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What taxi medallions can teach us about cryptocurrencies

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Taxicab medallions have been in the news in recent weeks due to the widely publicized involvement of Michael Cohen, President Trump’s former attorney, in the New York City taxicab business.

Much of Cohen’s wealth in recent years had been attributed to the steadily rising value of the taxicab medallions he owned, but like all cryptocurrencies, Cohen’s supposed medallion wealth was merely an illusion that is no more.

Cabs cannot operate in New York, Chicago, San Francisco or Boston unless they have a medallion, which effectively is a city permit to carry passengers for hire.

Although not widely understood, the artificial, politically imposed limit on the number of medallions a city will issue — an artificial shortage if you will — for many years led to a steady increase in the market value of medallions as the number of taxi passengers increased.

That rising value, and the returns medallion owners expected to earn, created many distortions in the New York taxi business, including gypsy cabs and the absence of cabs in poorer neighborhoods.

Limiting the number of taxi medallions a city would issue has a parallel in the crypto world — an artificial limit on the number of units of a particular cryptocurrency that could ever be issued.

For example, according to the design of the bitcoin algorithm and database, supposedly developed by someone named Satoshi Nakamoto, no more than 21 million bitcoins will ever be created.

Further, the computational effort required to “produce” each additional bitcoin steadily increases as that limit is approached, further enhancing that sense of scarcity.

The design of the bitcoin algorithm has been seen as brilliant, but in fact it is not, for artificial scarcities do not produce sustainable value.

In each instance, there is no real value — readily available permits issued without limit have no resale value. Cryptocurrencies that can easily be replicated under a different name have no intrinsic value, they have no claim on real-world assets, there is no “there” there.

For a while, these artificial limits worked: Values rose steadily, and the owners of these scarce items got rich. Then technology reared its ugly head, in the form of computerized ride-sharing — Uber, Lyft and their many knock-offs — and cryptocurrency “forking,” such as bitcoin begetting bitcoin cash and bitcoin gold.

According to one report, the price of a New York taxicab medallion peaked at over $1 million in 2013. Currently, they are priced as low as $175,000, a price decline over 80 percent. Boston and Chicago taxi medallions have seen sharp price declines, too.

Comparable price drops have occurred in the crypto world. Based on data from www.coinmarketcap.com, at 1 p.m., Eastern Time, Thursday, bitcoin, the most valuable cryptocurrency, was selling for $7,529, down 63 percent from its peak price of $20,089 last Dec. 17.

Bitcoin price recoveries since then have quickly petered out. For example, after hitting a low of $6,636 on April 6, bitcoin recovered to a peak of $9,965 on May 5 before beginning its current price plunge.

Other major cryptocurrencies have experienced similar price declines. After peaking at $1,433 on Jan. 13 of this year, at 1 p.m. Thursday, Ether, the second most-valuable crypto, was priced at $585, down 59 percent from its peak.

Ripple, XRP, the third most-valuable crypto, peaked at $3.84 on Jan. 4 before beginning its price plunge. At 1 p.m. Thursday, XRP was priced at $0.623, a price drop of 84 percent.

The total market value of all cryptocurrencies peaked at $595 billion on Jan. 18. Nearly four months later, that number has dropped to $333 billion, a loss in market value of $262 billion, or 44 percent.

While many investors have only experienced paper losses on their cryptocurrency investments, the substantial crypto trading activity in recent months suggests that actual, realized losses suffered by crypto investors are in the tens of billions of dollars, if not much more.

Although there is no hard data on the extent to which crypto investors have made leveraged bets, by financing their crypto purchases with credit card advances or by refinancing their home mortgage, anecdotal reports suggest that such debt-fueled speculating has been extensive.

Many taxicab medallion purchases were financed, too. The subsequent drop in medallion prices has led to many medallion foreclosures and substantial losses to lenders. At least two credit unions have failed due to losses on their medallion loans.

Lenders to crypto investors will suffer losses, too. Often, though, they will not have realized that they had financed a cryptocurrency speculation.

There is every reason to believe cryptocurrency prices, like taxi medallion prices, will continue to decline because in a very fundamental sense, they have no real value. As I have written in previous Hill op-eds, cryptocurrencies do not function well as money, and they have been, and will continue to be, a terrible store of value.

Worst, unlike taxi medallions, cryptocurrencies generate no income or cash flow. Consequently, the only reason to invest in a cryptocurrency is the expectation of endless price appreciation, which requires a belief that the “greater fool theory” will work indefinitely.

That most definitely will not be the case for taxicab medallions, or for cryptocurrencies.

Source: http://thehill.com/opinion/finance/389226-what-taxi-medallions-can-teach-us-about-cryptocurrencies

Uber,lyft and other taxis

Uber applies for patent to spot drunken passengers

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The technology could spot changes in walking speed, user typos, and swaying motions

Popular taxi app Uber has applied for a patent to use artificial intelligence to determine how drunk a potential passenger may be.

According to the company’s application, made to the US patent office, the new technology would allow them to spot “uncharacteristic user activity” by monitoring customers’ activity as they use the Uber app. These variables could include: walking speed, unusual spelling errors made while typing on the app, the angle at which a potential passenger holds the phone and whether the phone is moving in an abnormal way.

Thought the patent application does not explicitly refer to identifying drunk or otherwise inebriated passengers – it uses terms such as ‘predicting user state using machine learning” and “uncharacteristic user states” – The Guardian points out that vetting intoxicated passengers is the most likely application for a system built to spot typos or unusual swaying motions.

The patent application suggests various ways that Uber may tailor their service if a user is seen to be exhibiting “uncharacteristic user activity”. For example, they may be directed to a well-lit pickup point, or they may be matched with a driver trained to deal with drunk passengers. Uber also suggest that intoxicated passengers may be prevented from “pooling” with other app users.

Many critics have suggested that Uber’s new proposed system may allow drivers to exploit intoxicated passengers. The company has seen several serious data breaches over the last few years, and in 2014 came under criticism for its use of the controversial ‘God View’ software program. The software allowed the company to monitor real-time locations of customers and drivers. In 2016, the company’s former forensic investigator Samuel Ward Spangenberg concluded that the software was abused by employees who used it to track ex-partners and celebrities.

In a statement, Uber said: “We are always exploring ways that our technology can help improve the Uber experience for riders and drivers. We file patent applications on many ideas, but not all of them actually become products or features.”

 

from NME website

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Uber,lyft and other taxis

New York City Uber Driver Has License Suspended After Kicking Out 2 Kissing Women

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An Uber driver who booted two kissing women out of his car had his livery license suspended on Tuesday.

The New York City Taxi and Limousine Commission, which licenses about 180,000 drivers of car services and yellow cabs, called his behavior “ridiculous.”

“It’s 2018 in New York City, and this isn’t the way we live anymore,” commission spokesman Allen Fromberg said.

The women, Alex Iovine and Emma Pichl, a couple in their 20s, were on their way from Brooklyn to Manhattan on Saturday when they exchanged what they called a “peck” on the lips. They said driver Ahmad El Boutari, who’s 35 and lives in Brooklyn, forced them out and a confrontation ensued.

A cellphone video taken by Pichl shows the driver saying that kissing in an Uber is illegal.

“You can’t do this in the car,” the driver says.

“Kissing is not illegal,” one of the women responds. “Why are we not allowed to kiss in an Uber?”

“It’s disrespectful,” the driver says.

Fromberg noted that the city does not regulate behavior in Uber cars and similar services. But he called what the driver did to the women “an unacceptable and repugnant act that will not be tolerated.”

The Taxi and Limousine Commission is investigating.

Uber has behavior rules amounting to, basically, no sex in cars. But Iovine and Pichl said they were doing no such thing.

El Boutari told the Daily News that the women played loud music on their phones and one put her feet on the seat.

But Iovine said that was not true.

“We would never try to upset someone in their own car,” she said by telephone.

Then, “after we had peck-kissed, sitting on opposite sides of the back seat and not even touching, I saw him looking at me in the rearview mirror,” she said. “He was very angry.”

She said they were in lower Manhattan when the driver pulled over, opened a rear door and ordered them to “get out of my car.”

During the altercation, when Pichl started recording the scene, “he grabbed Emma’s arm to try to get her to stop,” Iovine said. “It was kind of a scary experience.”

Uber, which is based in San Francisco, has removed El Boutari’s access to its app, saying it does not tolerate discrimination. It said it is investigating.

Source: http://time.com/5310596/kissing-women-new-york-uber-driver-license-suspended/

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Uber CEO says New York City should charge a fee on all ride-hailing trips to help out struggling taxi drivers

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The chief executive of Uber said New York City should impose a fee on app-hailed rides and taxis to help taxi medallion owners who are struggling with debt.

CEO Dara Khosrowshahi told the New York Post on Monday that the city should put the surcharge into a fund to help taxi owners who bought their medallions at sky-high prices. He did not say how much the fee should be.

“In circumstances where medallion owner-operators are having a hard time, where technology has changed and demand patterns has changed their environment, we would support some kind of fee or pool to be formed, a hardship fund, call it,” Khosrowshahi said.

Because taxi drivers in New York City are required to own them, medallions were once extremely valuable and highly coveted because the demand for cabs was stable. But in the years since Uber and similar companies disrupted the industry, a medallion’s value has fallen from as much as $1 million to $200,000.
Drivers working for Uber and other app-based companies don’t need medallions, and many taxi owners who thought their medallions would continue to grow in value say they are now hundreds of thousands of dollars in debt.

Advocates have blamed five apparent suicides of drivers since last November on the taxi industry’s woes.

In the most recent case, yellow cab owner-driver Yu Mein Chow was found floating in the East River last month. The city medical examiner has not determined a cause of death, but Chow’s family members believe he jumped to his death.

A livery cab driver shot himself to death outside City Hall in February after writing a Facebook post blaming politicians for the taxi industry’s decline.

Groups that represent drivers blasted Khosrowshahi’s proposal.
“Dara Khosrowshahi’s proposals are a slap in the face to struggling drivers and an attempt to get out of being regulated,” said Bhairavi Desai, executive director of the New York Taxi Workers Alliance.

The Independent Drivers Guild, which represents Uber drivers, said, Khosrowshahi “needs to address the widespread hardship faced by drivers for his own company before considering taking another cut from our sub-minimum-wage pay.”

Source: http://www.businessinsider.com/uber-ceo-supports-ride-hailing-surcharge-help-new-york-city-taxi-drivers-2018-6

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