Blockchain, a technology famous for its application in cryptocurrencies like Bitcoin, is being explored by automakers as a way to improve security in increasingly connected vehicles. As the average car gets closer to being fully connected, electric, and/or autonomous, there will be a corresponding increase in the need for a more evolved database to match – and blockchain is shaping up to be the answer.
What is Blockchain and How Does a Blockchain Work?
A blockchain is a distributed database, meaning that the storage devices for the database are not connected to a common processor; instead, it maintains a growing list of ordered records called blocks. Each block has a timestamp and a link to a previous block, making it impossible for an individual block to be altered without also changing the rest of the blocks behind it. Users can edit parts of the blockchain that they “own” by possessing the private keys necessary to write to the file. Cryptography ensures that everyone’s copy of the distributed blockchain is kept in sync.
Blockchains are secure databases by design, making them excellent prospects for recording things like medical records, financial transactions, identity management, and proving provenance. Blockchain offers the potential of removing the middleman in trade and transaction processing. Here are 5 ways blockchain has become a disruptor and driver of adoption in the automotive industry
1. Secure Payment, In-Vehicle
Blockchain first landed in the public consciousness as the technology supporting cryptocurrencies, such as Bitcoin; cryptocurrency remains the primary arena in which blockchain technology is used. Car owners soon, however, could use blockchain to pay for the electricity to charge electric cars. Imagine if every time you charged your vehicle, the action triggered a smart contract on the blockchain that took the appropriate amount of money from your account and sent it to the charging station. The same could go for your monthly parking cost, your insurance, and any other financial transactions involving your vehicle.
2. Safe-guarded Autonomous Data
As a self-driving vehicle navigates the world, the blockchain could become responsible for recording data about the details associated with the trip. This localization data could include everything from information about road and infrastructure details to general traffic patterns. Other vehicles in the network could then access this information and trust that, since it has been processed through blockchain technology, it is accurate and secure (the data structure of shared ledgers in blockchains makes adding to, removing, or altering data nearly impossible once it has been validated and stored in a block). Since sharing everyone else’s data is the fastest path to autonomous driving, automakers may soon leverage blockchain to share all the localization data as securely as possible. Only authorized parties would be able to access this data in real-time because it is cryptographically secure. Hacking is big business and not a threat to individuals as much as it is to OEMs. Blockchain usage will prevent “bad actors” from hacking the network and potentially holding OEMs hostage as a result of a display of what can be done to the automaker’s autonomous vehicle network.
3. Ridesharing Decentralized
Ride-hailing services such as Lyft and Uber are already reinventing the way we use — or don’t use — our vehicles. With a few swipes on an app, a driver picks you up in their car and takes you to your destination. Blockchain, along with autonomous technology, could take ridesharing to the next level in the not-too-distant future.
One aim of blockchain is to remove intermediaries between rider and driver while establishing more secure maintenance of data. By basing payment on predetermined conditions and installing them in a smart contract, for example, drivers will get paid only when they have delivered a rider to their destination. If a rider cancels, the contract could release a small portion of the funds to the driver to account for their time instead of an arbitrary cancellation fee.
The possibility is even there for blockchain technology to disrupt the way companies such as Uber operate. By transferring the processes of payment and driver/rider selection to the objective, secure blockchain, an ecosystem-type platform could be built as a remedy to remove the middleman. Riders could connect directly with drivers on such a platform, viewing individual reputations and choosing a driver based on price, quality and other free-market factors. It would be a welcome alternative for many drivers fed up with the current ridesharing pay structure associated with companies like Uber.
4. Fair and Reliable Car Sharing
Blockchain-based systems facilitate the sharing of not just rides but also vehicle ownership. For example, in the future, a group of people may share ownership of vehicles — instead of every person living in a high rise owning their car or relying on other modes of transportation, they could share a fleet of 10 vehicles. They’d request access to a vehicle when they needed it via an app, and during use, the cars’ blockchain would record the activity of each vehicle.
The system would automatically settle payments on whatever basis the owners agree upon, and the secure nature of blockchain would take the guesswork out of exactly how long, far, and fast vehicles are used for – ultimately creating more convenience for all.
5. Supply Chain Management
In the automotive industry, the transparency offered by distributed ledgers could help ensure that manufacturing, shipping, and suppliers see the same supply chain, making it nearly impossible for the insertion of counterfeit parts. Furthermore, multiple blockchains could be put into use to manage the mass amounts of data generated and monitored by automotive manufacturers and suppliers daily: one blockchain might contain bills of lading for vehicle components, another could contain quality-inspection records created during the manufacturing process, and another could store WIP information for each vehicle assembly from start to finish.
Additionally, smart contracts could be embedded in manufacturing blockchains to automatically release purchase orders at certain phases of the manufacturing process. Supply chains could benefit from contracts being automatically awarded to the supplier with the largest inventory on hand.
The Possibilities Seem Limitless
Blockchain, as a secure and unique form of encryption, has the potential to be one of the critical technologies that make it possible for the automotive industry to leap forward into the new era of smart vehicles. Whether it is by securing financial information or making shared ownership more trustworthy, blockchain can revolutionize the way data is managed in the vehicles of the future – and it’s worth paying attention to.