How Blockchain is Disrupting the World – The Example of the Automotive Industry

We are looking to explain how Blockchain technologies are currently disrupting most of – if not all – sectors of the industry.

We shall also detail, in a series of articles, the current trends in terms of blockchain platforms and give a panorama of the main blockchain projects in the various impacted sectors.

In the present article, we shall detail the blockchain projects in the automotive industry.

A Quick Reminder about Blockchain Technologies

We assume that you’re already familiar with what blockchain technology is and understand the nature of Blockchain technologies.

Blockchain networks are decentralized networks that create a ‘spine’, a concatenation of blocks containing transactions (or records of various natures), such blocks are glues between each other in a way that removing one block destroys the entire history of blocks (the ‘block-chain’).

Validation of a new block is done by special operations involving usually a consensus between the nodes of the networks. Such consensus can be complicated to obtain.

Here is a list of possible consensus algorithms:

To this, we can add protocols such as RAFT or PAXOS mostly used in permissioned blockchains.

Permissionless Blockchains vs Permissioned Blockchains

Permissioned Blockchains are more fitted for industrial use cases.

Permissioned blockchain networks are non-public blockchain networks and as such, they require paperwork and/or special authorizations or qualities for membership.

They act as a ‘private club’ which can be a network of resellers for example or owners of a product manufactured by a company.

The platform used for permissioned blockchain is often different from the platforms used for public blockchains like Bitcoin or Ethereum.

Usually, permissioned blockchains are different from simple ‘private’ blockchains because there are several layers that require dedicated permissions to operate together with control mechanisms, which can be partially centralized (to the difference with a public blockchain which is always decentralized).

“Blockchains” are not subject – for the moment – to any standards or regulations. There is no “PCI” or “ISO” norm for blockchains for example.

It is common for the average user to make confusion between the platform (software) required by a blockchain to operate and the blockchain (eg the network) in itself.

Some Important Blockchain Platforms

The most important platforms used to create and operate permissioned blockchains are:

Private blockchain networks are usually used for non-public cryptocurrencies. Here is a list of the industries that they are disrupting:

The mission of blockchain networks is to fight fraud and prevent the creation of counterfeit or forged documents, and collusion among ‘bad’ authorities to bypass validation.

Any organization that requires the validation of documents may benefit a lot from blockchain technologies.

Blockchain networks are non-centralized systems and their strength comes from the obliged cooperation between distrusting entities, and as such this reduces the risk of an ‘inside’ criminal conspiracy.

In what follows, we summarize the difference between public and private blockchains:

	Permissionless Blockchains	Permissioned Blockchains
Access level	Everybody can participate	Only the members of a restricted group
Participation	No ID required (unless a web wallet is used)	Identities of participants are usually known to a group of administrators. Need paperwork and proof of ID for registration.
Security	Consensus mechanismProof of workProof of stake	Multi-parties signature via PKI, notary service used for TSA. No proof of work. No proof of stake.
Performance	Can be slow	Usually fast because involving a Lighter blockchain

Why the Blockchain is so Disruptive Everywhere

Among the recent technological trends, blockchain technologies are probably the ones that are the most poorly understood and underestimated. Blockchain has very strong assets.

They create ‘magically’ a secure and trustable ecosystem that works on its own, they turn into powder the threats of faking transactions or documents and they create a global change in plenty of sectors where pyramidal and hierarchical organizations are suddenly no longer needed!

All sorts of bureaucracy can be wiped out with blockchain! No need anymore for so-called ‘trusted’ authorities which will stamp and ‘certify’ in a lengthy and costly way.

The ‘network’ can do it itself and in such a way that things will be immutable and irrefragable. Blockchain technologies are ‘proof by the network’. Since nobody owns the network, the network acts as the supreme authority.

Disruptive is a weak term, a euphemism, here. Blockchain technologies can be a real tsunami. They can spread and develop at a tremendous speed and virtually ‘glue’ everything together, interconnected networks, devices, and systems.

Hard to resist the charm of such technology which has apparently only but benefits to offer: reduction of costs, reduction of paperwork, highly trusted and secure.

It is too broad a subject to be described entirely in the present article. We will, therefore, in what follows, demonstrate the power of the blockchains in the context of the automotive industry.

An Example of how Disruptive the Blockchain is: The Automotive Industry Example

The Supply (Block) Chain

In a typical car manufacturing process, dozens of thousands of parts are needed, provided by a chain of subcontractors and specialized manufacturers of such parts.

Many of these parts are eventually critical for the safety of the final product and they need to be tested following various quality schemes.

Of course, in such a system, competition between the contractors is harsh and one cannot rule out the risk of malevolent processes where parts could be stolen, damaged, replaced, counterfeited, or simply where test reports and quality certificates could be faked.

The complexity of the automotive supply chain is such that it is not easy to maintain ledgers and records in a secure and trusted way of all the various events which may occur.

By using DLT, the supply chain may turn into a supply blockchain and virtually eliminate the aforementioned risks. This also can be applied to spare parts, second-hand parts, and parts used for car servicing processes.

Commerce

Buying/selling a vehicle, either new or used is not a straightforward process.

Blockchain technologies can be used to assert the authenticity of a vehicle, reducing the risk that it may have been stolen or that its records have been tampered with, for example masking history of repairs or damages.

A token can build a global system where car history and payment are linked to each other.

Car Insurance and Third Party Services

Third parties are often involved during the lifetime of a vehicle. For example insurance companies or car service maintenance. This is especially true for cars used for business purposes like transport bus or trucks or taxis or ride-sharing services.

The information related to a vehicle that is needed by these third party services can be accessed via a blockchain. This fits very well for the On-demand mobility services (MaaS) cases.

Connected Cars

Vehicles are now produced as IoT devices. They can communicate and cooperate with a wide range of other IoT devices: other IoT cars/vehicles for instances but also radars, geolocation services, autopilot services, motorway information systems (weather, traffic conditions, etc…), unmanned service vehicles, charging stations, other traffic or repair robots, etc.

That interconnection can be regulated and secured through blockchain technology, especially to prevent hackers from counterfeit connected vehicles or compatible services).

DLT can also establish – digitally (or with the help of secure hardware – the ownership rights of a vehicle.

These are just examples, there are potentially many more disruptive applications of blockchain in the automotive industry! Here we provide some concrete examples of DLT projects currently operated by some car manufacturers.

Some Innovative Startups Operating in Blockchain for Automotive

These companies are providing blockchain systems to coordinate shared rides, check the ownership of vehicles, identify vehicle owners, auto insurance, ownership transfer, vehicle recall optimization, trading cars using a cryptocurrency, identification of auto parts, etc.

For example, car vertical offers an online solution that can prevent false VIN (Vehicle identification number) from being used and they can efficiently protect users against car fraud.

DAV provides a token, the DAV token, which allows anyone to pay for a group of interconnected services linked to transportation and especially to car transportation.

A List of Blockchain Projects Operated by Car Manufacturers

Hyundai AutoEver & Blocko

Hyundai AutoEver – a subsidiary of the car manufacturer Hyundai Motor Group, in partnership with Blocko has announced formally the development of a hybrid blockchain for securing a Hyundai vehicle ownership rights and offering an irrefragable history of events such as mileage, service history, and vehicle age, etc.

Interestingly enough the blockchain technological choice is the Aergo Mainnet platform.

BMW & Vechain

The famous German car brand has partnered with the blockchain platform VeChain to develop the VerifyCar system designed to act as a digital passport for a BMW vehicle.

BMW also announced it will use blockchain to prevent odometers and tachometers to be counterfeited as an alternative to the existing smartcard-based technologies.  BMW is also a member of several blockchain associations.

Porsche & XAIN

Porsche has conducted successful tests with the XAIN platform to develop blockchain allowing owners to let other people drive their Porsche vehicles.

Some projects are also conducted with the Spanish BBVA bank to develop blockchain-based corporate loans for the acquisition of a Porsche vehicle.

Conclusion

With the example of the automotive industry, we saw how the Blockchain modifies the current industrial landscape.

Many gurus and blockchain evangelists do firmly believe that many industries are currently being disrupted by the blockchain technologies.

The blockchain finds in an astonishing way, its ‘natural’ role among other emerging technologies such as autonomous, ‘self-driving’, and connected cars for example.

There are many examples of blockchain use, outside the automotive industry, namely in the other aforementioned industries. We shall go through these cases in some other articles. Stay tuned!

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