The Growing Use of Blockchain Technology in Cars – exploring the details

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The mobility sector has changed significantly over the past century. And it has no plans of slowing down anytime soon. As Industry 4.0 technologies make their debut in the automotive industry, we will definitely see some drastic transformations in the future.

Currently, the prime focus is on the blockchain.

As an efficient, transparent, and secure platform, blockchain is getting its fair share of the limelight. A 2018 study by IBM reveals that 62% of executives across the automotive industry are convinced by this emerging technology’s offerings and claim that it will soon become a disruptive force there.

This idea has launched companies in the auto sector into action. As a result, MOBI (Mobility Open Blockchain Initiative) was created. The consortium brings together major auto industry players, such as BMW, Porsche, General Motors, Honda, Ford, and Renault, with premier tech organizations, such as IBM, Accenture, Toyota AI-Ventures, Hyperledger, and ConsenSys, onto the same platform. It is specifically designed and dedicated to promoting smart mobility with the use of blockchain and related technologies. Their goal- making transportation greener, more efficient, and more affordable. MOBI is expected to have a significant impact as the different companies collaborate to merge existing concepts with newer technologies.

So how is blockchain actually going to reshape the automotive industry?

The automotive sector has always been keen to adopt creative technologies. And now, with this latest addition, there’s no end to its applications.

Moreover, you need to remember that the industry consists of a complex ecosystem of businesses, incorporating aspects such as design, manufacturing, distribution, marketing, financing, and servicing. This leaves open ground for the technology to grow in every field.

Let’s take it from the top.

  1. Auto financing

Digital currencies are fast becoming the preferred medium of payment. Since blockchain has always been closely associated with crypto, it’s natural for the two to be interlinked. The technology is now being used by several businesses that sell and buy cars with cryptocurrency.

High-value financial transactions favor blockchain technology as it is faster and more secure. The speed of clearing financial transactions has significantly improved because there are fewer intermediaries involved.

  1. Additional forms of payment

Blockchain is not limited to only auto payments. Use cases are expanding to include charging or fuelling cars, in-vehicle infotainment services, tolls, and much more. Businesses are working on blockchain to support M2M (machine-to-machine) transactions.

Recently, Oaken Innovation demonstrated how this could be done through blockchain-powered technology and payments infrastructure. It illustrated how Tesla cars use smart contracts to pay tolls automatically with ethereum as they drive through blockchain-enabled toll booths.

  1. Authentication of parts

The blockchain network uses irreversible one-way hash functions and time-stamping, which ensure data is unalterable and traceable. This is particularly useful in the authentication of auto parts.

Blockchain offers a systematic solution against parts fraud. Distinctive IDs and immutable time-stamps can be placed on all the parts during manufacturing. This will facilitate the tracking of vehicle components from the factory floor to the automobile it is used in to its replacement during servicing.

Innogy SE is making headway in this department. It launched ‘The Digital Twin’ platform to give every automobile part a “digital twin” that will aid in authentication and provenance purposes.

  1. Supply chain management

The automotive industry needs a system that offers transparency to various components of the supply chain, including manufacturers, suppliers, third-party logistics and transportation companies, etc. More importantly, the data needs to be accurate and consistent.

And since blockchain is also known as a distributed, decentralized, public ledger, data is visible and accessible to everyone. Moreover, every connection in the network has the same information. In the auto industry, this is a huge advantage. There are thousands of parts involved alongside global OEMs and suppliers. So managing the huge amounts of data that is generated daily can be overwhelming. But supply chains backed by blockchain technology can help streamline processes and award contracts automatically to suppliers with the largest inventory on hand.

  1. Maintaining the authenticity of vehicle records

On the blockchain, information is stored in blocks that are linked to each other. Transactions are recorded in the form of hashes where every block has the hash of the previous one. That means data cannot be altered.

The fact that information remains untampered makes blockchain a secure platform for records, whether companies store car history records, ownership documents, sales invoices, or vehicle designs.

This is what CarVertical, a blockchain-backed startup, is aiming for. They realize that car owners often do not have adequate knowledge about a car’s history. Their solution- a blockchain registry that compiles data from different sources. Not only is there greater transparency about previous ownerships, but the information is also tamperproof.

  1. Ride-sharing

Lyft and Uber have reinvented the mobility sector. The new era consists of shared vehicles and ride-sharing services. But as these services become increasingly common, preserving personal and sensitive data is more and more important.

As a secure digital platform, blockchain technology is the ideal solution for MaaS (Mobility-as-a-Service). It can help guard identities, personal preferences, and settings in a protected environment.

But other startups, like Tesseract, are taking things further. Instead of simply sharing rides, people can now share ownership of automobiles. More interestingly, as P2P (peer-to-peer) car sharing takes off, it’s only a matter of time before autonomous vehicles drive into the scene. The 2017 PwC Strategy & Digital Auto Report states that car-sharing and autonomous vehicles will thrive within the next ten years.

Final thoughts

Trends are shifting towards technological processes within the automotive industry. This is opening avenues for automation, IoT, AI, and blockchain. As technology progresses, newer concepts, ideas, and innovations will continue to emerge.

But generally speaking, the concept of a car is also changing. What was once an object of ownership has now become simply a means of transportation. With the rise in car-sharing and the incorporation of autonomous networked systems, it appears that things are going to change more than we can anticipate.

The question now is, are you ready for the next generation of cars?