How Blockchain Technology and Its Application is Changing The Automotive Industry?
December 27, 2022
Nowadays blockchains are incredibly popular. Many of us are entirely unaware of how they work, what problems they solve, and how can they come into use.
As the name suggests, a blockchain is a series of blocks that contain data. The technique was initially described in 1991 by a group of researchers, and it was studied to timestamp digital documents.
It seems pretty impossible to backdate them or to tamper with them at that. Yet, it was not in use until Satoshi Nakamoto 2009 adapted to create a digital cryptocurrency bitcoin.
The blockchain is also known as a digital ledger which is decentralized and distributed in such a manner that it offers information to be recorded, shared, and maintained by a specific community. For a better understanding of blockchain technology in automotive, below mentioned are some key characteristics of blockchain. Lets us have a look at it.
Near real-time -
By removing friction or any human error, blockchain helps to provide accurate and instant settlement of recorded transactions.
Reliable and available -
At one time, the availability of blockchain is accessed by the number of participants; therefore, there is no single point of failure, and if in some rare cases it faces outages or attacks, it can smoothly recover from it.
Blockchain technology is a chain that is visible to all the members, and so are the transactions. To increase the ability to audit correct and secure information, there are identical copies maintained on multiple computer systems.
It helps to simplify the back-office processes and maintains the accuracy of the records by making transactions irreversible.
Blockchain technology assures no breaching of the information, and it is impossible to make any changes to a blockchain without apprehension. Plus, it carries information with complete confidence.
It offers a vast set of applications that tends to express any sort of data or asset in a specific code and gets referred by a ledger entry.
As we move further, we will shift our focus towards blockchain in the automotive industry. The evolution of the automotive market will be enormously different from today. It is going to be much more integrated and offers on-demand and customized services that will comprise autonomous, shared, and connected cars.
As per the researchers, blockchain technology holds the potential to play a significant role in supporting the Upcoming Innovations In Automobile Industry that is emerging. There are several industries that are ready to explore blockchain opportunities and also holds the chance to transform into detailed enterprise strategies. The achievement will ultimately vary on the rationale and how much a company is willing to invest with overarching strategy and its capacity and capabilities.
In short, the ones who are more proactive also hold the ability to be benefitted to generate more value for the respective business. As there have been several analyses, have been conducted on both the value and practical applications of blockchain technology in the automotive industry. It comes to an outcome of several blockchain opportunities and also helps to shape and develop your business with the most appropriate approach.
Fortunately, the automotive industry slowly and steadily is knowing the fundamental role of blockchain technology and apprehending that it could be a game-changer for the automotive industry. The survey conducted also mentioned that the auto industry might spend around $169 billion on the upcoming technology in the next four years and that too with the lower investment rate of 0.6 percent into the blockchain technology.
This article will help you gain knowledge about some blockchain applications in the automotive industry and how blockchain technology is reformulating various operations in the industry. Without wasting any more time, let us begin!!
Transaction Modes That Are Protected
As we all are aware that the current mode of payment options for purchasing automobiles are limited and for a considerable time. There are several reasons behind the delay, such as indulgence of multiple parties and the following process involving financial, institutions, verifications, and several amounts of paperwork. Over here, blockchain technology assures simplifying and secure the buying process by accelerating the data transfer among several parties.
Apart from that, the technology also focuses on introducing new payment modes without including any intermediaries such as firms and banks. By easing the whole process, people can seamlessly buy a car with bitcoin in the upcoming future. Even though many people get confused about digital currencies, yet the use of cryptographic money as an alternate payment option would keep on beginning.
Blockchain Technology - Powered Car Wallets
The upcoming generation of cars will require advanced solutions for wallets in order to automatically exchange data with the charging solutions and parking zones without any sort of human interaction. The blockchain-powered wallets integrated with smart cars can help to create a new layer of smoother transactions on a regular basis. To understand it better, we have mentioned below a case study BMW Group using blockchain to drive the supply chain.
Let's Go Through Some Blockchain Case Studies in the Automotive Industry
BMW Case Study: Using Blockchain Technology to Grow
The BMW Group is evolving and experimenting with new digital technologies in order to improve their processes. Fortunately, blockchain technology helps to enable the sharing of the data without tampering, and with the potential applications helps to optimize the entire cycle. In fact, blockchain automotive solutions tend to be more secure and protected than a workshop stamp in a logbook. With the help of the digital blockchain method, you cannot forge the workshop stamp for the checkbooks with the color printer.
Yet, with a blockchain storing, the data record cannot get manipulated with the current technology. This way, the occurrence of accidents and the numbers of previous owners limit the risk of subsequent falsification. The transfer of the data can also be further verified by the car insurance company in order to get some relaxation for the infrequent drivers.
Apart from that, the car owners can automatically pay the tolls and the credit card provider managing the system. Yet, with a crypto-based technology, the toll fees and taxes will get paid automatically without paying any intermediaries.
This section is where every car owner is on the fence to choose between maintaining an older one or getting a new car. The only reason why cars are so expensive that's because of the parts. After a while, the vehicle gets older and is in need of maintenance to keep them on the road. If we look at the numbers, it costs approx $8,469 yearly. It can be reduced only if you take care of the warning lights and take action on them on time.
Introducing blockchain technology to the maintenance vertical gives out a robust blockchain-based maintenance system. In this scenario, automobiles can seamlessly connect with all the different areas of blockchain technology in the automotive industry to save an adequate amount of time and money. Plus, there will be no need to have regular visits to the mechanic on a monthly basis as your car would be easily accessible remotely through the blockchain network.
Spare Parts Authorization
As we have discussed above how car maintenance can be expensive; let us know the reason behind it. Counterfeit car parts are essential to increase and maintain productivity.
As it is essential for the reputation of the company, but it also assures no danger to the consumer's lives. Having blockchain technology by our side indeed offers the perfect yet ensured solution to the problem. When it comes to the authentication of the spare parts, the technology comes in hand to track the automotive products in the whole process and keep in check the originality of pieces by utilizing RFID tags. By this, the auto manufacturers can easily detect and identify fake spare parts and can prevent several financial losses suffered by the industry.
As we are familiar that blockchain is a decentralized ledger where one can easily register, track and record irrefragable digital transactions that include the exchange of assets between members of a business network. Due to this, auto insurance companies can seamlessly solve a lot of problems that were earlier being faced by the car insurance companies. This way, the insures can track the claims in an unprecedented manner by just having a look at the shared trusted ledger.
To explain it more, let us assume that a car insurance company can make sure to track the driving history and behavior of an insured customer, and this way, they will have enough knowledge to adjust the policies accordingly. If in any scenario, the driver is reckless or careless, then he/she would not be able to claim any premiums or bonuses fraudulently. The fraudulent claims would be virtually impossible as all the information is already stored in the ledger. In fact, the data will have already be shared in the blockchain with the competing reinsurers, insurers, and brokers. In short, blockchain technology can come in handy to verify vehicle mileages and to aid the auto insurance industry.
Smart vehicles are becoming more and more connected to roadside infrastructure, such as traffic management systems and other vehicles in close proximity, as well as to the Internet in general. Self-driving cars will necessitate a large amount of data to be stored and shared instantly with manufacturers and other vehicles on the road.
As per the survey, every day, a single self-driving car will generate up to 4,000 GB of data. And, with human lives on the line, we can't afford to leave the data open to attack. In a distributed ledger, blockchain can help autonomous cars collect and process data about road signs, weather conditions, and traffic patterns. We can be confident in the data's accuracy thanks to the distributed ledger and blockchain's power.
Transferring Of the Ownership
This is where blockchain technology can make the process a lot easier, possibly even eliminating the need for agents. Because of the high level of transparency provided, changing car ownership is a breeze. Smart contracts can also be used to ensure that buyers and sellers have a simple time dealing with the selling process.
The ability to eliminate the middleman is the smart contract's most significant advantage, as long as the transaction can be made legally binding. This isn't yet a reality due to a lack of international laws, but things are changing.
Real-World Blockchain Use Cases in The Automotive Industry
By knowing about the blockchain technology applications in the automotive industry, there are some blockchain automotive use cases that are rapidly changing the market. The blockchain use cases in the automotive industry comprise of some famous industry leaders such as Toyota, BMW, Mercedes-Benz, Ford, and many more of them are turning towards the blockchain to make vehicles autonomous and increase the sustainability and efficiency of their supply chains. Let us have a look at them.
Porsche pairs up with XAIN to introduce blockchain technology into their vehicles.
Porsche has teamed up with XAIN, a blockchain startup, to integrate blockchain technology into its vehicles. Users would be able to unlock their cars using an app, and automated payment systems would be easier to implement. The two companies have also stated that the technology could be further developed to include self-driving capabilities. The project is currently in the testing phase. There's no word on when Porsche will integrate the technology into its newer vehicles.
The MOBI brings together automotive industry beasts.
MOBI is a new consortium formed by 37 major automotive and technology companies with the goal of developing blockchain solutions for the automotive industry. Ford, BMW, and GM are just a few of the automakers that have joined. A member of the group is IBM. MOBI members hope to use blockchain technology to make automobiles more affordable, safe, and widely available.
VeChain rename as Vechain Thor announcing a partnership with BMW
In addition to announcing its newest partnership with German automaker BMW, VeChain has rebranded and renamed itself, VeChain Thor. Despite the fact that the pair has yet to announce any projects, it is safe to assume that VeChain and BMW are working together to bring blockchain to BMW. Following a similar partnership between IOTA and Volkswagen, this one was announced. Both VeChain and BMW have been relatively quiet about any projects they may or may not be working on since the announcement of the partnership last year. Nonetheless, given IOTA's partnership with Volkswagen, it's safe to assume that the automotive and blockchain industries are in healthy competition.
Koopman joins forces with IBM to improve the efficiency of the automotive supply chain.
Consider the numerous cogs that make up the automotive supply chain. You have a car with a body, a motor, tires, electronics, and so on. All of these materials are made in different parts of the world. Tires may come from Asia, but a vehicle's body may be made in the United States. International transactions can be complicated to coordinate logistics for.
Koopman has teamed up with IBM to create the first digital vehicle delivery process. As a result, parts can be tracked as they travel around the world. It will be easier to tell where details are, how many of them there are, and much more with Koopman and IBM's system. As a result, shipping times will be reduced, and supply chain management will be simplified. The supply chain will become more efficient as it is simplified, resulting in cost and time savings.
Towards the end of 2018, the project began development. There has been no word on what progress has been made during that time. However, according to Koopman, the project is expected to be completed in 2020.
IBM formulates Blockchain Payment Platforms for Vehicles
IBM is currently working on an automated payment system tailored to automobiles. Tolls, car-sharing, parking, charging, and a variety of other payment systems could all be automated with this system. When fully developed, this technology has the potential to completely transform the automotive industry.
Consider the process of paying for parking, for example. This process could take minutes depending on your city's systems. Payments could be made in a matter of seconds, with no human interaction required, and without having to leave your car. The same automated payment system can be used for car-sharing, tolls, and other services.