The automotive industry is one of the best real-use cases blockchain has to offer.
By Mihai Ivascu*
Cars are the physical embodiment of mankind’s technological progress. As such, it is no surprise that they are also one of the best real-use cases of the digital revolution’s latest innovation: blockchain.
The automotive industry has been slow to adopt blockchain, but times are changing. The IBM Institute for Business Value surveyed 1,314 executives in the industry across 10 areas and 10 countries: 62 percent believe that blockchain will be a disruptive force in the industry by 2021.
The automotive industry is complicated, with a plethora of opportunities for errors to be made in the distribution of information in the system. Moving a vehicle from factory to dealership is a process that involves Original Equipment Manufacturers (OEMs), logistics providers, ports, and shipping companies. Paper and pen still dominate, and information is held in separate and disjointed systems.
The friction in the system leads to: Members of the system not having access to the same information, with this misinformation leading to poor decisions and longer delays; risks to information security from hacking and cybercrime, and the inability to access and analyse the huge amounts of data in the system as it exists on paper not digitally, meaning much of it is not collected.
Blockchain can help. The technology uses a ledger that is shared by all participants in the system, rather than each participant having their own version. The complete history of the vehicle, or any other asset, is available to all, and recorded transactions cannot be retrospectively changed. The information remains private as companies have to give their permission for others to view it. The same IBM survey found that 55 percent of OEMs and 47 percent of suppliers believe blockchain will improve the information system in their business networks.
The power of blockchain
Here are the top four areas where blockchain can make a difference in the car industry:
- Finance – OEMs and suppliers working in multiple regions and legal jurisdictions need interconnected financial payments systems. Paper systems and manual data entry currently mean increased human errors, disputes, longer settlement times, and higher transaction processing costs.
- Supply chain – Difficulties in tracking and verifying the thousands of different parts in any single vehicle can lead to performance issues down the line if the parts do not integrate as they should, leading in turn to consumer dissatisfaction.
- Car-sharing services – Cleaning, maintenance, and delivery of vehicles are outsourced to companies that use older technology, such as phones, emails, and spreadsheets, leading to work that is both high cost and more susceptible to human error. Blockchain can organise smart contracts, authenticate access to vehicles, and capture vehicle usage, thereby streamlining operations and eliminating waste.
- In-vehicle transactions – Paying for various goods and services from within the vehicle is already a reality for some consumers, and will continue to be a growing trend. Blockchain can increase both the security and transparency of these e-commerce transactions.
Taking action today for a better tomorrow
Major car manufacturers are investing in blockchain. BMW, General Motors, Ford, and Renault all joined forces to launch the Mobility Open Blockchain Initiative (MOBI) in May 2018. The initiative includes blockchain and technology companies big and small alike, such as: IBM, Accenture, Bosch, and ConsenSys. It also includes international organization and academic institutions such as the World Economic Forum and Blockchain at Berkeley.
MOBI will explore how blockchain can be used in the new, digital automotive ecosystem. Some of its initial projects will focus on secure e-commerce, usage-based pricing and payments, as well as records of vehicle identity, history and usage. With its agnostic approach, Modex Blockchain Database (BCDB) was designed from the scratch with enterprises need in mind. Modex BCDB is a middleware solution that can be used by automakers to deploy their first blockchain project in a matter of days.
All the players from the automotive sector can now benefit from blockchain’s highly sought after characteristics immutability, data integrity, and high security. As a hybrid software solution, Modex BCDB is designed to integrate with the automaker’s existing databases with minimal changes.
Ask anybody who is anybody in the automotive world, and they will tell you that blockchain is the future of the automotive industry.
*Mihai Ivascu is a serial social impact and technology entrepreneur, CEO and Founder of London based tech group M3 Holdings which comprises 3 fast-growing companies: Moneymailme, a Neo-Banking technology infrastructure provider; M3 Payments – FX management and global payments platform; Modex Blockchain Database – SaaS technology provider, which in less than 4 years has come to be valued at GBP 250 million.
Interesting related article: “What is Blockchain?”