The Growing Use of Blockchain Technology in Cars

Finjan TeamBlog, Cybersecurity

Finjan The Growing Use of Blockchain Technology in Cars

With the evolution of the automobile beyond four (sometimes three) wheels, a solid chassis, and an internal combustion engine, vehicular technology has had to embrace a full spectrum of innovations, as the market continues to develop and grow.

New materials, alternative fuel, and energy sources, changing manufacturing and safety standards, and the incorporation of computer technology throughout: All of these have influenced and continue to influence the form and nature of cars and other vehicles, present and future.

Market research agency Frost and Sullivan estimates that automotive companies will spend somewhere in the region of $169 billion on implementing new technologies in their organizations by 2025.

It’s from the digital arena that the most dramatic changes have taken place – from “connected” vehicles combining smart sensors with wireless networking and internet, through to autonomous or self-driving cars employing Artificial Intelligence (AI) and edge computing, to give real-time or near real-time responses which are approaching the capabilities of their human passengers.

To this mix can now be added a system that’s been the environment for trading and transaction recording in the burgeoning cryptocurrency market: Blockchain technology.

Blockchain Technology in a Nutshell

Blockchain actually consists of a set of integrated technologies which allow for the creation and management of a distributed database architecture. Known as the “distributed ledger”, this is an encrypted environment in which the creation of each data or transaction record and the verification of each transaction is reliant on several parties, each of which has to agree on its validity.

This eliminates the need for a centralized authority or “clearing house” to govern transactions, and distributes that responsibility over to the members of a given blockchain ecosystem or network.

You’ll hear the word “immutable” bandied about, in relation to the blockchain. The word means “unchangeable” – and while it’s an accurate term when applied to the verification checks and mechanisms used to keep blockchain information and transactions secure, it’s a bit misleading when you consider that the blockchain is also about creating and recording new transactions.

You can think of it this way: Changes can continually be made within a blockchain ecosystem, as fresh transactions occur. But once each change has been authenticated, verified, and recorded within the network, the transaction record is set in stone.

As each transaction takes place, it’s put into a block. Blocks are connected in sequence to the block before, and after. Groups of transactions are aggregated together like sections of a chain, and a fingerprint of each block is added on to the next, creating an irreversible sequence.

The complete blockchain acts as a database of all the exchanges which have taken place between its users, since its creation. And each authorized member of the blockchain network retains a complete instance of this database.

Beyond its applications in the cryptocurrency sector and the work of several startup ventures using it as a distributed database and verification system, blockchain technology is now demonstrating its potential to disrupt the automotive industry, in a number of ways.

Using Blockchain Technology in Cars – Ensuring Autonomy

Despite the best efforts of Tesla, Google, and other players in this sector, the self-driving car hasn’t yet been perfected.

We’re still in the very early days of the technology. But already, we hear theoretical arguments along the lines of, “Who’s legally responsible if a robotic vehicle causes property damage or harm to pedestrians and other road users?”

Much of this debate stems from the lingering doubt that autonomous vehicles simply won’t have what it takes to process the huge amounts of information needed to safely navigate our streets and highways – or the rapid-fire decision-making qualities required to translate that information into responsive and responsible motoring.

Blockchain technology provides a platform for the verification and safe transfer of data between vehicle owners, researchers, manufacturers, and other stakeholders. It also allows for information transfer between cars and can give a greater guarantee of repeatable outcomes or responses on the part of the autonomous vehicles.

The Toyota Research Institute has entered a partnership with the MIT MediaLab and four other companies to test blockchain applications in the automotive industry. Among these are a platform for sharing the data gathered by connected cars and information from tests on autonomous cars.

Using Blockchain Technology in Cars – Guaranteeing External Interactions

With the growth of the so-called “Internet of Things” (IoT), networked communications are expanding to include an ever-widening ecosystem of smart, connected, and responsive players. These include people, motor vehicles, street furniture (traffic signals, etc.), and urban infrastructure.

Blockchain security may ensure that only verified and relevant information is made available for exchange – and that only those entities with authorized access to given information can actually get to it.

Beyond the security guarantees, vehicle interactions with external agents have the potential to improve automated processes and have a positive impact on vehicular health. For example, French carmaker Renault is pioneering a digitized car maintenance program. This uses blockchain technology to log all car repair and maintenance histories on a single shared platform.

Automobile Financing and Insurance Applications

The vexing and often complex process of applying for a car loan has the potential to benefit from the streamlining effects and quicker validation of blockchain technology.

The same may also be said of the automobile insurance process. Blockchain databases could assist insurers in keeping accurate records of vehicles (including performance, maintenance history, and other factors), and in assessing drivers. The documentation, submission, and review protocols currently used in assessing claims could also be greatly streamlined.

Using Blockchain Technology in Cars to Verify Ownership and Transfer

Blockchain technology has the potential to streamline and simplify the multiple processes of transferring ownership of assets (including motor vehicles) from seller to buyer. Many of the existing paper-based processes could be fully digitized, and the time which would be otherwise spent on legal procedures for authentication, witnessing, and validation could be reduced on the common blockchain platform.

Enhanced verification could also be applied to vehicles themselves, with blockchain technology in cars used to log and track the movement of car components and spare parts – from the point of manufacture, throughout their service lives. Features recorded by onboard monitors and meters (miles on the clock, etc.) could also be documented in this way.

A company called BigChainDB is currently developing a technology it dubs CarPass, which centralizes all information about a car (including title of ownership, service providers, prior damage, maintenance, and inspection history) in a blockchain database that’s immune to fraud or tampering.

It’s been suggested that this approach could radically alter the nature of used car purchasing. With a secure and accurate record of a vehicle’s entire history, dishonest resellers would have a very hard time in passing off a lemon as a Grand Prix candidate.

Auto Manufacturing and Supply Chain Management

Blockchain technology in cars could be applied not only to monitoring and tracking vehicle components during manufacture but at every point of their journey from the factory floor.

Supply chains in the automotive industry consist of multiple players – ranging from raw materials suppliers, industrial plant makers, and component manufacturers, through to hardware, software, and firmware suppliers, shipping companies, distributors, dealers, regulatory agencies, insurance companies, and labor unions.

They’re incredibly complex, and existing methods of communicating and coordinating activities between the various parties are equally difficult. By designing blockchain networks to allow access to the relevant parties in a given part of the automotive ecosystem, much of this complexity can be reduced, and measures can be put in place to cut out bureaucracy and introduce greater security and control.

Ride-sharing and New Ownership Models

If sections of the popular and motor industry press are to be believed, we’re entering an age of “New Mobility”, in which the use of shared vehicles becomes increasingly important, while the question of who owns these vehicles becomes less relevant. The 2017 PwC Strategy & Digital Auto Report predicts that car sharing and driver-less cars will be the major trends driving the automotive industry, in the next ten years.

The accounting and consulting firm EY (part of Ernst & Young Global Ltd) has developed a blockchain based system called Tesseract, which is designed to enable groups of individuals or companies to more easily share ownership of vehicles, and access to cars and trucks. Blockchain technology in cars is expected to be used for recording vehicle ownership, logging the use of vehicles, apportioning insurance costs, and other transactions.

Israeli start-up La’Zooz offers a decentralized carpooling service, which is entirely owned by its community. Tokens are earned when you contribute to the service as a driver, passenger, or developer for the app, and these tokens are “banked” on a blockchain, from which they can be used to order a ride.

So blockchain technology in cars has a role to play in creating and sustaining new models of vehicle ownership, in the coming years.

Creating the Required Links

It’s still early days. Commercial applications of blockchain technology in the automotive industry must first overcome the obstacle of the sheer number of entities and agencies required to adopt decentralized ledgers. Problems with local law and regulatory requirements must also be met.

As a starting point, major players in the industry are banding together to help meet these challenges. For instance, Toyota (which is already part of the R3 group) has recently announced that it’s building a consortium of its own, to promote blockchain solutions. Meanwhile, Daimler AG has joined the Hyperledger project.

Original equipment manufacturers (OEMs) in the automotive sector are also expected to make positive moves toward blockchain adoption, following the lead of the major names.

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Finjan The Growing Use of Blockchain Technology in Cars
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The Use of Blockchain Technology in Cars - It's Not Just About Bitcoin!
It's still early days, but the commercial applications of blockchain technology in cars are many. Major industry players are banding together to help meet these challenges. Toyota recently announced it's building a consortium of its own, to promote blockchain solutions and Daimler AG has joined the Hyperledger project.
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