Blockchain has become a hot topic in tech discussions since the launch of digital currencies. Although it was initially conceived and developed for bitcoin, the technology is no more limited to cryptocurrencies. Today, blockchain has grown and become a crucial entity to facilitate various business operations. It has found applications in fintech, healthcare, supply chain, retail industry, and so on.
The automotive sector is another industry that is now utilizing blockchain technology in various areas of its operations. It is among the fastest-growing industries that is getting revolutionized by the applications of blockchain. The industry is making use of blockchain technology in logistics, sales, supply chain, auto financing, and parts authentication to mitigate the inherent risk in multi-party transactions and the resulting lack of trust between them.
Once fully implemented, the blockchain technology will enhance transparency and immutability in the auto sector and make it impossible for dealers to remove or modify any records in the chain. The technology will also improve data security and expedite transaction speed, which is painfully slow in the centrally-controlled system.
Luckily, the automotive industry is recognizing the role of blockchain as a game-changer for the industry. Leading automakers have already invested heavily in the technology which more and more players are showing interest in blockchain investments.
As per the report of Frost and Sullivan, auto businesses will spend nearly $169 billion on new technology in the next four years, with 0.6 percent of the investments going into the blockchain. Another study conducted by the IBM Institute for business value revealed that around 62 percent of the automotive sector is ready to utilize blockchain for various use cases this year.
This blog post will explore some blockchain applications in the auto sector and how the technology is redefining various operations in the industry. So, without further ado, let's begin!
The present payment options for car purchases are limited and time-consuming. The delay is often caused by the involvement of multiple parties and a complex process that involves financial institutions, document verification, and tons of paperwork.
Blockchain promises to simplify and secure the vehicle purchasing process by expediting data transfer between various parties. It also aims to introduce new payment modes that would not depend on intermediaries like banks and firms. All this is easing the process for people who wish to buy car with bitcoin in the near future.
The first use case of such a payment option surfaced in 2013 when a bitcoin owner bought a Lamborghini for the first time with the digital currency. Since then, many digital currency owners have come forward to purchase cars with bitcoin.
Despite the confusion surrounding digital currencies, the use of cryptographic money as an alternate payment option is constantly on the rise.
The next generation of cars will require advanced wallet solutions to automatically exchange data with parking zones and charging solutions without any human interaction. The concept has been given a try by Ford with their patented vehicle-to-vehicle crypto transactions.
Although car owners can pay tolls automatically, they still have to pay the credit card provider or the person managing the system. With a crypto-based smart-contract, all the toll fees and taxes will be paid automatically and securely as you pass through the gate.
Vehicle maintenance is an expensive ordeal and can run you around $8,469 annually. However, the cost of maintenance service can be significantly reduced if you can assess the warning lights and get your hands on vehicle information timely.
With a blockchain-based maintenance system, vehicles can be connected with all the sub-sectors of the automotive industry to save you time and money. It will remove the need to visit the mechanic every month because your car could be accessed remotely via the blockchain network. The recent partnership between the auto giant Renault and Microsoft is an example of vehicle maintenance using blockchain technology.
Counterfeit car parts pose a serious economic problem for the automotive industry. It not only compromises the reputation of the carmaker but also puts consumers' lives in danger. According to Frost and Sullivan, the global loss to the auto sector due to counterfeit parts can be as high as $45 billion. Abu Dhabi officials confiscated more than 500,000 counterfeit spare parts on a single day in 2017.
Fortunately, blockchain technology offers a solution to this problem. The technology can be used to track automotive products in the supply chain and ensure the originality of parts with the help of RFID tags. It will allow auto manufacturers to identify fake spare parts and prevent the economic loss facing the industry.
Blockchain technology can be used to verify vehicle mileages and facilitate the auto insurance industry. It will connect all the stakeholders in a single environment and bring more transparency to the claim handling process. The University of Luxemburg has already created a department to research blockchain applications in the insurance industry. Their Services and Data Management is working on blockchain-based platforms for the auto insurance industry.
The dream of autonomous vehicle technology cannot be fully materialized without the help of blockchain. Self-driving vehicles will require extensive data that needs to be stored and instantly shared with manufacturers and other vehicles on the road. According to Intel's report, a single self-driving car will generate as much as 4,000 GB of data every day. And with human lives at stake, we can't leave the data vulnerable to attacks.
Blockchain can help autonomous cars to gather and process data about road signs, weather condition, and traffic patterns in a distributed ledger. With the power of the distributed ledger and blockchain, we can be sure about the accuracy of the data.
Although blockchain technology is still in its nascent stages, it has the potential to disrupt the industry. Blockchain applications can be applied to the supply chain, financial services, and exchange of rider's data to make it safer and secure. Given the massive investments in technology, auto manufacturers need to prepare themselves for a future full of blockchain disruptions.
About the author
Justin is a fashion enthusiast and has the soul of a traveler. Staying atop the fashion trends, styling and grooming are etched in every fiber of his being. Not only that, but he loves to share his thoughts with a myriad of people via his blogs. You can follow him on Twitter @justcody89