Transforming Mobility via Blockchain
It probably comes as no surprise that the future automotive or mobility industry will look vastly different from that of today. The transportation industry is experiencing fast changes as autonomous cars, ridesharing or hailing and connected vehicles are impacting the landscape. Thus, to remain competitive, industry leaders are looking for ways to improve efficiency, security, reduce environmental impact, and improve the customer experience. Fortunately, blockchain has the potential to solve some of the industry’s most pressing issues.
Blockchain, for those of you who aren’t familiar with the technology, is the underlying technology of Bitcoin, Ethereum and many other cryptocurrencies. However, it can be so much more than that. The underlying technology of Blockchain can be used for anything from verifying vehicle history, improving supply chain tracking, automating transactions, enabling seamless ridesharing and more. There are also many possibilities to use blockchain across the automotive and mobility industry. As Deloitte recently mentioned in one of their articles: “Blockchain provides an innovative approach to managing data and executing transactions where accuracy and reliability are paramount”.
Blockchain technologies have the potential to improve data integrity and reliability, enable decentralized, peer-to-peer transactions, and create trustworthy digital identities for vehicles, components, and consumers. This is accomplished through a variety of capabilities, such as:
- Writing and reading encrypted transactions as blocks of data that are connected chronologically through hashing algorithms. Thus, helping to prevent data manipulation or deletion.
- Using consensus mechanisms to sync distributed information.
- Sharing data through distributed ledgers across diverse participants, thus reducing the points of failure.
- Giving permission access to known parties and their authenticated users.
Though none of these functionalities are unique in and of themselves, they can drive traceability, transparency, and trust across the transportation mobility ecosystem when combined.
Blockchain Use Cases for Mobility
According to the research of IBM, there are a number of ways blockchain could add value for mobility providers and consumers. For example, blockchain can be used for:
- Tracking components such as car parts through the supply chain.
- Verification of vehicle identities and history.
- Automated machine payments.
- The facilitation of car and ride sharing or hailing.
- Support usage-based insurance and taxes.
Now, let’s have a further look at these use cases. First, tracking components such as car parts through the supply chain. Blockchain is known for solving problems and increasing transparency within all kinds of supply chain processes, including the mobility sector. Manufacturing vehicles is an extensive process with many different components, companies, stakeholders, and systems. Through tracking services, sales and repairs, blockchain creates more accountability throughout the entire chain.
Furthermore, verification of vehicle identities and history. Blockchain can prevent the problem of mileage fraud by establishing anonymous, transparent, and manipulation-proof databases. Data like mileage and battery levels can be uploaded autonomously via the vehicle directly to the maintenance shop. Other situations such as accidents or problems with the car can also be recorded in the blockchain. With this kind of extra traceability, fraud and resale value can be impacted significantly.
Automated Machine Payments, as new car generations arrive with advanced autonomous features, automating payments and processes becomes increasingly important. Smart contracts have the potential to improve automation in a variety of ways. By removing barriers such as credit cards and bank accounts, automated payments could be made more quickly. Settlements can take place behind the scenes using smart contracts based on predefined parameters. Smart contracts in the leasing and financing space could enable the deactivation of the unlocking system of cars with outstanding lease payments.
Then, the facilitation of ride-sharing and ride-hailing. The transportation and logistics industries have evolved, and the face of privatized public transportation has changed with them. Beginning with horse carriage rides, the first generation of formalized Government-regulated metered taxis, and then the introduction of Ride-hailing platforms mediated by second-generation Transport Network companies. Services like DRIFE, the decentralized ride-hailing platform to empower its ecosystem’s value creators and extractors — platform drivers and riders, will disrupt the industry and existing business model. Thus, creating a fairer, more efficient, and transparent ride-hailing economy and decentralized mobility marketplace.
Support user-based insurance and taxes. Blockchain technology enables the decentralized network-based transparent and immutable logging of a vehicle’s sensor data. This data can be processed and integrated into an insurance plan using smart contracts. Verifiable documentation via a blockchain black box could aid in the resolution of disputes following an accident. Peer-to-peer insurance solutions guarantee payment to the customer in the event of an insurance event. Other companies intend to use smart contracts to make insurance more affordable and flexible for insurers and customers. The possibilities are limitless, but insurance companies will need to overcome numerous regulatory and legal hurdles before implementing blockchain technology.
Final Thoughts
Blockchain has enormous potential to transform mobility, but many obstacles and technical challenges must be overcome before that potential can be realized. Putting together a consortium effort is a step in the right direction, but it will still take time, dedication, and resources to produce real value.
