend during the “cold winter” of the sharing economy, revealed the secret of survival in the winter when he was interviewed by Bo Yi Finance.
“Sharing Economy” — straying far from where it was started
U-bicycle was established in September 2016. As one of the first bike-sharing companies to enter the Chinese market, the founder Ian has a deep understanding of the sharing economy: the original sharing economy, in actuality, a peer-to-peer model. Users share their idle resources with people who need them. This can efficiently help increase the utilization rate of the sharing items, thereby improving the efficiency of the entire society.
He believes that a number of Chinese sharing companies, from bike-sharing to umbrella-sharing, are essentially centralized companies. Through financing in the capital market, they purchase standardized hardware or services and finally distribute them into the society, which expresses more contents of rentals.
This model has a fundamental problem — whether it can in fact improve the utilization rate of social resources remains open to question. Furthermore, during the past two years, too many bicycles have been put on the market due to the vicious competition between enterprises and capital, which has caused serious waste of resources.
In this regard, Ian commented: “This is straying far from where the sharing economy was started.” In the early months of the year 2017, U-bicycle already concluded that this business model is not sustainable and began to actively seek for solutions.
“So we did a few things at that time, one of them was to take the initiative to move from China to foreign markets. We tried to expand overseas and explore better business models, since in some Western countries, the damage rate of bicycles is lower, and the efficiency caused by a single ride may be higher. Additionally, a single ride can be charged more — like a dollar or two.
Secondly, we want to try carry on a self-revolution by combining our blockchains with certain technology infrastructure and use the initial peer-to-peer business model of the sharing economy to innovate the existing model of purchasing a large number of bicycles and distributing them into the market.”
By its early entrance into overseas markets and introducing blockchain technology, U-bicycle has accumulatively deployed more than 500,000 bicycles in 40 cities over 5 countries and has 30 million users and 180 million total rides per year. It has maintained a stable and healthy development during the cruel industry reshuffle.
How a blockchain empowers shared mobility
In the process of operating U-bicycle, Ian summed up the three major pain points in the current shared mobility business model and used the blockchain technology to give a solution:
1) Waste
As mentioned above, a large number of current shared products did not exist and were manufactured to meet the specific sharing needs — this will cause actual waste of resources and deviate from the initial intention of sharing economy to improve the utilization of idle resources.
From overseas, we can see companies such as Uber and Airbnb. They don’t customize a batch of cars or houses. Instead, car owners and homeowners share their idle resources for those in need. In essence, the sharing economy is such a peer-to-peer business model and it is the best stage for the implementation of blockchain. By opening the nodes in the blockchain, the suppliers of bicycles (either organizations or individuals) can be added to the ecology. As more people joining in, we can make better use of the idle resources of the society and solve the problem of waste.
2) Inefficiency
The centralized platform operation is inefficient. Ian explained to us the practical problems encountered by U-bicycle: “We used to have a set of standard processes which each city would follow, however, this resulted in many problems. For instance, some cities prohibit big trucks to enter; in some cities we can only use tricycles to dispatch bicycles; some cities have particularly heavy traffic; etc. In this case, a centralized company will report these problems to the higher level and wait for their decisions, which is very inefficient.”
If we use the decentralization of blockchain technology, many smaller centers, such as a city or a university, will appear after removing the big center of the platform. Users in these small centers will spontaneously maintain the place they live. Enterprises will also shift from centralized operations to community-based operations, which are more efficient than top-down models.
After entering the overseas markets, U-bicycle has experienced and interacted with various cultures, user habits and government policies from different countries and regions around the globe. Centralized companies struggle to cope with different systems, while the way of community-based operations is clearly more efficient.
3) Cost
Every time a bike-sharing program is launching in a city, it is necessary to recruit a large number of people to dispatch vehicles, operate, and maintain the vehicles, all of which will incur very high costs. To combat this, companies are incentivizing their users to help them manage their large fleet of vehicles.
Ian gave us an example of an American electric scooter sharing company BIRD; when the electric scooters are out of power or needs maintenance, the user just needs to take it back home, charge it, and return it on a designated location. Once it’s done, the user gets a $5 reward. Through this crowdsourcing approach, they achieve better results in community-based operations: users like this feeling of making money and contributing to the environment, while the company gets help from its users which greatly reduces operational cost.
Blockchain implementation
Everyone knows that blockchain is an innovative technology; what’s essential is how to apply this blockchain technology in a real-life commercial scenario. Below is an informational interview with Ian about this topic.
Q: How to apply the blockchain technology?
A: We are working on a project called UChain, which is a cryptocurrency derived from the blockchain technology. There will be three roles in the system: one is the user, second is the shared service provider who can provide his product and services, and the third role is the ecological participants, such as third-party training developers and users who help us operate and maintain through crowdsourcing.
UChain is currently in a testing phase; when this is done, it will open to the public as a beta. Before eventually releasing it, we will perform two rounds of iteration until we reach a relatively stable version. After the release, U-bicycle’s DAPP will connect to the blockchain network and the main network will be released in more shared areas, allowing more people to join the ecology of this blockchain in a shared economy universe.
As for U-bicycle’s integration, the first step will be to access the underlying data, such as the user’s order information. The next step will be modification of the gameplay; the app will add the elements of the community connections, such as the crowdsourcing maintenance, the function of riding a bike to get rewards and so on.
Q: Riding bikes to get rewards? Will UChain have its own incentive system?
A: We now have the UChain token, which can be used for riding. In addition to bicycles, we will also release more shared-transportation applications in the future, so the token can be used throughout our ride-sharing platform; it can incentivize the users to operate and maintain our fleet, as users will be rewarded token in exchange of their participation.
Q: Usually the price for bike-sharing is $1 per ride. After decentralization, the user may not care so much about the price reduction.
A: We do decentralization not for individual users, but from the perspective of the entire organizational model. We decentralize to improve the efficiency of the overall operation and motivate the users. Before, you spend one dollar for a ride, and now the cost is still one dollar; but after the ride, I may give you one or two tokens randomly.
From a global perspective, for example, a beach-cycling ride in Miami Florida will cost five dollars per 30 minutes. The price will differ in different places.
Q: Blockchain is a technology that encourages trust and consent. After accessing blockchain technology, how can the deposit problem be solved?
A: We solve this problem by smart contracts, a user credit pass on UChain. We don’t know if your credit is good or not at first, so you have to pledge a part of the token. In the next uses after verifying your credit, the smart contract will refund the deposit when it finds that you are a good user. This also ensures that there is no embezzlement or abuse of the users’ deposits.
Blockchain and the future of sharing economy
In Ian’s view, blockchain technology’s operational efficiency will transform the current sharing economy model through these inevitable changes:
Blockchain disintermediation
Whether it is Uber or Airbnb, they make use of a centralized platform as a player in the sharing economy universe. In their actual operation, they collect more than 20% commission fee. Through blockchain point-to-point matching, this commission fees will be removed.
Blockchain prevents data abuse
There is a data abuse problem all around the world. This is due to the fact that all users’ data are stored and recorded in the centralized platform owned by the company. While the users are enjoying the services they get, they are unaware of what the company is actually doing with their data.
In the blockchain world, the data generated during the user transaction belongs to the user himself, not the company. The company will need to obtain the users’ permission to use their data, which will solve the problem of data abuse.
After transforming Ubike to be based on the blockchain technology, it will become like Airbnb; users will provide their private resources and communicate directly with the other users. All these processes will be done on the blockchain network.
In the final stage of development, no centralized company will be operating this network. Like Bitcoin, no organization is operating it. All the assets are owned by users involved in the ecological construction.
At status quo, U-bicycle has spread from only bike sharing to e-bike and e-scooter sharing; we will gradually add more products to build a vast ride-sharing platform. In addition to ride sharing, we plan to introduce space sharing, knowledge sharing, and finance sharing to our users.
By completing one or two successful cases in blockchain and shared mobility, it can be proved that blockchain can improve efficiency and help the project’s operations. Then we’ll invite partners to join this ecology and build an increasingly prosperous ecosystem.
Throughout the interview, the most notable impression Bo Yi Finance got was Ian’s high level of morality.
His consideration of the business model is whether it can improve the efficiency of the use of available resources, instead of burning money to occupy the market. His use of the blockchain technology is to prevent the centralized companies from doing evil and abusing their users’ deposit and data privacy.
Sharing economy today in China is chaotic; the business model seems prosperous, but it cannot create value, nor can it complete the closed loop–they eventually run out of cash and close down.
Whether the business model is a sharing economy, blockchain, or others, if the business model cannot bring incremental user value in the value creation flow, then that business should not exist at the first place.
We believe that the ultimate victory will be attained by one that is leveraging technological innovation and committed to improve social efficiency.
UChain — The next generation distributed smart network blockchain for the sharing economy.
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