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9 Ways The Blockchain Will Change The Car Industry

The car industry is going through a seismic shift as we change our relationship with the open road. Electric cars are here, full autonomy is on the way, ride sharing schemes could consign the very concept of ownership to history and we’re set to see a revolution. Blockchain is set to take a starring role.

We’re heading towards an automotive singularity, a world so different from today that it’s almost impossible to conceive. That’s the headline, but we also have to consider the logistics, car ownership and even renting out your own car while you’re at work. The blockchain is the glue that could bind this disparate future motoring world together.

Here are 9 ways that the blockchain could change the automotive industry forever.


Ultimate Control of Self-Driving Cars

This is a moonshot, because the blockchain simply isn’t fast enough right now and may never be. But blockchain technology will get faster, the blockless tech behind IOTA Tangle looks the best of the current breed and there’s a real chance this could be the future.

The Internet of Things is coming and the concept is simple, but the execution is a nightmare. Technically every car will communicate with each other, lamp-posts, traffic lights and more to create a seamless symphony that bears no resemblance to today’s world.

How we make that happen is another story. Today’s self-driving tech relies on cameras, radar, lidar and pre-programmed algorithms that are really complex versions of ‘if then, then that’ computer programming. That simply isn’t good enough.

Everything needs to communicate, but the Cloud is already stretched to breaking point and things like edge computing feel like bodged repairs on an already broken system. This is not elegant technology.

If the blockchain is fast enough, then smart contracts could be the answer. These won’t be transactions in the traditional sense, they will be cars giving way to each other, making space for another road user or slamming on the brakes if the worst comes to worst. It will be thousands of cars slowing imperceptibly to avoid a 10-mile tailback on the highway and others re-routed to avoid traffic in the city.

Not only does this allow the cars to properly interact, rather than use closed-loop systems that really don’t feel like the ultimate solution, it will solve another pressing issue. Simply put, autonomous cars can be hacked. It has already happened and a malicious attack on a highway could potentially create chaos in seconds.

It’s possible to hack the blockchain, but it’s way more difficult and this might be the only way to secure the system.


Pooling Manufacturer Self-Driving Data

Self-driving cars mean that soon the car will do the hard work while you get on with some work, or take a nap. But we’re not there yet. Self-driving cars are out there, but the admittedly rare accidents are a stark reminder that the algorithms are far from perfect.

Right now a select few production cars have Level 3 autonomy, which is little more than driver assists to keep you on course on the highway, radar-based cruise control and emergency braking. It’s crude, and even that takes millions of road miles and exponentially more on the simulators to train the computers.

The blockchain could offer something new. It could connect the manufacturers and allow them to pool their information on a tamper-proof ledger. It could help the technology take a quantum leap forward and save lives.

Not all the manufacturers will pool their data willingly. Tesla is a country mile ahead and bet the farm on autonomy long ago, so Elon Musk might not want to give up that competitive advantage. But the blockchain provides the opportunity for those left behind to close the gap. That could change the complexion of the industry and force the others to co-operate.


Ride Hailing Opportunities

Inner city car ownership will become a thing of the past in the very near future as subscription-based ride hailing schemes come to the fore.

BMW already has ReachNow pilot schemes in operation in Seattle, Portland, Berlin and London, among others. Audi’s SilverCar, Daimler’s Car2Go and GM’s Maven are all racking up the subscribers and this is a model that isn’t going away.

Google-owned Waymo is working with Chrysler and there are still rumors of an Apple car. That is almost certainly an iTunes-based subscription service that won’t hit the streets until the driver is redundant.

Uber and Lyft might seem like a different ballgame, as they offer private-owned taxi rides, but they’re both in it for the long-haul and cannot wait to replace owner-drivers with fleets of autonomous vehicles.

There is just one problem: the services largely suck right now. Actually it’s a series of problems, from buggy apps through to cars that don’t recognise smartphone keys and simply do not unlock. A driver taking the car for longer than planned can also throw spanners in the works and leave an army of customer service staff scrambling to fix issues. That costs money, and then there at least one driver was locked in a car when his time expired.

The blockchain can fix this. It’s almost tailor-made for the vast series of transactions that are required to keep a fleet of cars and a massive subscriber-based tallied, located and running smooth. The car itself will know if it isn’t going to be back on time and that can trigger a series of back-up plans to ensure that another customer isn’t left staring at an empty space.

Blockchain-based identification is also safer and faster than the current system of smartphone recognition. Realistically, there is no other option. Ride-hailing schemes, even established ones like Uber and Lyft, will have to switch to the blockchain in the end.

This system means you could even rent your car out during the day, rather than leaving it outside your office. A self-driving car could drop you at work and then join the Uber fleet in the city, before returning in time to take you home.


Over-the-Air Updates

Just a few years ago, the on-board computer on a car was about as sophisticated as a Playstation. How times have changed…

Now, Tesla leads the way for over-the-air updates that range from improvements to the self-driving tech to actual power boosts. VW wants to take that to a whole new level with blockchain technology and it’s inevitable the rest will follow suit.

VW has a deal with IOTA and intends to show the first products based on Tangle next year. At first, the functionality will be limited to showing drivers how far their cars have gone. They could do this with a pocket calculator or, maybe, the odometer. This is child’s play and really nothing to shout about.

Over-the-air updates, though, could happen on a constant basis as the autonomous cars in the field send data back to the factory, which is then used to refine the programs and find bugs that could kill its customers.

IOTA is a blockless protocol and sending one transaction validates two more, which could be the final solution to complete autonomous oversight. For now, IOTA will refine its processes with the VW Group, which includes Audi, Bentley, Lamborghini, Bugatti, Skoda and SEAT.

We suspect we won’t know IOTA’s true potential for a long time, but when it finally shows all its cards, the technology could be mind-blowing.


Road Tax

Death and taxes are the only certainties in life and yet the road tax situation in many countries is an antiquated, convoluted mess. It’s absurd in the modern age that we’re reduced to paying a registration fee and the vagaries of fuel-based taxation have led Europe in particular to embrace diesel cars that could have a far greater effect on the environment.

Toll roads have proved popular, but they are complex and expensive to run. A blockchain system, though, could finally give us a pay-per-mile system that works. With the blockchain, it can be complex and allow for different kinds of vehicles and their respective toll on the environment and the road surface.

A truck that spends all day on the road, for instance, will almost certainly do more damage than a compact car that barely leaves the drive. That is dealt with to some extent by the fuel levies, but it’s not a fair system.

Fuel tax could be reduced or abolished and the charges could be applied in an open and transparent manner. That will boost consumer confidence and could provide much-needed funds to renovate a road network that is fast falling into disrepair.

A number of cities have introduced ‘congestion charges’, too, including London in the UK. Drivers have to go online and pay their fee in a convoluted process that some simply cannot comprehend. Don’t think that’s just for stupid people either, US diplomats racked up $382,000 in fines last year alone in Britain’s capital. This is just insane.

A blockchain-based system us designed for microtransactions and could apply and take the charge as you cross the threshold. It’s frictionless, it’s simple and it’s the obvious solution to a broken system.


Proof of Ownership/Rental

You really shouldn’t have to carry your license and registration in the modern age. A blockchain-based solution could authenticate your ownership of the car instantly. Changes of ownership can be set in stone, with no forms or postage, with a simple exchange of contracts.

It goes well beyond the actual car as well. Each component could carry the VIN number and that means stolen parts and chop shops could become a thing of the past.

Mercedes-Benz already carries a database, but it’s cumbersome and service centers have to correct the ledger when they retrofit new parts. A blockchain solution could provide a simpler, faster and cheaper system that updates with a simple scan. Stolen parts could be traced instantly and this would save the automotive and insurance industries billions of dollars a year between them.

Rental cars can be a problem, as you need to keep the documents with you. A blockchain database would bring an end to these issues and ensure that law enforcement can check quickly and simply that you are the registered driver of the car. It’s a small point, but every minute a policeman spends verifying your right to drive a car is a minute they can’t spend on something more valuable.

The rental agreement itself will become easier, too, and you won’t have to spend an hour queuing for a car at an airport in the future. With a blockchain solution, your car will be waiting for you and ready to go. You may also agree to certain limitations, such as a low mileage, that offer you a completely different price for your rental. The only limit is the rental company’s imagination.


Proof of History

Proof of history on the blockchain could eliminate counterfeit and dangerous parts and ensure cars have been recalled for safety updates

When you buy a used car right now, it’s good advice to take a mechanic along for an inspection to make sure the miles tally and your chosen steed hasn’t been brought back from a life-changing crash.

There would undoubtedly be ways round a blockchain based ledger, but that in itself would become a red flag. A ‘clean’ car would have its history laid bare, including its mileage at every major service and any record of major accident damage or an engine failure. Any discrepancies would be much harder to hide than they are right now.

Carfax does a solid job, but it simply isn’t infallible. Locking the car’s service history and even driver violations into a secure ledger means you can buy a used car with confidence. Right now, it isn’t unheard of for friendly service stations to just ‘stamp the book’ and fill in missing services. That really can’t happen with a blockchain system.



Automotive logistics are incredibly complicated but blockchain tech could help create frictionless supply chains for car manufacturers

We have all endured that painful moment when the part we need to get us back on the road simply isn’t there. With the smart contracts on the blockchain, as well as improved oonboard diagnostics, basic parts could be on the way before your car has ground to a halt.

The logistics behind the car industry is simply amazing. Not only are the cars themselves shipped all round the world. In 2016, the VW Group shipped more than 5.2 million cars and 75 million cubic meters of materials in Europe alone. That number has grown since then and the sheer volume of parts that has to reach individual service centers around the world is mind-bending.

Manufacturers have production centers dotted around the world and link them together with an army of personnel. The blockchain and smart contracts could automate a huge number of processes that require people right now.

It can also streamline a ‘just in time’ manufacturing approach that means manufacturers don’t have to overstock parts and leave them sat in cold storage. That’s better for their bottom line and the environment in the long run.

The savings on offer mean it’s inevitable that the logistics side of every major production company will switch to the blockchain. That’s good for the industry, and it should mean that your car doesn’t sit idle in a garage while a mechanic forgets to order the crucial part.


In Car Entertainment

Not so long ago, a tape deck was pretty fancy and a CD multichanger was reserved for the elite. Now? Even a basic compact car has advanced in car entertainment and that has turned into a battleground for the manufacturers.

Internet radio, Android Auto and Apple CarPlay are taking over, but they’re all interfaces that do their best to integrate disparate systems. Essentially they work like a smartphone, with different apps for different jobs. A blockchain-based ICE system could render them redundant overnight.

Ethereum is the obvious choice for a framework as it already comes with a variety of dApps that range from restaurant booking systems through to access to supercomputers.

When the car takes over the driving, speed, acceleration and fuel economy will fall by the wayside.The In Car Entertainment system will become the main USP and a fully-connected car that is set-up for transactions from the start is simply a better system than a collection of separate subscriptions that take time and energy to complete.

The next generation of In Car Entertainment systems could turn your car into a movie theater, an office or even a peaceful snooze as the ocean laps against the windscreen in virtual form. The blockchain will offer instant access to a vast array of services, media and experiences and it’s a friction-free approach.



The next generation of cars will be a world away from the machines we drive today and we’re set to enter a golden age of high-technology.

Calculations, transactions and interactions. A world where machines make decisions faster, smarter, and better than human drivers.

Only the blockchain is capable of holding these myriad technologies together, and providing the holistic solution to the future of transportation that so many startups (and global players like Waymo) are seeking.

So it’s simply a matter of time before the car industry takes this on board and builds the next cars and businesses on this flexible foundation.

I just hope they’re still fast.

The author is not currently invested in digital assets.

(All images courtesy Shutterstock.)

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