The advent of new technologies is challenging traditional automotive business models. Blockchain technology, for example, is changing many aspects of traditional vehicle ownership and related businesses.
While this technology remains largely misunderstood, its potential to change the way people buy cars through ensuring transparency and fair pricing couldn’t be more obvious. Here is how blockchain technology is impacting the automotive industry.
The automotive sector, a backbone of the global economy, is looking to blockchain to streamline the buying and selling process. Blockchain is already making inroads in the automotive industry, with solutions that include secure data sharing, smart contracts, and personal mobility.
Role of bitcoin in the automotive industry
Blockchain enables users to coordinate activities without trusting a third party or central authority, which makes it possible for users to transact without any intermediary taking a fee.
With blockchain technology powering their applications, companies find new ways to connect buyers and sellers. IBM, for example, has been working on a blockchain-based platform that tracks a vehicle’s maintenance history and enables car owners to share or sell their data as desired. Such a system allows third parties such as lenders, insurance providers, and even automakers themselves to access an individual’s driving history.
Blockchain-based systems also allow for the authentication of documents, removing the risk involved with transactions that rely on paper records. In addition, blockchain’s public ledger brings transparency to the supply chain process, so both manufacturers and consumers know their parts were ethically sourced.
For example, Provenance uses blockchain technology to create a system that can track tuna fish caught in Indonesia to your local sushi restaurant. The fishing industry is rife with illegal, unreported, and unregulated (IUU) ships that steal billions of dollars from government tax coffers every year. Blockchain-based tracking systems provide proper documentation while ensuring the safety of consumers.
With emissions testing becoming automated, it’s becoming easier to cheat the system. Blockchain adds a layer of transparency, ensuring that manufacturers adhere to regulations set forth by governing bodies.
In Europe, for instance, blockchain can be used to track CO2 emissions from cars in real-time and pinpoint any fraudulent activity. Using smart contracts – protocols that allow terms of an agreement to self-execute based on set conditions – blockchain could enable users to make micro-payments for driving a specific mileage, driving too fast, or even driving in high-emissions zones. These payments are automatically pushed through pre-arranged intelligent contracts, creating frictionless transactions. Learn more here about top five reason to invest in bitcoin.
While Tesla and Mercedes Benz have received the most attention with their advances in self-driving vehicles, blockchain can connect cars, passengers, and even infrastructure. For example, using blockchain-enabled “smart contracts,” cars could communicate with bright traffic lights to minimize congestion or interact with parking meters without human interaction.
Blockchain can also streamline the process of car-sharing by verifying a user’s credentials before allowing them access to the vehicle. Get around and Turo offer peer-to-peer car-sharing using this model, with the former having partnered with Land Rover in 2016.
How will the automotive industry be transformed in the future?
Car manufacturers will be forced to make hard choices; integrate or risk irrelevance. Blockchain promises to upend the automotive industry, turning it on its head by allowing users to share their data with relevant third parties while ensuring that transactions are safe and secure.
These smart contracts can also power peer-to-peer car-sharing services, which could be a significant disruptor for automakers who cannot adapt. Car manufacturers can either integrate blockchain technologies into existing products or risk becoming obsolete. Last year, Daimler AG, the parent company of Mercedes Benz, took an equity stake in PayCash Europe SA, which is working on blockchain-based solutions for car-sharing and peer-to-peer payments. Porsche has also recently joined the board of XAIN, a blockchain-focused startup based in Berlin.
Finally, blockchain technology will transform the car industry in the coming years. Vehicle manufacturers who do not embrace change will face irrelevance. The future will see new ways of renting cars, sharing transportation, and paying for road usage based on this new platform.
Blockchain can help consumers control how their data is collected and shared with third parties. Car manufacturers will also have to rethink integrating blockchain into their products or risk becoming obsolete.