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December 17, 2018

How blockchain technology will revolutionize the automotive industry

The hype around blockchain and the fluctuations in the value of cryptocurrencies have been amongst the most overplayed narratives in the digital world over the past two years. Beyond the hyperbole, however, blockchain technology is serious and will be transformational across most major industries, including automotive. 

Blockchain tech is already being employed in the automotive industry and increasingly consumers will see this technology affecting the way we buy and sell products in the private resale market.

Bitcoin has famously been accepted for vehicle purchases from a number of dealerships via Bitpay, whilst the innovative Bitcar project facilitates fractional ownership of classic cars on a blockchain-based platform.

Buying and selling vehicles with cryptocurrency on the private resale market might still be some time off, but it’s not hard to envisage the trading of digital currencies, credits or tokens for physical objects soon going mainstream.

Meanwhile, beyond vehicle purchasing blockchain is gradually working its way deep into the fabric of the automotive industry. Deloitte (News - Alert) are always on the ball with trend watching and they have already produced several reports on blockchain in the automotive industry.

Blockchain’s ‘distributed ledger technology’ provides decentralised, encrypted and secure data storage solutions. This technology could be utilised by vehicle manufacturers, dealerships, suppliers and car financing firms in numerous ways. These may include more efficient supply chain management and fleet management, improved vehicle information logging, more accurate driver behaviour studies and stringent odometer fraud prevention.

As Deloitte themselves put it, “while blockchain can be used in isolation, it is likely to have a bigger impact when combined with other technologies such as big data, Internet of Things (IoT) and Artificial Intelligence.”

The arrival of driverless cars has been widely reported, whilst the proliferation of connected cars continues to gather pace. Connected vehicles will increasingly communicate with each other, with the road, with traffic management systems, with transport authorities and with wider IoT networks.

The requirement for secure, encrypted data networks to ensure passenger safety in connected and driverless vehicles is obvious. Hacked or faulty data systems would cause fatal accidents and traffic chaos. Highly secure blockchain-based data managements systems may well be the answer.

With regard to car insurance the major players in this sector will step up driver behaviour analysis when it comes to setting premiums and prices. Connected vehicles will provide ever more sophisticated feedback to insurers on driver location, average vehicle speeds and driver behaviour. If they can accurately measure acceleration patterns, braking, overtaking, cornering, infractions and dangerous driving this puts more onus on their clients to drive safely in return for cheaper insurance.

Connected cars and the IoT could make this possible sooner than we might imagine. Blockchain technology could provide a failsafe means of data collection and management on vehicle usage and driver behaviour. Safer roads and cheaper insurance backed up by a decentralised, transparent and secure ledger system? Yes please.

To conclude we will take a quick look at a case study of what is reported to be the first instance of a car manufacturer implementing blockchain technology inside a vehicle. Porsche has collaborated with Anglo-German start-up XAIN to allow vehicle owners to grant third-party access to their cars, remotely, via smartphone.

On a blockchain-backed system, the Porsche XAIN project also allows car owners to record traffic data in communication with other vehicles and to lock or unlock their vehicles via a fast, secure, offline connection. In addition, the system can send real-time notifications with data on the identity, location and timing of individuals accessing the Porsche and even allows packages to be delivered to the trunk of the vehicle. The automotive future is here and its built on blockchain.

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