Women In Business

How blockchain can work for startups. Case study: the auto industry

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For any industry to establish itself in the market, it is important that its participants make a timely recognition of any opportunity that comes their way thus automatically putting them on top of their game. The automotive industry is one such industry that is beginning to integrate new ideas and technology into their systems thus giving it a competitive edge in the market.

Previously, the automotive industry had been facing a lot of issues regarding security, reliability, and validity of information in online car dealings. These issues as a result also led to untimely deliveries, scams, and frauds & unethical bending of rules to favor one of the contributing parties.

Owing to such incidents, a large chunk of the automobile sector took advantage from the skyrocketing world of cryptocurrencies and thus decided to pave its way into the finance sector and utilizing its principal technology, the “blockchain” for the advancement of their own systems.

What is blockchain?

The world of information technology (IT) is growing rapidly. Activities that would take months to execute and implement now take a few weeks or even days. According to a speech by the Israeli Prime Minister, Benjamin Netanyahu, it took only a small ten years for the world to spring from one IT company (Microsoft) in 2006 to around five major and established IT companies (Google, Microsoft, Apple, Facebook,etc.) in 2016. Only these digits show us how the world is progressing and transforming into a digital economy and how it is important to integrate new and advanced technology into our industries.

Bitcoin, Etherium or Litecoin, neither of these names are new to us. The world of such and many more cryptocurrencies is surging on a daily basis, and one common feature in all of these altcurrencies is the use of the underlying technology, i.e., blockchain. If we were to simplify it to the smallest unit, blockchain consists of blocks of particular information or data with cryptographic coding that are connected through small nodes. This information has specific time stamps to when it is accessed by any of the contributing parties which are provided with the source code. This prevents the information stored on these blocks to remain secure and private thus preventing any change or alterations once a particular transaction is deemed complete. Highlighting the top and most prominent attributes of the blockchain technology, we can say that it

  • Exhibits top level privacy and security
  • Provides a decentralized control system thus no third party authorization or accessibility
  • ensures stability and validity by providing unalterable and irreversible information/data
  • Unlimited application outside of the investment & finance world

According to authors of the book, “The Blockchain Revolution,” Dan and Alex Tapscott, the blockchain is an incorruptible digital economic ledger that facilitates the recording of not just financial transactions but anything that is of some value.

Making the change happen

A lot of companies within the automotive sector aspire to transform into one large digital unit that aids the transactions between car dealers making them more quick, efficient & productive. One such company that brilliantly uses the idea of blockchain is The AutoBlock. They provide an online exchange platform for car dealings to take place providing full security, anonymity, and reliability of data. Not only this but in order to up their game to a whole new level, the AutoBlock has also developed the first cryptocurrency designed specifically for motor trade transactions, called the AutoCoin.

Car dealers can make use of the AutoCoin to sell or purchase cars instead of the conventional fiat money exchange. This allows users to save on transaction costs as they do not have to pay extra or hidden charges to the banks. Also, the transaction is going to be complete within seconds, and the remaining AutoCoins can either be stocked up or saved to invest in more AutoCoins or cryptocurrencies as well as be converted to traditional fiat money in times of need. The system is programmed in such a way to carry out 200,000 transactions per second.

According to an article by TechCrunch, Toyota motors have also paired up with the MIT media lab to explore the world of blockchain and how they can use this technology to amplify their car features such as the lock system, speed control, etc.

Companies which are now integrating the blockchain technology into their working systems are providing numerous benefits to car owners, dealers, leasing & insurance companies, etc. A few of these benefits include:

  • Smart Contracts: The blockchain technology allows information to be accessible easily thus creating the concept of smart contracts. According to Investopedia, smart contracts provide terms of agreement for the transaction taking place in the form of codes. These codes exist across a decentralized system of blockchains which are only accessed by the buying and the selling parties.
  • Fair Vehicle Valuation: Previously, potential buyers or purchasers could only evaluate cars to the best of their knowledge or against whatever information would be provided to them. Due to the implementation of blockchain technology, transactions have become more visible and transparent allowing no interference of any third parties. Every car in question is assigned a specific QR code against which a payment is made once the customer scans it and rules cannot be bent for either of the participating party. In addition to that, customers are provided valuation according to the country or region-specific laws which makes them more aware and gives them a clearer vision to analyze the cars.

Except for the original car owner, nobody else knows about what happened with a car during its use. In the case of any accidents or tampering, only the insurance companies will have that information which unfortunately is never made public. To get access to it, a significant fee is to be given to the control center, and even then, the provided data is incomplete. As a result, potential buyers do not have much of scope in determining exactly how much a car should be valued at. According to an article on FXempire, Car vertical is a company that provides solutions regarding this issue using the blockchain system. They raised around $15000 in Ethereum ICO’s for a project that aimed to provide transparent car data to potential purchasers.

  • Digital Wallets/Hardware Wallets: Just as the AutoCoin will be working to aid in digital transactions, it also allows customers to build and retain digital wallet. This is possible due to the POS system offered by the AutoBlock through which a transaction takes place when both the buyer and the seller enter the source code or access codes given to them.
  • The Digital Clone: A German company InnogySE has also made use of the blockchain technology to create digital clones of every spare part that the organization is selling to prevent doubling of orders, authentic information on these spare parts, double spending or counterfeit orders.

Implementing the revolution

With all these varieties of blockchain features, the entire picture of the automotive industry has changed, and the sector is striving to achieve even more. What was previously considered impossible and something you could only imagine is slowly turning into reality.

Globally established conglomerates in the industry such as Nissan, Tesla and Volvo are also working to get self-driving and autonomous cars out onto the roads and introduce them to the public. What is more important to highlight is that these cars will be able to communicate with one another using the Internet of things (IoT) which uses blockchain. This enables multiple modes of transports for customers allowing them to share a ride, using a pick and drop service, etc.

According to an article on blockchain expo, Porsche has paired up with Xain, a company that provides solutions on blockchain intelligence to test the blockchain technology into their cars. They tested how the blockchain system can help lock and unlock their vehicles. They were able to increase the speed of unlocking the car by 6 times, i.e., it was reduced to 1.6 seconds from the original pace. In addition to this, when any individual unlocks or locks the car, the data is logged onto the blockchain system with a timestamp making it much easier for anyone to track who had access to the car at a given time.

With all these huge market players coping with the blockchain technology, the automotive industry is for sure to set a competitive benchmark that other industries will have to follow. The blockchain system is proving to be not just any invention, rather one that is here to change the future!

About Alycia Gordan

Alycia Gordan is a freelance writer who loves to read and write articles on healthcare technology, fitness and lifestyle. She is a tech junkie and divides her time between travel and writing. You can find her on Twitter: @meetalycia

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