How can blockchain technology disrupt the auto industry?

Blockchain technology has been the new kid on the “block” for some time now and is especially hot when enabling new currencies with the rollercoaster rides that these have recently taken. However, blockchains are not limited to crypto-currencies but are widely being adopted by other industries as well, especially the automotive industry. According to Frost and Sullivan, 10–15% of connected vehicle transactions are expected to be on blockchain by 2025. Toyota is exploring blockchain technology in collaboration with MIT Media Lab to develop a new mobility ecosystem that could accelerate the development of autonomous driving technology, particularly with secure data sharing, car/ride share transactions and usage-based insurance. German supplier ZF and IBM announced in 2017 that they were jointly developing Car eWallet, a payment technology targeting future mobility services. According to the two companies, the Car eWallet could be used by automakers and service providers to handle tolls, parking, electric vehicle charging, car sharing and in-car services. These are just a couple of blockchain investments among many others in the global automotive industry. For now, let us look at what blockchain technology is and how it is being used for connected and autonomous vehicles.

What is Blockchain?

A blockchain is a decentralized and distributed public digital ledger, that is used to store static records and dynamic transaction data across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network. The validity of these transactions is certified using a consensus-based mechanism. Today, different arrangements of blockchain are available ranging from public open source networks to private blockchains that require clear permissions to read and write. The following diagram describes the process of adding a new block to a public blockchain.

Blockchain — Technologies for the Automotive Industry, Ginkgo Research, 2017

By storing data across its network, the blockchain eliminates the risks that come with data being held centrally. Since blockchains are transparent, they are widely being adopted to enable secure communications and digital payments between connected vehicles or vehicles and the infrastructure with use cases as outlined earlier. Blockchain technology has gained a lot of momentum in the automotive industry and in the sections below, we cover some of the recent blockchain developments for autonomous vehicles.

Multi-Modal Transport Platform

Blockchain technology is helping solve core mobility issues such as scalable sharing vehicle ownership and the integration of multiple mobility stakeholders including consumers, OEMs, mobility and transport providers, city and infrastructure providers among others. In 2017, EY launched Tesseract, a blockchain-based integrated mobility platform with transport services ranging from single vehicles to fleets available on the platform. Vehicles and trips are digitally logged on the blockchain and the transactions are automatically settled between owners, operators and third-party service providers through a single-source, usage-based payment system. The platform will also provide access to a variety of on-demand mobility solutions.

Peer-to-Peer (P2P) Sharing Economy

DAV, a blockchain-based transportation platform, allows autonomous vehicles to discover each other, as well as service providers and clients around them. The company implements decentralized node discovery using a peer-to-peer protocol that does not rely on a central server. The company aims at developing a platform that will eventually allow customers to rent out their autonomous vehicles for other people to use. Toyota is developing proof of concept applications specifically targeted at data sharing and peer-to-peer exchanges. This car and ride sharing platform will allow individual and fleet auto owners to lease their vehicles short-term. An authenticated rider can access the platform through a mobile app which finds available vehicles. A car can be booked and paid for using blockchain technology. The app communicates with the car, allowing the user to unlock the car with just the click of a button. Data is stored in a decentralized manner, so that the app knows how much to charge for the use, with the transaction securely taking place on the blockchain.

Smart Contracts

Blockchain technology ensures that every recorded transaction related to digital assets can be verified at any given time in the future, enabling new contract-based transactions. These automated transactions are initiated and regulated by smart contracts, which are basically computer programs that execute automatically on behalf of predefined conditions and enable complete and conclusive verification without an intermediary such as a financial institution. Through blockchain-based smart contracts, the autonomous vehicle is able to engage in two-way communication with its environment and can handle transactions by itself. Smart contracts will help autonomous vehicles identify authenticated riders and set up transactions like battery charging schedules and prices. Smart contracts have enabled Innogy SE to launch hundreds of blockchain-powered charging stations for electric cars across Germany through its e-mobility startup venture Share&Charge. The e-mobility community platform enables all the stakeholders to opt-in while accelerating the adoption of electric vehicles. With smart contracts in place, an autonomous car on the Streamr platform, for instance, can automatically buy data from other vehicles, weather stations, traffic channels and other sources that it needs to drive. It can also sell back the data to the same sources with the data that it collects at ground level.

Digital Payments

Bitcoin, Ethereum, Ripple, Litecoin and other crypto-currencies, all based on blockchain technology, have become immensely popular today. AT&T is exploring in-vehicle payments through these digital currencies. A handful of start-ups like DAV and Helbiz are developing their own token systems or ICOs (initial coin offering) to enable digital payments in autonomous vehicles. IBM and ZF showcased their Car eWallet as an innovative, digital assistant in the car that allows secure and convenient payments on the go, independently carrying out tasks and authorizing payments without the user having to be active themselves. Bosch recently partnered with IOTA to explore blockchain-based micropayments between autonomous vehicles. Blockchain technology enables secure and automatic digital payments which in turn enable autonomous vehicles to make payments for tolls, parking, electric vehicle charging, car sharing and in-vehicle services seamlessly.

Usage-Based Insurance

Usage-based insurance is a recent innovation by auto insurers that more closely aligns driving behaviors with premiums for auto insurance. Mileage and driving behaviors are tracked using in-vehicle telematics. Gem, in partnership with Toyota, specifically works on usage-based insurance products tied to in-vehicle telematics by implementing blockchain technology. Autonomous vehicles will also be installed with black boxes, mandated by governments, to track autonomous driving behavior. Black boxes along with smart contracts pertaining to claims data can streamline the insurance process by automating claims payments and by filing and adjudicating claims based on secure information recorded on the smart contract. This would lower costs, increase the speed of payments and provide new innovative business models such as pay-as-you-drive and pay-how-you-drive models. These are likely to become the preferred type of metrics to calculate insurance premiums. In addition to these, new options such as manage-how-you-drive will gain momentum beyond 2020 due to a greater influence of data analytics. Frost and Sullivan suggest that usage-based insurance policies are expected to reach close to a 100 million drivers by 2020, dominated by Italy, UK and US.

Automotive Security & Privacy

As connected and autonomous vehicles continue to develop increasing the lines of software code needed to control the vehicle and increasing the number of connected devices in the ecosystem, the number of potential security vulnerabilities have also been increasing. Experts at CSIRO, University of New South Wales and Virtual Vehicle Research Center addressed car security using blockchain technology with research suggesting that smart car connectivity should adopt a decentralized model to avoid issues associated with a single point of failure. They propose a system where data can be securely exchanged between vehicles, smart homes, software vendors and others, as well as provide car owner privacy with blockchain technology ensuring proper access control, identity management and data integrity. An interesting approach to automotive cybersecurity is the combination of blockchain technology with Software Defined Perimeters (SDPs), which is a new approach to cybersecurity that is designed to provide on-demand, dynamically provisioned secure network segmentation that mitigates network-based attacks by creating perimeter networks anywhere in the world, whether it is in a cloud or a data center. If a situation requires a bi-directional link, an SDP connection can be provisioned from a vehicle to a cloud resource and once set up, blockchain technology can be used to transmit messages between internal vehicle systems. These blockchain-based security systems can protect connected and autonomous vehicles from cyber attacks and privacy breaches. Cube is also developing an autonomous car security platform based on blockchain technologies, deep learning and quantum hash cryptography.

Streamlined Supply Chains

The automotive supply chain is incredibly complex, consisting of numerous types of parts, hardware/software/firmware suppliers, distributors, dealers, regulatory agencies and insurance companies. Trusted suppliers are thoughtfully selected and managed, as well as checked and certified for quality, reliability and consistency. Blockchain technology enables the development of secure digital product memory records from the source of the raw materials, to how and where they were manufactured, including their maintenance and recall history. Product and assembly ownership, authenticity, trading, purchase and license use of each component can be protected with blockchains, allowing multiple supply chain partners to collaborate easily. Blockchains could significantly streamline supply chain processes, especially those that rely on regulatory and compliance approvals.

Blockchain technology is a foundational technology that has opened up a world of innovative opportunities for the automotive industry. OEMs could use blockchain technology as a platform to enhance their overall cybersecurity for vehicles, validate software bills of materials, enable secure micropayments, strengthen identity management and improve data validation. Blockchain will add the levels of trust and security necessary for a self-driving future.

*Disclaimer: The views and opinions expressed in this article are my own and do not represent any other person or corporation. All content is subject to copyright.