Blockchain in Enterprise: Automotive Applications and Data Marketplaces

With blockchain’s relatively recent rise to fame, some auto-giants have started to notice solutions to some of the recent problems around data collection, servicing, and automation. With each new day, the horizon of auto manufacturers continues to expand due to the advent of blockchain technology.

From Driver Dependent to Driverless

Miami is typically known for sun, sea, palm trees and a thriving city-life, however, in late February last year, the US city made it into the news for a slightly different reason: driverless pizza deliveries. You see, the local Miami-Dade County had recently signed a new research partnership with automotive giant, Ford, to deploy custom-built autonomous cars across Miami through a variety of partnerships with other businesses, most notably Domino’s Pizza (I can hear my New York friends hissing over my shoulder).

But this isn’t the first major feat of driverless technology.

Waymo, the self-driving technology company birthed from Alphabet Inc, has been busy designing and testing driverless technology as far back as 2009. Currently, its fleet stands at 600 cars and growing, with an industry-leading 10 million miles covered on public roads. In a bold move at last year’s Web Summit, CEO John Krafcik announced that they will make their ‘robotic chauffeurs’ available for commuters in Phoenix, and so far the experiment has gone so well that they recently launched an autonomous ride-hailing app, Waymo One.

But this success hasn’t come without its problems. Critics have been quick to raise a number concerns such as ‘will a computer-controlled car willingly sacrifice itself when presented with an impossible situation?’ or ‘who’s held liable during an accident and what are the at-fault vs no-fault circumstances?’. Another common issue revolves around the concept of ‘merging’ and whether autonomous vehicles would create unsafe environments when trying to merge with traffic or change lanes. Despite some of these drawbacks, the wider point I want to make is that mobile transport has come a long way since the days of the horse-drawn carriage.

Open Data Markets

With smart cars being manufactured day-by-day at an increasingly affordable rate, consumers now find themselves sitting in what could probably be better described as a mobile computing platform able to house what until recently was the equivalent of a supercomputer. Complex sensors monitor your car’s fuel consumption, engine health and speed, all neatly presented to you on a flashy, interactive dashboard, which also happens to play your favourite playlist, all accessed at the tap of a finger.

All this data, however, is currently siloed to their respective owners, namely the vehicle owners, carmakers, fleet managers and manufacturers (OEMs). If these data stores were opened up and accessible between these parties then this creates a number of possibilities which revolve around more accurate and efficient execution of existing processes, as well as new ways of growing this ecosystem of mobility.

Take, for example, Waymo crossing the ’10 million mile’ mark for autonomous cars. Chris Ballinger, the former director of mobility services at Toyota, was quoted last year as saying “hundreds of billions of miles of human driving data may be needed to develop safe reliable autonomous vehicles”. If this is the case then it would probably be in the interests of most competitors in the driverless car market to put their heads together and figure out a way to pool this data together.

So the question here revolves around if any of these companies would be willing to share their data and how can blockchain help with this? Distributed ledger technology (DLT) can provide particular rails for attestations and payments in a data marketplace but is this enough to guarantee enterprise-grade output?

Making Sense of Data

Well, firstly there’s a distinct lack of data property rights in the industry at the moment. To address this issue we need to answer the question ‘what data needs to be shared?’. The data in question tend to fall into two buckets:

• Consumer Data
• Rich Data

Consumer data refers to the data that can be attributed to the driver of a car e.g. location history, vehicle speed etc. Commuters also often spend hours in their car interacting with a variety of internet-enabled services such as personal electronic assistants like Alexa or a navigation system connected to the cloud. If we create property rights for this kind of information then the data itself can become self-owned, whether that’s by the driver, vehicle owner etc.

Rich data refers to the large amounts of complex data the expensive sensors in your cars are constantly hoarding e.g. LIDAR, temperature sensors. This data, in fact, is much more up for grabs and when you consider that connected cars today are currently producing around 25 gigabytes of data an hour (and growing rapidly) there needs to be sound infrastructure built to harness its value.

Imagine the number of real-time services that would pop up such as traffic density updates which would effectively allow you to “see around the corner” and take the most efficient route to your destination. Of course there are existing services for this such as Waze or Google Maps, however, these services are dependent on voluntary data collection vs automatic, attestable methods. Think about car collision data which would help provide more accurate injury assessment. All of these services rely on effective and trustless open data markets: a place where different parties can own, authenticate and share the data they collect with entities that can provide a means of value to them.

The major issue with the way data is stored within companies today is that it’s not built to share with others. There are many reasons for this ranging from the fact different companies often use different data management systems making hard to integrate, to maintaining the privacy of confidential data that gives them a competitive advantage. This, however, results in silos of data building up that aren’t necessarily considered a competitive advantage e.g. the average temperature recorded by sensors on Toyota cars driven in California. This data might be of great value to a third-party service provider however with no uniform means to attest and access this information is withheld.

An open data marketplace would allow for common, accessible interface and exchange of data. Users of such a marketplace (drivers, owners, fleet managers, automakers, OEMs) would be able to choose what data they wanted to share and the value it would cost. Users would attest to the origins of said data and provenance of such datasets would be transparent for purchasers to validate. This would create a new dynamic where existing companies had access to multiple-folds of data they were collecting already which could be used to develop new products or services. Furthermore, they could exchange data they didn’t consider of value to them for data provided by another vendor on the marketplace.

Why Blockchain?

Transparent attestations of data combined with executions of smart contracts open up a new way of accessing information from these silos.

The question then revolves around what should be built to help support this?

To be clear, I’m not of the mindset that these companies should go out and launch their own blockchains. In fact, I think the real value with enterprise blockchain comes from proving the value of a smaller scoped use-case, which would then pave the way to a more focused and better-understood company vision.

Vehicle History

Let’s consider vehicle maintenance for example. The current premise is that a car’s maintenance history is supported by a range of different sources. Dealerships have a detailed log of every show car before they get sold. Repair shops log details every time you bring your car in for a service, but often owners move house or decide to get their car serviced elsewhere leading to a very fractured history about your car which could prevent a mechanic from fixing a certain problem or even selling your car to a prospective buyer. A blockchain’s distributed nature could help consolidate and validate the authenticity of this information across different parties for easier access and a more transparent understanding of a vehicle’s history. Third-parties, such as insurers or original equipment manufacturers (OEMs), could leverage this information to better value cars or assess the durability of the parts they produce.

Renault was actually one of the first automakers to cotton on to this idea and in May last year produced a ‘proof-of-concept’ (PoC) that acted as a digital maintenance log for car repairs which was shared and used successfully amongst car dealers and workshops. The team are now looking to scale this prototype along with help from Microsoft.

The final point I’ll make here addresses the elephant in the room: data privacy. It’s no secret that enterprises probably don’t want to broadcast all their data on a public interface, particularly if competitors are involved. This often leads people to consider using private distributed ledgers, however, the trade-off here is the security you get with a public blockchain. This has been a contentious issue for some time now however recent developments have proven that a desirable compromise is in the works. Progress in the fields of ‘Zero-knowledge proofs’, for example, allows users to make certain information private whilst remaining on a public ledger, a step which will allow users to benefit from desirable traits of a private DLT without sacrificing the benefits of immutable or secure public ledgers.

Digital Identity

Opening up data to the masses is one thing however the inability to attest or ‘own’ this data would lead to a number of problems including fraud, unaccountability and others too long to list.

Typically, use of a blockchain helps disintermediate certain actors within a process. In the example I used above, the dealers, repair shops etc would have access to vehicle data but they wouldn’t necessarily own it any more.

It’s also important to consider the bigger picture. Vehicles are often a personalised reflection of its driver, and the data that supports this can be very valuable to certain actors. Consider Amazon’s Alexa, the digital assistant that’s slowly creeping into people’s lives and shaping the way we communicate and interact day by day. Right now you can unlock and start your car, turn the lights off in your house and close the garage door on your way out, at the command of a few words. It’s not too hard to imagine a future where your car is adorned with technology like this which automates a lot of the effort you undertake today whilst also providing a personalised experience to your journey for an optimum experience whenever you’re in the car.

Automakers recognise that if they want to beat the competition they need to put the customer first and deliver increasingly personalised and consistent experiences. This would strengthen their brand, better customer retention and increase profits. To deliver on this, companies need to recognise, serve and safeguard people’s identity and needs and this begins with being able to trustlessly attest and authenticate data to an owner. So as we move to more open and transparent economies it’s important we seed the right frameworks for users to establish ownership of data that’s rightfully theirs.

There are a few ways to go about this, the most common being vehicle identity. At this early stage of the technology’s development, it’s important that actors in the automotive space work together to establish a standard for recognising vehicles. There have already been a number of PoC’s that have produced the digital equivalent of a ‘birth certificate’ for cars however these trials will probably result in failure unless they can get the community to adopt it. Some companies have taken it a step up, exploring the concept of a ‘digital twin’, a standard which could extend beyond machine to include humans themselves.

Consider that for a second. Imagine a human and a car having a digital twin that can be attested to in a trustless manner which could activate payments in the case of an automated taxi for example. Blockchain technology would be used both to attest to the digital twin of the car and customer and provide the rail for payments.

Token Economy

Don’t worry, this isn’t an ICO pitch. What I want to focus on here is the importance of transactive value.

Transactive value doesn’t necessarily mean monetary value. Yes, someone could offer data to purchasers at a price but this doesn’t encompass all forms of exchange. For example, a car repair shop may have a log of how many times a year a customer replaces the tyres on their car. This may seem relatively unimportant to the repair shop but to the company that made the tyres, this is information it could use when designing the upgraded version of that tyre. Similarly, local authorities responsible for maintenance of road infrastructure may deem that information valuable in determining the quality of roads in the area and whether they need to allocate budget for their repair. These parties could trade this data for something the repair shop needs, for example, better tax rebates for their property.

Now that we’ve understood the premise behind identity and data, we need to consider how different actors exchange this data and communicate with each other, particularly, if there are to be fewer centralised middlemen involved.

Uber’s most recent valuation puts them somewhere around the $70bn mark which is expected to rise to $120bn should they IPO next year. This is a huge amount of value from a company that has successfully been able to aggregate liquidity within ‘driver’ and ‘rider’ pools and act as a matchmaker between them.

But what if this wasn’t the case?

What if the relationship between a driver and rider was more direct and didn’t require a central authority like an ‘Uber’ who charges up to 20% in fees. Sovereign ownership of data and an open marketplace to transact this data means that actors like these within the mobility ecosystem should be able to seamlessly interact with one another, either autonomously or intentionally, in ways that reduce the effort and time spent. Not only would fees be reduced but the supporting infrastructure would be commoditized meaning individuals or market-makers would be able to establish more reasonable rates at a lower cost.

Remember the ‘merging lanes problem’ problem I described at the start? Well, consider a scenario where cars could signal to each other indicating a preferential route of access during their journey. What you’d end up with is something like a marshalling service where some drivers could pay some sort of premium (money, data etc) to get to their destination quicker. In fact, Ford has already been trialling this, filing a patent in June called ‘vehicle-to-vehicle cooperation in marshal traffic’ which outlines a system of ‘consumer’ and ‘merchant’ vehicles where one could stake a bounty or pay ‘X’ number of tokens/fiat to merge in front of others and access shorter routes.

UBS and Innogy have already teamed up to create an eWallet that can facilitate autonomous electric car payments for charging whilst Daimler is following a similar line of thought with their purchase of PayCash which facilitates bitcoin transactions in their ‘Mercedes Pay’ service.

Thinking more practically, these kinds of services would allow for instant transaction remissions between parties by pre-coding this logic in a ‘smart contract’ which is basically a self-executing digital contract. Now there’s no need for a payments processor. Blockchain also adds a layer of security that is currently missing from existing solutions and can’t be matched through centralised development.

Active Automotive Consortiums

Something to note about the blockchain space, in general, is the amount of collaborative effort that has been undertaken to build its value.

Over the last year there have been a growing number of consortium groups popping up across a bunch of different industries, all focussed on figuring out where decentralization fits in their business models. The advantage of such groups primarily revolves around coming to a consensus about ideas and forming partnerships to deliver on these. After all, if you want to want to set standards for a new ecosystem it’s probably wise that you come to an agreement about it before.

Within the last year or so there have been two major consortiums at play within the automotive space, here’s the TLDR:

The Toyota Research Institute (TRI)

Announced at the end of May last year, the TRI was set up as part of a joint collaboration between Toyota and MIT. Their goal was to figure out how they could enable the new era of autonomous driving by means of using blockchain and DLT. Their 3 core verticals form around providing solutions to sharing driving/testing data, car / ride-sharing transactions and usage-based insurance. The group signed early partners including aforementioned Oaken Innovations, BigChainDB (scalable blockchain database) and Commutterz, a P2P car-pooling service.

As you can see the group’s main drivers include a few of the concepts we’ve touched upon so far in this article, however, TRI have found it hard to develop any traction with no significant mention of developments in the news. In fact, their former director of mobility services, Chris Ballinger, quit the role earlier this year and co-founded the consortium at the number one spot currently, MOBI.

The Mobility Open Blockchain Initiative (MOBI)

Set up in May by some of the biggest players in the automotive industry including BMW, Ford and Bosch, the non-profit group is focussing on accelerating the adoption and standards of blockchain and DLT for the benefit of the transportation and mobility ecosystems. Their aim is to create simple digital standards for identifying cars, people, payment rails and secure exchange of data.

These essentially mirror the goals of the TRI except the difference here is, firstly, the brand presence of their members which reach a wider audience and, secondly, MOBI is working very closely with government and regulatory authorities to help define and legalise standards. This is arguably a smart way to go about things. The term ‘decentralization’ tends to strike fear in the eyes of corporate tycoons who have built their empires off of the very opposite, however, decentralization isn’t about ripping up governments, but rather defining a new, more collaborative means to an end.

So far the group have been working on addressing vehicle identity, machine payments, data markets and usage-based insurance, often producing workable PoCs. The group is still in its early stages of exploring the space however they recently announced a competition in October where teams will go head-to-head to build out what they think is the best ways for cars to communicate and transact with each other in an autonomous and decentralized future. The ‘cash-prize’ currently sits at $1,250,000 worth of tokens contributed from Ocean Protocol (decentralised data exchange) and Beyond Protocol (hardware-to-hardware communication).

One of Many Transforming Industries

For the final segment of this piece, I wanted to summarize some of the specific use-cases that are being paid special attention to within the automotive space and/or are actively being built and tested:

Usage-Based Insurance

Transparency and access to more data about a vehicle, the driver and their driving habits will lead to more accurate and better-priced insurance offerings. Existing solutions include devices called ‘black boxes’ which are computers attached to your car that record things such as speed. This data is then fed back to the insurer who then uses this to charge the driver appropriately.

Using a blockchain-based solution may decrease data silos and would allow insurers to access a much wider pool of data to analyse, hence resulting in more accurate pricing tiers for their customers. The data itself would be attestable to the driver (or even the car itself) who could then decide what type of data and order of magnitude (daily, alternating days) they’d be comfortable in transacting in return for insurance. This would benefit the safer drivers in the sense that they’d save on costs due to more accurate pricing, but also they’d be responsible for choosing the data they wanted to share, allowing for data-owners to exercise flexibility with third-parties essentially ‘cutting their own deal’.

Fraud Prevention

Mileage fraud is common in the automotive industry, where malicious actors within a repair shop tweak odometer settings on a car to portray a healthier lifespan than is actually the case. This problem is so bad that is currently affects around 450,000 cars sold annually which accounts for over $1BN worth of sales.

UK-based start-up, Dovu (part-owned by Jaguar Land Rover), partnered up with BMW to build out a PoC which helped track mileage across their fleets. The company is currently testing out ways to incentivise more users to participate.

The overall gist I wanted to get at here is its normal for companies approaching blockchain to bite off more than they can chew. A more proven method is to start with a smaller problem, specific to your business, build out a solution which demonstrates clear value and then scale from there.

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As technologies for cars develop you’ll notice an increasing need for standards which will help unlock the full capabilities for what are essentially mobile computers on wheels. Aside from the upcoming buy-cycle for cars coupled with the increasingly affordable smart cars that are being competitively produced every minute, I expect to see mass technological change come in phases. The majority of these will most likely take place in cities, where the average expendable income is higher and the latest supporting infrastructure is already being rolled out. San Francisco is already one of the busiest areas for ride-sharing and car sales have noticeably declined over the last few years.

With decentralized ecosystems being built out in almost every other industry aside from automotive, we’re likely to start seeing a lot of overlap and learnings spillover from other verticals. Smart monitoring, digital identities, data exchanges, and connected insurance are some of the future automotive functional areas that can be leveraged based on blockchain technology.

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Nothing in this article should be taken as legal or investment advice.