Would you like to rent a Lamborghini for a day but can’t find an offer that isn’t prohibitively expensive? Thanks to the blockchain-based solution developed by Blockchain Cars on the Waves platform, the daily rate will be just €77 for a Lamborghini and €37 for a Mustang — comparable to the prices a traditional rental company will charge you for a day’s use of a regular ‘economy’ car.
The idea for Blockchain Cars came about when a group of friends in Warsaw tried to rent a luxury car for the weekend. It turned out there was no affordable solution for such a short period of time. Leasing companies don’t normally offer one-day leases, and car rental companies’ day rates for luxury cars are exorbitant: around €350 a day for an S-class Mercedes and €260 for a Mustang. The group of friends decided to create their own solution, and turned to blockchain technology to do it.
Tokenization The friends’ idea for bringing rates down arises from the fact that the average rental car is in service for between just three and five days a month, meaning rental companies have to charge high rates to make up for the days when their cars stand idle.
Blockchain Cars suggested instead that shared car ownership should be tokenized, with tokens for renting cars sold in advance for an entire year. Each token enables its holder to use a car for any single day over a 12-month period.
Under this system, every car managed by the car sharing company will be rented out for every day of the year, allowing much lower daily rates.
«This is basically a subscription service, similar to Netflix, ” explains Szymon Fedorovicz, CEO of Blockchain Cars. «For every new car connected to the system, a pool of 365 tokens is issued, each of which is valid for a period of 365 days and will be burned once that period has expired. A user can spend a token by renting any car on any specific day it is available.»
Tokens will be available in the Blockchain Cars app, where users will be able to buy and sell them, as well as exchange them for other tokens. Similarly, tokens will be traded on the Waves DEX, with prices determined by their remaining validity period.
«A user has one year to spend their token, ” Fedorovicz continues. «If the year is coming to an end and you haven’t used your token and it looks like you won’t be able to, you can sell it — but the value will go down as the expiration date gets closer.»
To drive a car, a user will have to exchange their token for a smart contract-based access token.
Blockchain Cars is already operating in MVP mode, with five cars in service and more expected to be added shortly.
Profits for everyone involved Blockchain Cars’ solution aims to connect car owners and car users in a way that is beneficial for both parties. Currently, many companies have unused cars in their fleets, while manufacturers’ stocks are estimated at over 5 million.
Initially, cars for the service will be provided by rental companies, which already have expertise in dealing with insurance and other administrative requirements.
«But the market is developing, ” says Fedorovicz. «In the future, it will also be possible to add privately-owned and company cars.» Similarly to Uber, which has representatives to deal with administrative and organizational issues in every city the company operates, Blockchain Cars plans to have hub managers.
The idea is that everyone involved in the scheme should be able to profit. Car owners and hub managers will be paid a fair fee, while the car-sharing service will generate revenues, and customers will be able to hire cars at lower rates than those currently available. Example figures for a Mustang are given below.
Overcoming obstacles Although the idea is ultimately set to benefit everyone, Blockchain Cars has to overcome a number of obstacles first. One obvious technical challenge is placing a substantial quantity of information on the blockchain.
However, equally important is the need to explain to potential users the concept behind the service — which is quite different from the conventional model they are used to. «One important issue is explaining the concept clearly, since it is new to the market, ” Fedorovicz notes. «When you offer a new business model, miscommunication can be a problem.»
The company has also yet to figure out how to deal with day-to-day issues, such as the situation when a car has broken down but is booked for use the next day.
Nonetheless, the Blockchain Cars team are convinced their concept is viable and there is substantial room for expansion. «At the beginning, we plan to focus on luxury cars to grab attention, to differentiate ourselves from the crowd and offer something new, ” Fedorovicz explains. «But in the longer term, we may offer a greater variety of options, for instance including motorcycles and scooters.»