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Someone’s putting electric cars on the blockchain to mine crypto while driving

Posted: 20 September 2018 1:16 pm
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Has science gone too far? Or has economics not gone far enough?

CoinTelegraph reports CyClean is putting electric cars on the blockchain so they can mine cryptocurrency while driving – as you do.

Electric vehicles and other more eco-friendly products are supplied to CyClean with a chip that connects to the CyClean server. It then tracks how far a vehicle travels or how many watts are used and rewards the driver or user accordingly.

CyClean currently only covers electric bicycles and motorcycles, hence the name presumably, but the expansion to electric cars is said to be coming in the near future. The chip can also be incorporated into solar panels and other clean energy systems to deliver additional rewards for the amount of power produced as well as into wrist bands to reward people for running a certain distance. The vision is to create a healthy, green, environmentally conscious and almost painfully wholesome green fitness community.

The money

The system involves a fixed amount of daily rewards, which is then divided among all the users who have travelled more than a kilometre in that day or produced more than one watt. The amount of CyClean coins will be proportionate to the distance travelled or the watts produced. The total daily amount distributed is subject to change as the system evolves, its white paper says.

It's a fascinating idea that will no doubt be subject to a lot of "oh so now we have crypto mining cars on the blockchain" type criticism, even as the economic criticisms are potentially much more valid.

The token itself is intended to be useable for renting a range of CyClean products as well as other partner products over time and will be connected to carbon credit schemes. Naturally, it's also intended to be redeemable for cold hard cash at constantly varying prices, also known as sellable.

Where's the value?

The nugget of value in the entire system is intended to be CyClean's brand name and the sense of endorsement that CyClean products are expected to carry. This is what CyClean offers partners who agree to let their products be rentable in exchange for CyClean credits rather than real money. The idea is that this, in conjunction with the CyClean rewards, make CyClean products a much more tempting option for consumers.

Seems like it could work, although the anticipated volatility of CyClean coins might make it tough for CyClean to convince partners to accept it over money.

Living long enough to become the villain

There are also some seemingly self-defeating peculiarities with the system and the intended self-driving car.

"When CyClean car is complete and launched to the market, it will be one of the strongest mining capabilities thus will be like ASIC metaphorically when mining CyClean coins," the white paper explains.

In other words, it's incentivising people to drive wherever possible rather than bike, walk or take public transport. Not only that, but it's also encouraging people to drive as far as possible in any given day. If CyClean rewards ever become valuable enough for people to drive when they don't need to, the system might be undermining its own ethos. And with more people suddenly CyCleaning around the place, the rewards for those who use it as intended start dropping.

This puts a fairly stark cap on the potential value of CyClean rewards. By necessity, they can never get high enough to actually be "worth it" and will only ever be a small side benefit to help sell a specific brand of product.

There are also some lingering questions around obvious gaming of the system and how fair it will be for everyday users. It won't be long before people find the most effective way of mimicking travel times, such as throwing their CyClean electric bike and scooter into their car before driving around wearing an armband or finding a way of hacking their device's GPS tracker.

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But even assuming everyone does use it as intended, the system is naturally geared towards those who will be covering a lot of ground every day. These are your full-time Uber drivers, taxi companies, delivery drivers and similar. Later on, it will be your autonomous vehicle owners; the CyClean car roadmap is intended to eventually lead to driverless cars.

The vast majority of the rewards will be going to these heavy users who cover a lot of ground in their cars. And not only is distance a strong factor, but CyClean rewards are also weighted by device type, so cars are worth disproportionately more than wrist bands, for example.

Without actually doing any calculations, it intuitively seems like the actual value of the system for an everyday CyClean user, someone who just rides an electric bike to or from work or goes jogging with the wrist band, would end up close to zero.

Remember, if the actual token value gets too high, it starts destroying the system by incentivising needless energy consumption and dropping rewards for everyone who can't be bothered gaming the system in this way. By necessity, the total value of the daily reward pool can never get too high.

These limited rewards are then distributed mainly to the most dedicated "miners," who drive full time in their own vehicle or are otherwise in a position to earn the highest rewards. The rewards for those everyday users, who make up the bulk of the market and help shore up the value of the CyClean tokens through their purchasing power, seem like they'll be too low for anyone to bother with.

In the end, CyClean products will still need to compete on quality and price to get anywhere, and without enough rewards to sway consumer purchasing decisions, these tracking systems and blockchain chips will just be extra overhead.

Slightly ironically, CyClean's green energy economy might not be sustainable.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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