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About the International Transport Forum

The International Transport Forum at the OECD is an intergovernmental organisation with 59 member countries. It acts as a think tank for transport policy and organises the Annual Summit of transport ministers. ITF is the only global body that covers all transport modes. It is administratively integrated with the OECD, yet politically autonomous.

ITF works for transport policies that improve peoples’ lives. Our mission is to foster a deeper understanding of the role of transport in economic growth, environmental sustainability and social inclusion and to raise the public profile of transport policy.

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ITF organises global dialogue for better transport. We act as a platform for discussion and pre-negotiation of policy issues across all transport modes. We analyse trends, share knowledge and promote exchange among transport decision makers and civil society. ITF’s Annual Summit is the world’s largest gathering of transport ministers and the leading global platform for dialogue on transport policy.

Executive summary

What we did

Digital technology continues to reshape the transport industry. Recently, much discussion has focussed on blockchain and other distributed ledger technologies (DLTs). This report investigates the potential for DLTs
to support broader coordination of seamless urban mobility services and the delivery of Mobility as a Service (MaaS) in urban settings. Like other economic sectors, transport could be profoundly transformed by blockchain, and other novel DLTs that allow decentralised applications to run in peer-to-peer networks. These technologies allow agents to enter into direct relationships with each other according to a commonly agreed set of rules and a high degree of trust without having to go through a central authority. Combined with a common language and syntax for the “internet of mobility” and new means of deriving insight from previously siloed data, these applications may help redefine how people access, pay for and use transport in their everyday lives.

This report builds on an expert workshop at the MIT Media Lab in November, 2017 and further expert inputs and desk research carried out by the ITF Secretariat. It serves to frame the principal policy considerations relating to the application of distributed ledger technologies such as blockchain to an
evolving urban mobility ecosystem.

What we found

Urban mobility today is a siloed world of separate and independently regulated services. The application of distributed ledger technologies, such as blockchain, to urban mobility may lead to a future more aligned with other “as-a-service” models where actors engage directly with each other based on commonly agreed protocols.

Even actors that have disrupted traditional transport (and other sectors) in recent years may in turn find their business models under pressure as citizens gain direct control to build their own trip experiences. These changes will also challenge public authorities. They must keep abreast of developments in data science and DLTs to adapt current regulations where they hinder beneficial outcomes. They must also explore new regulatory responses where these are necessary to deliver the outcomes the public wants. The deployment of DLTs is still very much in its infancy, especially in support of Mobility as a Service (MaaS). Initial use cases for these technologies will not necessarily be those that get adopted at scale later. It is yet unclear if, how and to what extent DLTs will become integrated into economic sectors including transport and, ultimately, into daily life. Uptake hinges on whether or not decentralised ledgers such as blockchains can deliver better value than traditional ledger and transaction frameworks in use today. It will also depend on whether they can enable new, value-adding applications that are not yet possible with existing technologies, and on how far the regulatory environment will support this innovation.

What we recommend

  • Public authorities must prepare for a much more networked and meshed world

In an ever-more dynamic urban mobility ecosystem, citizens’ choices are expanding and changing rapidly. Public transport operators, car manufacturers and taxi companies are facing increasing pressure to innovate to attract and to retain users. Increasingly they must both compete and co-operate with each other as well as with market entrants with new business models. Traditional regulatory approaches that focus on transport operators and modes in isolation are increasingly out of step with what recent market offers and how many people make travel decisions. Public authorities must adapt their regulatory framework to this emerging and interconnected “mesh-y” urban mobility ecosystem. Legislation has to set the framework for interoperable MaaS but technical details must be addressed through standardisation bodies. The process for setting these standards must be inclusive, transparent and technically thorough.

  • Take into account changes in data science and technology when developing Mobility as a Service

The concept of Mobility as a Service (MaaS) encompasses the integration of various forms of transport services into a single mobility service, increasingly also accessible on demand. It offers people seamless digital access to different transport services, many of them shared. MaaS applications leverage database, identity management, data access and transmission protocols that are all simultaneously evolving. Current platform-based models for MaaS may not deliver on the promise of an open urban mobility ecosystem. In an increasingly networked and meshed world, a very diverse set of stakeholders must trust each other and underlying business processes. New developments in data protocols, structure and data science may help establish this trust in an open and platformless world. Governments should bolster their capacity to identify, understand and monitor these developments and support the implementation of the most promising of
these.

  • Look beyond initial cryptocurrency applications of distributed ledger technologies

Much of the discussion around DLTs centres on their role to underpin cryptocurrencies. In the context of transport, this focus is misplaced. The value of DLTs for transport is how they ensure transparency, traceability, trust and distributed revenue sharing and governance. DLTs create new business and regulatory opportunities in a number of ways. They underpin robust identity and rights management. They create an immutable, distributed and openly verifiable record of past transactions. They enhance data privacy and access. And they improve cyber-security. DLTs also foster innovation and efficiency via automated business or regulatory processes by self-executing “smart contracts”. Public authorities should identify the opportunities for better regulation and service delivery created.

  • Governments should help deploy the building blocks that enable wider uptake of distributed ledgers

As a technology and as a foundation for new business and regulatory processes, DLTs are still in their early days. It is hard to predict how this will evolve. This makes it difficult for public authorities to assess what
role DLTs will play in MaaS – and what role public authorities will play in deploying DLTs, if any. Rather than supporting broad-scale deployment of existing DLTs, public authorities could ensure that the necessary
building blocks are in place for future DLTs. These could include harmonised identifiers, a shared and common data syntax in support of the internet of mobility and a regulatory framework that anticipates future DLT developments. These standardised building blocks are effectively public goods and governments should use their convening power to bring developers together to establish them early.

  • Apply blockchain technology now for slow and (relatively) small transport use cases; anticipate next generation distributed ledger technologies for “big and fast” applications to be deployed later

Current blockchain applications are limited because they fail to scale and are relatively slow. Nonetheless, they are still suited to some of the tasks in delivering MaaS, those that are not sensitive to limitations in capacity to handle data, volume, or speed of processing. These include identity management, licensing and registration and asset tracking. These use cases can serve as a test bed that will allow stakeholders to become familiar with DLT-supported MaaS applications. MaaS tasks that require more real-time logging and high-volume data processing will require new DLT models purpose-built for speed and “Internet of things” applications. Technologies should already be tested even if their large-scale uptake for MaaS may not be immediate.

  • Governments should develop algorithmic code-based regulation to accompany the uptake of distributed ledger technologies

Transport activity is increasingly influenced by an underlying web of code-based algorithms and protocols. The deployment of DLTs in transport will only amplify that trend. At a minimum, public policy should understand how algorithms are affecting transport. But governments must also explore ways to move away from sole reliance on analogue, paper-based regulation that is crafted in human language. Instead, they will need to move towards frameworks that integrate technical code and algorithmic logic into the regulatory process – e.g. RegTech. This will require governments to enhance their internal capacity to understand and regulate in this domain, including through machine-to-machine communication.

“EVERYTHING TO EVERYTHING” INTEROPERABILITY

IOTA (IOTA, 2018) is an indicative case of both the potential for DAG DLT implementations for internet of things (IOT) tasks like MaaS and illustrative of some of the pitfalls that are related to early implementations of any DLT.

IOTA has been developed specifically for IOT applications involving large, heterogeneous, networks of transacting entities (e.g. sensors or vehicles). IOTA is built on a DAG structure called the “Tangle”. The Tangle is a blockless DLT that builds consensus directly into its architecture. Each new transaction added to the tangle must validate two previous transactions. Transaction recording and validation in IOTA is a threestep process.

In the first step, the new transaction is created and signed cryptographically. In the second step, the new transaction (a “tip”) is cryptographically linked and bundled with two other previous transactions. In the third step, the IOTA protocol defines a nonce-based “proof of work” outcome that must be met for each of the two past transactions in the bundle. In scenario A (Figure 13), Tip T1 confirms transactions 26 and 27 and Tip T2 confirms transaction 27 and re-confirms transaction 26. The Tangle protocol is engineered such that Tips validate a mix of new and recent transactions thus building consensus. As more tips confirm a same transaction, confidence in the validity of the transaction grows. The Tangle proof of work is similar to, but more lightweight than the POW constraint set in Bitcoin. Tangle POW helps to ensure that transactions
do not expand invalid extensions of the graph. Once the “proof of work” condition is met, the Tip is considered accepted and the transaction is confirmed.

The IOTA Tangle protocol allows for rapid transaction confirmation and, unlike blockchain protocols, validation speeds scale with the size and complexity of the tangle. Another feature of IOTA’s Tangle DLT is that the model calls for fee-less transaction recording. Whereas blockchains like Bitcoin must incentivise “miners” to carry out resource-heavy POW-based block validation (and thus transactions incur a fee), IOTA’s Tangle model requires no mining, no incentivising of miners and no fees. IOTA’s feeless model is especially interesting in IOT deployments like MaaS where micro-transactions between connected objects, vehicles and parties would be the norm. In a blockchain model, fees may outweigh the value of microtransactions and that could limit the scope of potential MaaS transactions.

Another potential use of DAGs like IOTA beyond logging data from multiple sensor platforms for the delivery of services is the collection of data for testing purposes. The International Transportation Innovation Center (ITIC) has announced that it will use IOTA’s Tangle DAG to build a global network of testbeds to develop and validate technologies that support connected, automated and zero-emission driving (ITIC, 2018) This would enable a wide range of automotive manufacturers and service providers to make available vehicle testing data so that all can benefit from safety-relevant data.

Speed, scalability and suitability to micro-transactions all make the IOTA DLT model an interesting one for MaaS. But just as with everything else with DLTs, while the proof of concept may be enticing, the ultimate applicability of DAGs like IOTA to real-world applications is uncertain and evolving and will depend on more than the theoretical applicability of the technology to a concrete application, like MaaS.

For example, the initial implementation of IOTA incorporated serious vulnerabilities built into its bespoke hashing algorithm (“Curl”) (Narula, 2017). These vulnerabilities have since been addressed and patched but researchers have pointed out other issues as well. IOTA also uses ternary vs binary number encoding which in itself isn’t a vulnerability but it limits IOTA’s compatibility with “off-the-shelf” algorithms and security analysis software. A well, IOTA’s early-deployment dependence on a “trusted coordinator” function to protect against hijacking the transaction validation process has been seen by some as addressing a structural weakness in the protocol that may persist even at scale (IOTA is centralized) (The Transparency Compendium).

DAG-based DLTs like IOTA show how some of the current limitations of blockchain technology could be addressed, including those linked to speed and scalability in complex, multi-party and asset implementations.

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