The motor industry is witnessing some of the biggest changes in its history. Thanks to the advent of new technologies like electric cars, ride-sharing schemes, and smart contracts. However, the starring role in most of these new developments belongs to blockchain technology.
What is Blockchain Technology?
A blockchain is a decentralized and distributed public ledger that contains static records and dynamic transaction data across thousands of computers singlehandedly. All information is stored in a separate ‘block’ that has a unique time and date stamp, and it cannot be changed without the alteration of all subsequent blocks. All transactions made through blockchain are certified using a consensus-based mechanism.
Since blockchain is a decentralized network, it is completely transparent. Today this technology is being used widely to foster secure communications and digital payments. Blockchain has shown promising developments in the automotive industry, and in the section below, we are going to discuss some of how it will disrupt the motor industry.
Blockchain technology and the motor industry
Blockchain technology is ready to take the automotive industry by storm. Based on a decentralized data ledger format, this technology is set to empower users of the motor industry. The future is all about automotive singularity- a thought so unique from today that it is impossible to predict its repercussions. Think about self-driving cars, renting your car while you’re at work and other logistics. The blockchain is the glue that binds this futuristic motor world together.
Porsche decided to give blockchain a shot for the very first time, in collaboration with Berlin-based startup. XIAN. Porsche used blockchain to develop a series of anti-theft cars using blockchain. Needless to say, the results were far beyond their wildest expectations, and today some of the world’s largest car makers are harnessing the power of blockchain to develop cars like never before.
Let us look at how blockchain technology is changing the motor industry forever:
1- Smart contracts
One of the best features of blockchain is that it can generate smart contracts. These contracts are digital promises and quite unlike the regular contract, which requires the presence of a third party like a bank or notary. For example, Porsche used a blockchain based smart contract in their trial where a transaction occurred each time an electric car was charged. The technology generated a smart contract, and the amount for charging the car was automatically debited from the user’s account. This same technique was used to pay car loans. A smart contract is generated at the time of vehicle purchase, and the set amount will be deducted from the buyer’s bank account each month.
2- Auto Financing
Thanks to the blockchain, most individuals can afford to purchase cars outright, instead of waiting months for the bank to approve their auto financing loan. Although there will be terms and conditions for buying cars through a blockchain platform. It can still speed u things for both the buyer and the dealer. There will no more wait for letters of credit from the local bank, different documents, investigation of legal structures, and so on.
A blockchain based portal known as autocoincars is a platform that specifically targets crypto currency users that want to buy a car with bitcoin and other leading crypto. There are masses of people that have digital money in the form of crypto currency. They want to utilize these to purchase new vehicles or to buy used cars for sale. Thus the portal facilitates transactions like a digital marketplace to buy and sell cars using the bespoke cryptocurrency, as per the buyer and seller preferences.
3- Instant ownership
The process of purchasing a new car and transferring the ownership of an asset from buyer to seller is a tedious process. It requires the involvement of numerous intermediaries. But thanks to blockchain technology, the buyer won’t have to pay extra fees for getting ownership of the vehicle.
Blockchain streamlines the whole process by digitizing it and securing titles instantly.
4- Transparent vehicle valuation system
When buying a second-hand car, customers often have to rely on their own judgment or the opinion of an expert mechanic. Unfortunately, most facts are twisted to represent the car in perfect condition. You might end up buying a car that is driven much more miles than you originally thought. This is when blockchain can help you out.
Blockchain data is immutable, and you can compare the seller’s word with the honest information stored in the blockchain. In fact, you can check all the necessary information related to the car, such as mileage, accident history, maintenance, etc. to help you make an informed decision.
5- Self-driving cars
The blockchain is one of the most crucial aspects of autonomous cars. A self-driven car registered on a blockchain will use real-time data to make informed decisions like choosing the shortest route, predicting weather conditions and avoiding roads with traffic jams. In short, traveling to and from work is going to be a breeze- you might as well sleep in the car while it steers its way through the roads.
What’s more, the application of blockchain in autonomous cars will ensure the safety of the passengers physically but will also restrict hackers from accessing personal data such as their names, addresses, and payment details.
6- Eliminating counterfeit car parts
During the beginning of 2017, UAE officials confiscated more than 500,000 counterfeit auto spare parts which were worth a whopping $4 million. The process to calculate the details and worth of all the fake pieces took more than 20 hours.
The blockchain is a convenient measure that can be used to identify fake car parts. By stamping each original part with unique radio-frequency identification (RFID) tag, car manufacturers can ensure safety. The spare part can also be tracked in their supply chain, and all information will be stored in a public ledger. According to Mattew Jones from IBM, car manufacturers should use blockchain to prove the authenticity of their auto spare parts, so that recall costs are lowered in the long run.
7- Car insurance
The blockchain is a game-changer for insurance companies. Being a transparent platform, there will be no chances of receiving fraudulent information through false claims. Each car will be insured through a smart contract. What’s more, with blockchain, insurers will be able to detect which car needs serious repairs before it suffers from an accident. And the best part is that all this can be done within a few hours. You won’t have to wait for ages before you file insurance claims and wait for clearance.
According to a recent report, Toyota is already partnering with tech companies like MIT, BigchainDB, and Oaken Innovations, to create blockchain based insurance solutions.
We hope that this article was able to provide you with an insight into how blockchain technology is ready to take the automobile industry by storm. As per traditional thoughts, blockchain is not only limited to financial organizations. Many businesses and industries are using blockchain to improve their services.
In the automobile industry, car manufacturers, dealers, insurers, and of course consumers are showing their readiness to use blockchain for day to day activities. In the long term perspective, blockchain can reduce fraud, increase efficiency and ensure safety in the digital ecosystem.
What do you think the future holds for blockchain and the motor industry? Are you ready to be a part of this exciting revolution? Share your suggestions with us in the comments below: