The Five Ways Blockchain Will Redefine Car Ownership
Written by Thorsten Linz
This article was originally published on March 13, 2018
It’s early morning, a car pulls into a driveway of a non-descript neighborhood just outside Chicago. There is no driver. Out of the front door of the house, a man walks briskly to the waiting vehicle. Once inside, his morning music is playing and the interior temperature is exactly to his liking. He catches up on some work as the vehicle speeds down the highway, confident that he will arrive with plenty of time to prepare for his presentation to the board. The car slows, and he looks up from his monitor and smiles. The window rolls down so he can grab his morning smoothie from his favorite drive-thru juice bar. Seven minutes later, he arrives at his office park, and the car speeds away without him. He walks past a few of his coworkers who are working out and playing with their dogs in the outdoor gym and dog park that used to be the parking lot.
This isn’t a story by Philip K. Dick or even the opening scene of a new sci-fi series. This is the near future and it is all possible because of Blockchain technology.
What is Blockchain?
No doubt you have heard of Blockchain as it relates to Cryptocurrencies like Bitcoin. But what is truly revolutionary about the technology lies in its simplicity. Blockchain technology in its essence is a public ledger that cannot be changed. It allows transactions to be instantly verified by both parties and all transactions are recorded in “blocks” and “chained” together. It cannot be edited or changed in any way because there is no central repository and it is therefore fraud-proof.
Blockchain Smart Contracts Make Buying, Selling and Insuring a Breeze
While we are years away from autonomous-connected-shared vehicles, we will most certainly see Blockchain enter into the car-buying and car-insuring processes. One of the biggest headaches of purchasing or leasing a car, besides negotiating with the dealer, is the financing process. In 2015, Visa partnered with DocuSign, a transaction management startup, on a project that uses Blockchain to streamline car leasing called “click, sign and drive.” Using this tool, customers would sign both the lease and an insurance policy entered in a Blockchain public ledger. With the success of this project, we could see this practice developed for car sales and registrations in the near future. Blockchain technology can be used to create Smart Contracts which, essentially eliminates intermediaries and streamlines the entire process.
Using a Smart Contract, the agreement is written into code in the Blockchain. The parties within the contract are anonymous, but the transaction is part of the public ledger. When an event happens (such as the purchase or sale of the car or an expiration of a lease) it triggers the execution of the contract’s agreement instantaneously. Because of this, regulators can then evaluate the transaction while Blockchain maintains the privacy of the parties involved.
Smart Contracts can also help insurance services charge different rates based on the insured driving locations and conditions.
Blockchain itself can help insurance companies process claims more efficiently. A Smart Contract can execute automatically at the time of an accident, providing the driver with a percentage of the claim owed and getting them back on the road while the claim can be processed in full.
LenderBot, a micro-insurance proof of concept developed by startup Stratum together with Deloitte and payment services provider Lemonway uses Blockchain technology to help people using home-sharing companies like AirBnB, Tujia, Wimdu to insure assets with a Smart Contract and Blockchain public ledger. If this is successful, they could tackle the complexity of auto insurance.
Blockchain-Verified Riders and Drivers Reduce Traffic
Uber, Lyft and other ride-sharing services made everyone rethink how we get from place to place. One of the biggest barriers for the ride-sharing industry is safety: both rider and driver want to trust that the other is not a psycho-killer. While Blockchain cannot control human behavior, it certainly makes it nearly impossible to not be who you say you are. A Blockchain-verified profile for both drivers and riders would encourage ridesharing as folks who were hesitant to become drivers would feel safer and with more drivers on the road, there would be less wait times for riders. All of this can be done without invading the privacy of either the rider or driver as your profile is a line of code in the Blockchain and completely anonymous. Internet company La’zooz has built a platform that utilizes Blockchain technology to “synchronize empty seats with transportation needs in real-time, matching like-minded people to create a great ride-sharing experience for a “Fair fare”. This would put you in an empty seat in a car going your direction without a direct monetary transaction to the driver.
For drivers who don’t want to drive for one of the dominant rideshare companies, startup Arcade City uses a Blockchain system that logs each transaction and allow drivers to establish their own rates and services.
These same Blockchain-verified profiles could also help predict traffic times more effectively as your address, work location and work start times can be coded into the Blockchain also. You could essentially book your time on more popular thoroughfares for fee.
In the bigger picture, government planning departments could receive better data to help predict where to build transportation infrastructure.
Blockchain-Verified Car Ownership Prevents Theft and More
Once the Smart Contract executes and you are the proud owner, the automated entry system recognizes you (or your designated drivers and riders) and unlocks the door and features of your new car. Based on the FBI’s Uniform Crime Report approximately $5.9 Billion was lost to automobile theft in 2016 alone. While criminals will always persist, Blockchain-verified ownership can deter theft by simply not allowing anyone not verified to drive the car to drive it away.
In that same vein, Blockchain-verified ownership could make auto repossessions immediate and tragic for those who are chronically late in paying their bills.
One major bonus for everyone who has ever had to spend time at the Department of Motor Vehicles is that ownership papers and licenses could become lines of Blockchain code. Traffic cops in the future will no longer need to ask for your license or registration when you get pulled over. Car titles and driver’s licenses could become as quaint as rotary phones.
The Car That Pays For Itself
More and more we are able to pay tolls automatically through existing technology. But what if your insurance could be paid incrementally on demand and your car could pay to refuel or recharge itself? Blockchain can provide instant payment for all the services your car requires. Whether tolls, fees or repairs, your car would be essentially be able to pay for itself without you and your wallet as the intermediary.
This opens up the possibility of your car being able to negotiate the cost of getting you to where you are going in the future. Booking its place on a highly-trafficked road or finding folks to rideshare, the possibilities are endless. Especially once autonomous vehicles hit the mainstream, your car could be out driving other people while you are at work, literally making money to pay for itself.
Loyalty-based microtransactions
Using Blockchain Smart Contracts and Verified Profiles, the places you drive to could offer loyalty points and make getting gas or charging your car, even picking up your morning cup of Joe, seamless and easy. Ordering take out could be as easy as pushing a button. Smart Assistants can order and when your car arrives it verifies your identity through Blockchain and you pick up your food and beverages. Companies could add loyalty programs to encourage more drivers and riders to use their service, just as Starbucks and other companies are already doing with in-app purchasing.
Redefining Freedom and Mobility
Car ownership has been embedded in American culture since the first Model T drove off the assembly line. It represented freedom and instant mobility. That mindset might make you think that shared automated driverless cars would be a hard sell. Toyota, through Toyota Research Institute, has partnered with a series of companies who specialize in different aspects of Blockchain with the aim of making customers comfortable with the idea of an autonomous vehicle. Because the safety of autonomous vehicles rely on the data of hundreds of billions of miles of driving data, Blockchain and distributed ledgers can enable the pooling of that data. This could shorten the time reaching the data goal and bring the safety and convenience of autonomous vehicles to the road sooner. With Blockchain, drivers would control their driving data which would open the doors to more ride sharing and new insurance products.
Blockchain, like Henry Ford’s Assembly line, will revolutionize car ownership–especially when you don’t need your own car to get where you need to go anymore.
