Back to the list

Blockchain-Based Ride Apps Could Restore Confidence in Ride-Hailing Industry, Says Firdosh Sheikh

source-logo  news.bitcoin.com 10 February 2024 09:30, UTC

According to Firdosh Sheikh, the co-founder and CEO of DRIFE, blockchain-based ride-hailing platforms could disrupt and revolutionize the industry, much like Uber and Lyft did to the traditional taxi industry over the past decade. To support this argument, Sheikh, whose ride-hailing platform is already taking on Uber in markets like India, pointed to how the blockchain’s key attributes are already making a difference.

Blockchain-Based Platforms Can Foster an Equitable Ecosystem

To illustrate, Sheikh highlighted how the immutability of transactions on the blockchain potentially helps to restore trust between drivers and riders. Sheikh argued that when these parties trust each other, the disputes over fares, routes, and driver ratings are minimized and this in turn “fosters a more reliable and equitable ecosystem.”

In addition, the CEO also argued in her written answers sent to Bitcoin.com News that ride-hailing platforms built on the blockchain have the potential to enhance riders’ security and privacy “by encrypting sensitive user data and enabling pseudonymous transactions.” By protecting riders’ data from hackers and other cybercriminals, these blockchain-based platforms help to restore confidence in the ride-hailing industry.

Meanwhile, Sheikh asserts that, unlike centralized ride-hailing platforms like Uber, blockchain-based taxi platforms such as DRIFE have a better chance of consistently turning a profit. She highlighted the possibility of stakeholder involvement or inclusion in ride-hailing platforms’ governance structures. Involving both riders and drivers in the decision-making process “can ensure inclusivity, fairness, and long-term sustainability.”

In addition, by giving stakeholders a voice, the ride-hailing platforms can potentially “respond effectively to changing market dynamics and regulatory requirements.” In her written answers sent via Telegram, Sheikh also touched on how ride-hailing platforms can overcome some of the common challenges faced by drivers.

Below are Sheikh‘s answers to all the questions sent.

Bitcoin.com News (BCN): Since Uber’s groundbreaking launch of its ride-hailing app, the taxi industry has experienced a seismic shift. The impact has been profound, with many more ride-hailing platforms entering the scene. From a user’s perspective, these alternatives promise lower fees and improved service quality. However, many people including you see the blockchain as another disruptive technology that could reshape the entire ride-hailing landscape. Now, can you briefly explain why you believe the blockchain and Web3 will drive innovation in this industry?

Firdosh Sheikh (FS): The blockchain and Web3 technology hold immense potential to revolutionize the ride-hailing industry. Unlike traditional centralized platforms, blockchain-based solutions offer transparency, security, and decentralization, which can address several longstanding issues in the sector.

Firstly, blockchain technology can enhance transparency by providing an immutable ledger of transactions, ensuring accountability and trust between drivers and riders. This transparency can mitigate disputes over fares, routes, and driver ratings, fostering a more reliable and equitable ecosystem.

Secondly, decentralized platforms powered by Web3 technology can eliminate intermediaries, such as centralized authorities or corporations, thereby reducing fees and empowering both drivers and riders. By enabling direct peer-to-peer transactions, blockchain-based ride-hailing platforms can offer lower fares for riders while ensuring higher earnings for drivers.

Moreover, Web3 technology facilitates the creation of decentralized autonomous organizations (DAOs), allowing stakeholders to participate in the governance and decision-making processes of the platform. This democratic approach ensures that the interests of all participants are considered, leading to fairer policies and improved service quality.

Furthermore, blockchain-based solutions can enhance security and privacy by encrypting sensitive user data and enabling pseudonymous transactions. This protects users’ personal information from unauthorized access and data breaches, thereby enhancing trust and confidence in the platform.

Overall, the combination of blockchain and Web3 technology has the potential to drive innovation in the ride-hailing industry by promoting transparency, decentralization, fairness, and security. As these technologies continue to evolve, they will likely reshape the entire landscape, offering users and drivers a more efficient, equitable, and sustainable mobility solution.

BCN: Do you see the blockchain similarly disrupting the ride-hailing business as Uber did a few years ago?

FS: Yes, the blockchain has the potential to disrupt the ride-hailing business similarly to how Uber did a few years ago, albeit in different ways. While Uber revolutionized the industry by introducing a user-friendly app and a gig economy model, blockchain technology promises to disrupt the sector by addressing underlying issues such as transparency, decentralization, and trust.

Uber’s disruption was primarily driven by its innovative business model, which streamlined the process of finding and booking rides, offering greater convenience and affordability for users. However, Uber’s centralized structure also faced criticism for its control over pricing, data, and driver compensation.

In contrast, blockchain-based ride-hailing platforms aim to decentralize control, offering transparent and trustless systems where transactions are recorded on an immutable ledger. This transparency can mitigate issues such as price manipulation, unfair treatment of drivers, and data privacy concerns, leading to a more equitable and user-centric ecosystem.

Overall, while Uber’s disruption focused on improving user experience and efficiency, blockchain technology has the potential to disrupt the ride-hailing business by fundamentally transforming its underlying infrastructure, governance, and economics. As blockchain-based solutions continue to evolve, they may reshape the industry in ways that are both innovative
and sustainable.

BCN: Can you tell our readers about your journey of building and eventually launching a decentralized ride-hailing platform?

FS: DRIFE started and continues to be a personal journey. It all started during an UBER ride to an airport in India. I have always been a user of taxis as my means of transportation starting early on when I moved to Delhi for my studies, and then afterwards in Bangalore while I was working as a financial analyst. Yet one midnight drive to an airport changed everything.

It was on that evening that the UBER driver had asked me to cancel the trip telling me he would take me at a much lower price. Asking him why, I discovered that UBER was taking 35% commission leaving him with a profit of less than 50% after cost.

After that drive, I began speaking to all the drivers I would use for rides. The same story emerged, high commissions, no health insurance, and a feeling that they were caught in a vicious circle and still struggling.

I spoke to 1,000 drivers, and in the back of my mind, I remembered how my father had started his career as a taxi driver, and how as a young girl I would wait patiently for his return while he worked hard to earn money for his family.

It was then I decided that I wanted to change this. I had read about how bitcoin had offered freedom to the financial sector and realized blockchain could do the same for the mobility sector.

I call it Taxi 3.0 for short. In my experience, Taxi 1.0 was where people would book an unmetered taxi and agree the fare with the driver. Taxi 2.0 was where big tech got involved and everything moved to the platform. It was certainly a technical disruption and people could book and find a taxi with a couple of taps on their mobile phones.

DRIFE is Taxi 3.0. It is disrupting the disruptors of Taxi 1.0, the Taxi 2.0. While Taxi 2.0 was a win because of technology, it eventually became a loss for the driver. In Taxi 3.0, the community, the market, and the driver are in control not anyone else. The market sets the prices; there are no commissions and only a subscription fee to use the platform so that with every ride, the money belongs to them. This direct connection allows for more personalized and customized ride-hailing experiences, where riders can choose drivers based on specific criteria, such as driver rating, car type, and other preferences.

Our journey of building and eventually launching a decentralized ride-hailing platform began with a bold vision to revolutionize the transportation industry. It all started with the launch of DRIFE in Bangalore, India, during our pilot phase. With just 25 drivers onboard initially, we embarked on a mission to transform the way people commute in urban areas.

Since our humble beginnings, DRIFE has experienced exponential growth, with our platform now boasting over 30,000 drivers and serving a thriving community of 300,000 riders in Bangalore alone. Our journey from a small-scale pilot to a leading player in the ride-hailing sector is a testament to the dedication, perseverance, and innovation of our team.

As we continue to expand our presence and impact, our commitment to providing a transparent, fair, and user-centric ride-hailing experience remains unwavering. We are proud of how far we’ve come and excited about the future possibilities as we strive to make transportation more accessible, efficient, and sustainable for all.

BCN: Uber’s struggle or inability to consistently generate a profit has raised questions about the sustainability or profitability of ride-hailing apps in general. How does the use of the blockchain help make ride-hailing businesses like DRIFE profitable or sustainable undertakings?

FS: The use of blockchain technology in ride-hailing businesses like DRIFE can contribute to their profitability and sustainability in several ways:

1. Reduced Operational Costs: Blockchain enables decentralized, peer-to-peer transactions without the need for intermediaries, which can significantly reduce operational costs associated with traditional payment processing and administrative overhead. By eliminating third-party fees and streamlining processes, ride-hailing platforms can operate more efficiently and achieve higher profit margins.

2. Transparent Pricing: Blockchain-based ride-hailing platforms offer transparent and immutable transaction records, providing users with visibility into pricing mechanisms and fare structures. This transparency builds trust among riders and drivers, encouraging greater participation and loyalty. Additionally, by eliminating hidden fees and price fluctuations, blockchain platforms can attract more users and increase overall revenue.

3. Fair Compensation for Drivers: One of the key challenges faced by traditional ride-hailing companies like Uber is ensuring fair compensation for drivers while maintaining competitive fares for riders. Blockchain technology enables the implementation of dynamic pricing models, such as auction-based or token-based systems, where drivers have more control over their earnings. By allowing drivers to set their own rates or participate in incentive programs, blockchain platforms can attract and retain skilled drivers, leading to better service quality and customer satisfaction.

4. Tokenization and Incentive Mechanisms: Blockchain-based ride-hailing platforms can leverage tokenization and incentive mechanisms to reward users for active participation and engagement. By issuing utility tokens that can be earned through referrals, loyalty programs, or other activities, platforms like Drife can incentivize both riders and drivers to contribute to the ecosystem. These tokens can then be used for discounted rides, premium services, or even as a form of payment within the platform, driving user adoption and increasing revenue opportunities.

5. Decentralized Governance and Sustainability: Blockchain technology allows for decentralized governance structures where stakeholders have a voice in decision-making processes. By involving drivers, riders, and other community members in platform governance, blockchain-based ride-hailing platforms can ensure inclusivity, fairness, and long-term sustainability. Decentralized governance also fosters innovation and adaptability, enabling platforms to respond effectively to changing market dynamics and regulatory requirements.

Overall, the use of blockchain technology in ride-hailing businesses offers a range of benefits that can contribute to their profitability and sustainability. By reducing costs, increasing transparency, empowering stakeholders, and fostering innovation, blockchain-based platforms like Drife have the potential to reshape the industry and create value for all participants.

BCN: Many drivers have highlighted many problems they experience with different ride-hailing apps but perhaps the most common or crucial ones are excessive commissions charged by ride-hailing platforms and delayed payments. How does your platform strike a balance between the needs of drivers and the company especially since your ride-hailing app charges a near-zero commission?

FS: At our ride-hailing platform, we prioritize the needs of both drivers and the company by implementing a business model that fosters fairness, transparency, and mutual benefit. We recognize that excessive commissions and delayed payments are significant pain points for drivers in the ride-hailing industry, and we have taken proactive steps to address these issues.

First and foremost, our platform operates on a near-zero commission fee structure, which means that the majority of the fare paid by riders goes directly to the drivers. By minimizing or eliminating commissions, we ensure that drivers can earn a fair and sustainable income for their services. This approach not only incentivizes drivers to join our platform but also encourages them to provide high-quality service to riders.

At DRIFE, we prioritize the financial well-being and autonomy of our drivers by offering innovative payment solutions and transparent fee structures. One of the key features of our platform is the in-app driver wallet, which provides drivers with unprecedented control over their earnings. Unlike traditional ride-hailing platforms that may take 48 hours to 7 days to process payments and settle accounts, our drivers can withdraw their earnings immediately after completing a ride. This means that drivers are not dependent on us to facilitate payments or settlements, empowering them to access their funds whenever they need them.

Additionally, we operate on a subscription model, wherein drivers pay a subscription fee to gain access to our platform. This fee covers the cost of utilizing our technology and services, allowing drivers to leverage our platform to connect with riders and earn income. By operating on a subscription model, we ensure that our drivers have a clear understanding of the costs associated with using our platform, without the uncertainty of fluctuating commissions or hidden fees. This transparent fee structure underscores our commitment to fairness and driver empowerment, enabling drivers to maximize their earnings and achieve financial stability.

What are your thoughts on this interview? Let us know what you think in the comments section below.