The effects of tokenization on ride-hailing blockchain platforms

The rapid development of blockchain has inspired many traditional centralized intermediaries to transform their transaction models, especially for the peer-to-peer market. Lately, the token-based (blockchain) system (with cryptocurrency) is gaining popularity. However, little is known about the (comparative) performance of different operating types. In this study, we build an analytical framework to find the optimal strategies for the token-based and nontoken-based blockchain (as a special application scenario) platforms and derive the essential model properties and characteristics. We analytically show how the optimal mining bonus depends on the fraction of reserved tokens sold to customers and on the price-to-sales ratio. Furthermore, we obtain several actionable findings for choosing suitable platform types under different scenarios. The shift from the nontoken-based platform to the token-based platform may yield greater social welfare unless the nontoken-based system operates with a much larger ride price, which we show to be unrealistic for the considered Beijing case through numerical studies. Moreover, we find that the matching probability for the token-based platform is predominantly higher than that for the nontoken-based one. Besides, government interventions may encourage a path toward a fair consensus mechanism or a high decentralization level in order to enhance social welfare. One unanticipated finding is that a higher decentralization level may lead to a lower mining capacity shortage and so to a more efficient system, indicating that the combination of blockchain and the sharing economy has much potential.