Ever since Tesla announced its plan for an autonomous “Robotaxi” ride-sharing network in April 2019, the company propelled itself beyond just being a car manufacturer. With the announcement, Tesla indicated its willingness to be a pioneer creating new markets and business models enabled by mind-bending futuristic technology only conceived of in science fiction. For the autonomous fleet to operate as designed, it should implement Bitcoin’s Lightning Network as its primary payment rail coordinating all activity for the fleet.
Tesla Robotaxi in 2021
The ride-sharing network will work similar to Uber and Lyft. However, instead of having a network of independent drivers picking up passengers, with the press of a button on the Tesla app, Tesla car owners will lend out their cars to autonomously drive passengers and earn extra cash. During the unveiling, Tesla CEO Elon Musk said Tesla owners could earn an extra $30,000 per year by participating.
Based on rough calculation below, a Tesla owner would earn over $25,000 per year (before expenses) if she lends out her car for 10 hours every day, assuming Tesla charges $1 per mile and takes a 30% cut (Uber and Lyft charge an average of $2.5 per mile). All the while, she retains the ability to use her car two hours out of the day.
Tesla has the biggest head start and will be the first to market with their fully autonomous driving fleet. ARK predicts Tesla’s robotaxi service will launch in 2021, one year after Musk stated the service will be available, and the program will start with just 2% of eligible Tesla vehicles on the network in its first year. There are currently over one million Tesla vehicles on the road, so the program will start with just ~20,000 vehicles and quickly scale from there.
Advances in the development of 5G, precision cameras, ultrasonic sensors, and LIDAR (light and radar) are enabling autonomous vehicles to coexist with manually driven vehicles on the road. Now, blockchain and Bitcoin’s micropayment Lightning Network technology could also play a pivotal role.
Musk is no stranger to cutting against the grain and implementing (or disregarding) certain technologies to optimize performance. Most companies working on their own autonomous fleet, including Uber, Google GOOGL’s Waymo, Ford, and GM, believe LIDAR is an essential part of their sensor suite. Perhaps controversially, Tesla opted to forgo LIDAR technology in favor of eight surround cameras and twelve ultrasonic sensors as the basis for its self-driving technology. Musk famously said “LIDAR is a fool’s errand. Anyone relying on LIDAR is doomed. Doomed! They are expensive sensors that are unnecessary.”
As they share the road with other autonomous and manual vehicles, autonomous vehicles will create new dynamics on the road and require heavy computation as they digitally scan their surroundings and make thousands of decisions moment to moment.
Besides avoiding hitting objects and people, autonomous vehicle decisions will also involve negotiations with nearby cars and prioritization of factors such as right of way, speed, safety, traffic flow, and fuel efficiency. Rider preferences will dictate which of these settings and features to prioritize, and the network will need to ensure compatibility with all other vehicles in close proximity.
A woman in labor rushing to get to the hospital may choose to pay a premium for the right of way, making a micropayment of a fraction of a cent to every other autonomous vehicle that yields as she approaches. Similarly, a thrill seeker may turn on “Ludicrous” mode to reach breakneck speeds of over 150 MPH on his joy ride, without compromising safety. Nearby vehicles in no such rush will happily collect the fee and delay the arrival to their destination. If this is happening during peak traffic rush hour, the premium paid would be higher, similar to how Uber and Lyft charge higher “surge” fares when demand for drivers exceeds the active supply.
Algorithms will run in the background calculating exactly how much each rider will pay for their priorities, whether that is paying for the right of way or opting for the route that reduces the number of stops and starts for a smoother, more comfortable, and more fuel efficient ride.
The Lightning Network Coordinates Driving Activity
For Tesla’s autonomous fleet to operate correctly and ensure all vehicles on the network are properly incentivized to obey these rules, it must implement a micropayment system and Bitcoin’s Lightning Network may be the perfect solution.
As a brief overview, the Lightning Network is a second-layer solution enabling Bitcoin to scale to over a million transactions per second with payments routed peer-to-peer within milliseconds. It works by allowing participants on the network to open payment channels and then route payments through the network with near zero fees. These payments can be amounts smaller than one satoshi (the smallest unit of a Bitcoin – 100 million satoshis equal one Bitcoin). Comparatively, Bitcoin can only process about 7 transactions per second, transactions take on average 10 minutes to confirm, and the average transaction fee is over $1.
Although development of the Lightning Network is still in its early stages, it has been gaining traction and currently has over 5,000 nodes and 32,000 open payment channels.
The U.S. electric grid is notoriously vulnerable to cyberattacks by malicious actors, and Tesla must ensure its fleet is hacker-proof to gain acceptance and adoption. Bitcoin’s security guarantees may serve as the first line of defense against such malicious actors, especially as the chosen payment rails determine the prioritization and coordination of vehicles on the road and how they interact with each other.
By implementing the Lightning Network, Tesla would be able to tap into the user base of the largest and most widely accepted cryptocurrency. It would also leverage the security guarantees of the base-layer Bitcoin blockchain, the world’s largest supercomputer which is the most secure network ever developed and has never been hacked. The Bitcoin network comprises hundreds of thousands of miners around the globe producing 115 terahashes per second to secure the blockchain. SlushPool alone has an estimated 120,000 miners. The security of the autonomous fleet is paramount to widespread acceptance, especially as riders and regulators acclimate to the notion of sharing the road with driverless vehicles for the first time.
Although 5G, precision cameras, and ultrasonic sensors all play a crucial role in making the autonomous fleet operational, Tesla would do well to consider adding the Bitcoin Lightning Network as its primary payment rail.
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