Subway Blockchain

Metro Shenzhen Subway [ droid | iOS ] Left: Suggested route from the Civic Center to the airport (distance: 33.7 km, travel time: 55 minutes, fare: CNY 8 (approx MYR 5 | USD 1.2), requires 2 changes of trains). Middle: station information showing where the two lines that connect to the Grand Theater station lead to, includes dining suggestions around the station. Right: built-in map shows places around the Grand Theater station. [These screenshots are for miscellaneous illustration and are not directly related to the discussion below.]

The Curious Case of a Subway Blockchain
  • Shenzhen Metro is reportedly issuing blockchain backed invoices for rides.
  • An invoice in a more formal sense is a bill ie a request for payment. However, not infrequently, the term invoice is used for a receipt, a record of what was paid. For this discussion, we will assume the latter and use the word 'receipt' instead of 'invoice'.
  • Why use a blockchain to record receipts (and not a normal database)? Is a trustless system required? Not obviously so, the metro operator could presumably be able to competently record journeys and issue receipts. Do intermediaries need to be removed? Doesn't seem applicable, the metro transacts directly with commuters.
  • Must the receipts be absolutely tamper proof? Receipts have no intrinsic value except as records. A receipt for a ride is not high value, not an asset or exchangeable (except for corporate expense claims), and is not performing a hyper critical function (the metro could lose a ticket or two and still run vs if a bank loses some transactions).
  • Receipts as a whole are important to the metro to record revenue and rides. To ensure their accuracy, internal controls can be effected through subsidiary ledgers (eg. a secondary counting system at the entry/exit barriers) and other techniques. These would probably still be required even if a blockchain is used.
  • Then, why use a blockchain? Some possible reasons (as we speculate):
    • For publicity. • It is indeed an invoice and not a receipt ie a post-paid system. The record of journeys must be robust because the customer will be billed for them later. However, telcos have been doing post-paid billing for a long time without blockchain. • The owners (or tax department) does not trust the metro to record transactions diligently and is requesting it to use a blockchain (though if the metro can't be trusted, there might be issues elsewhere). • The metro (and/or its blockchain supplier) is trialing the blockchain in a non-critical, high throughput environment in preparation for something more substantial.