For many, renting a car is one of the worst parts of planning a vacation. The process itself can be very complex, especially if you are taking the car to multiple countries. There are the value-added services that help determine the price: size/make/model, mileage allowance, add-ons like navigation, additional drivers, or special tires. And then there are the nastier, necessary evils like insurance coverage.
This is especially stressful because of how opaque it is. If you rent from a broker you might purchase “complete” coverage, only to find out that the actual rental office says it won’t actually cover much. Who is correct? It’s never clear, and if you want to truly have peace of mind, it will cost you more than it probably should.
Under the current system, it feels like there are many unnecessary complications, too many middlemen, and too little transparency. Is this the price we pay for being able to borrow a car for a few days, given its high value and risk of damage, injury, or theft? Well, maybe not, according to innovations being developed in the Web3 space.
After all, blockchain technology has solved a number of core issues plaguing other industries, and from a certain perspective, these issues are very similar to the challenges faced by the car rental industry. Let’s look at Web3’s strengths and overlay them against the car rental experience, then examine one Web3 platform’s vision for next generation car rental.
Web3 Car Rental Application
If the car rental market were to implement Web3 processes and technology, it would be able to see a number of key innovations that would directly address some of its more problematic elements. The critical elements of this transformation could be:
Trust and Authenticity: Every transaction and piece of data is both immutable and transparent. This ensures that travelers can trust the reviews, ratings, prices and miss presentation of services, they see, confident in their authenticity.
Decentralized Marketplace: Unlike conventional online travel agencies that act as middlemen and impose listing and booking fees, Web3 platforms support direct peer-to-peer exchanges. This not only minimizes fees but also fosters direct communication between service providers (e.g., hotels, airlines) and travelers.
Enhanced Loyalty Programs: Blockchain technology could allow travelers to utilize their loyalty points across various services (eg., hotels, airlines) or even trade them.
Secure Identity Management: With decentralized identity solutions, travelers can maintain a singular, secure identity for use across diverse platforms, ensuring their personal information remains private.
Efficient Smart Contracts: Refunds for cancellations are processed based on set parameters, ensuring travelers don't endure the typical 2-3 week waiting period for refunds.
This is clearly a far reaching result and would take massive coordination between key parties (car rental agencies, loyalty programs, insurance companies, tour companies) and would threaten other parties such as car rental brokers. The result would be an efficient, smoothly running system that would not be burdened by borders, paperwork, or a distinct lack of trust.
Comparisons between vehicles would become much more apples to apples, helping customers find the right vehicle and feel confident that they are charged a fair price. Perhaps someday we will be able to see the rental industry transition to Web3, but it will take time, money, and a motivation to do so.
Another way to address the problem of renting a car might involve fully flexing the Web3 model to create a community owned experience. Semil Vithani, founder of Web3 platform Arakis, thinks he has the answer to the next generation of car rentals.
Car Rentals Unleashed: Community Owned, Web3 Driven
Vithani’s vision for the Arakis platform is ambitious, but based on what Web3 has achieved to date, it’s not unheard of. Instead of relying on car rental companies owning the cars, he envisions communities of investors working together to crowdfund cars. Once purchased, these cars will be listed on the platform for either rentals or ride sharing. Revenue earned from the rentals will go to necessities like maintenance, insurance, and the management of the vehicles to clients.
The profit, on the other hand, will go straight to the community of backers via the blockchain. Investors can collect on-chain “car points”, which can either be used for future car rentals, or they can off-ramp their earnings in regular currency. In any case, the renter’s journey is one of straightforward price comparison, transparency via smart contract, and reasonable rates. For investors, the rental profits can add up either on- or off-chain.
While a crowdfunded vision of car rentals might seem outlandish, the timing is actually perfect. In a post-Covid world, many rental companies offloaded inventory during the pandemic, creating a major shortage of rental cars once borders opened back up. As a result, rentals rose in price to meet demand, and assets were gaining close to 100% utilization, which is a very critical metric for car rentals.
A new entrant into the market, especially one that is focused on community, transparency, and a fair deal for all those involved, is a welcome addition at this point. So long as the community is big enough when it launches, Arakis has the ability to scale at its leisure, selecting new markets as demand grows and the car purchase investments are a safe purchase by the community.
Final Thoughts
If Web3 transforms the car rental industry the way we know it can, it will be a strong testament to what Web3 can accomplish in the broader markets of the global economy. Web3 can do what nothing else can, especially in terms of transparency, borderless currency, a trustless smart-contract based environment, and tokenization on behalf of a broad community. Let’s hope that the car rental industry can be successfully transformed by Web3; there are many more industries just waiting for the opportunity.
