If you’re confused about the title of this blog, then you might also be confused about Blockchain Technology. The word ‘blockchain’ has been trending for a few years now but what exactly is it and how can it be applied to the parking industry?
Blockchain can increase efficiency anytime a transaction takes place between two parties. Omission of a third party (e.g. a bank) means transactions can be carried out more economically and with reduced friction. Blockchain was created primarily for bitcoin, the most globally well-known cryptocurrency. It enables a business process that is transparent and difficult to tamper with. Essentially a massive and ever-growing ledger, each block in the chain is chronologically linked to previous blocks and synched with network nodes. A change in data in one block means all previous blocks need to be reversed. Any transactions that do not follow protocol are detected by the network nodes and can be rejected immediately and isolated in one block. Of course, it is possible for the whole network to be compromised but, as this requires more than 50% of the nodes to be malicious, it is improbable.
Decentralization is at the core of blockchain technology. As data is not controlled by any single party, no one can override a transaction, so the system is unlikely to fail. Blockchain builds trust as data cannot be modified, is independently verifiable and virtually impossible to manipulate.
There are three main types of blockchain:
1) Public blockchains
2) Private blockchains
3) Hybrid blockchains
Public Blockchain Vs Private Blockchain
Both share some similarities; transactions can be added but not change or deleted, both are decentralized using a peer-to-peer network of computers, verification of validity of a transaction is done by a majority agreement that it is valid in order to prevent potential tampering of the transaction.
Differences between public and private blockchain include the level of access participants are allowed. Public blockchain is all about accessibility and so, public blockchains are completely open. This means anyone can participate by adding or verifying data. Private blockchain consists of a closed network in which only certain parties may participate and rights and restrictions may differ between these parties.
In public blockchains everything is recorded, public and unchangeable. These types of blockchain are secure and transparent, as all transactions are verifiable by the public. Public blockchains also all have a token associated with them that is designed to incentivize and reward parties within the network. The more decentralized and active a public blockchain is, the more secure it becomes so incentivization is key to keep the blockchain parties active. One of the major problems with public blockchains is the speed of transactions. Transactions are slowed as it takes time for the network to reach a consensus and because the time needed to process a single block takes longer in comparison to a private blockchain. In general, the number of transactions possible per second from a competitive business such as Visa is approximately 395 times that of blockchain.
Private blockchains by nature are more centralized than public blockchains. They are more easily scalable than public blockchains and are also faster, as fewer parties mean less time required to reach a consensus. However, trust is an issue with private blockchain as transactions can not be independently verified and the use of fewer nodes means the blockchain network is reliant on these being credible and trustworthy as well as the whole blockchain being more susceptible to manipulation.
Some businesses have adopted a hybrid blockchain, which gives the pros of both public and private blockchains. A hybrid solution can offer the privacy benefits of a private blockchain with the security and transparency benefits of a public blockchain. This allows businesses significant flexibility to choose the data they want to make public and transparent and the data they want to keep private.
How Can We Use Blockchain in Parking?
Because blockchain effectively cuts out the “double spend” phenomenon, whereby the same transaction can be conducted twice, it is a very effective tool for smart parking as no space can be occupied twice. A blockchain-based decentralized parking platform can be utilised to enable drivers to find and reserve parking spaces. In conjunction with smart contracts, this platform can also accept reservation payments as well as assist drivers with navigation to their parking space with the offering of real-time traffic updates. Pricing with the use of smart contracts can be easily fed throughout the network so whenever a price is altered dynamically a transaction can be sent to the network for verification and, if verified, all local blocks can be updated simultaneously.
The use of blockchain can benefit both the end-user and parking providers. A blockchain-based decentralized parking platform can allow parking providers to monetize their parking spaces. Such platforms provide a medium for parking providers to list their open and unused spaces as provision for parking. If the blockchain is public, it could be that any party with an open or unused space can list their asset and generate an income by allowing drivers to park in their space. This may positively impact the parking space shortages in cities. If drivers can book for their parking in advance and be directed to the location of the space or to an alternative space in real-time, this would cut emissions and congestion.
The combination of IoT and blockchain technology together can potentially create a great solution, especially for smart city parking. An integrated smart parking system can bring multiple parking service providers together under one roof in order to provide a one-stop parking information service for users. The sheer amount of data required for such an operation means that both accuracy of the data as well as its performance can be questionable, and this is where blockchain can improve the service.
Blockchain may help not only in parking applications but also in other scenarios such as car rental, ridesharing, decreasing costs for charging of electric vehicles (when billing is based on the exact amount of electricity used) and even for other smart city applications such as grocery shopping (would you like to know where you can get 1kg of potatoes for the lowest price in your city?).
Blockchain technology is still in its relatively early years for applications outside of cryptocurrency. Improvements in technology and further education with the concept will see many companies consider adopting it into their business. It may be the case that the positive impact of blockchain on parking means municipalities look at adoption of blockchain-enabled decentralized parking systems, which could lead to a complete transformation of current parking practices.