The transportation industry is experiencing significant change as connected vehicles, autonomous cars and ridesharing impact the landscape. To stay competitive, industry leaders are constantly looking for opportunities to increase efficiency, improve security, reduce environmental impact and refine the customer experience. Luckily, blockchain has the potential to solve some of the sector’s most pressing problems.
From verifying a vehicle’s history, better supply chain tracking, automating transactions, enabling seamless ridesharing or supporting fairer insurance, mobility enterprises are already integrating this technology and coming out with exciting applications.
Verification And History
Blockchain technology can prevent the age-old problem of mileage fraud through establishing a transparent, anonymous and manipulation-proof database for mileage. Telemetric data like mileage or battery levels can be uploaded autonomously via the vehicle or through a vendor, such as an autobody repair shop. Accidents and subsequent repairs or service and maintenance work could also be recorded in the blockchain. Having this extra layer of traceability could reduce fraud and significantly impact resale value.
Blockchain technology enables the transparent and immutable logging of a vehicle’s sensor data in a decentralized network. Smart contracts allow this data to be processed and implemented into an insurance plan. Verifiable documentation via a blockchain black box could help resolve disputes after an accident. Peer-to-peer insurance solutions like Teambrella promise to guarantee payment to the customer in instances where an insurance event occurs. Other companies, such as Immediate, plan to make insurance more affordable and flexible for both insurers and customers by using smart contracts. The possibilities are endless, but insurance companies will need to overcome numerous regulatory and legal barriers before blockchain technology becomes the norm.
As new car generations roll out with advanced autonomous functions, automating payments and processes becomes crucial. Smart contracts have the potential to bolster automation in multiple ways. Reducing the need for barriers such as requiring credit cards and bank accounts could allow automated payments to happen seamlessly. Using smart contracts, settlements can happen behind the scenes, based on defined parameters. Within the leasing and financing space, smart contracts could provide the ability to deactivate the unlocking system of cars with outstanding lease payments.
Blockchain also offers value within the public transportation space, where bus depots can charge customers and track vehicles easier than ever before.
One of the biggest headaches of purchasing or leasing a car, besides negotiating with the dealer, is the financing process. In 2015, Visa partnered with DocuSign, a transaction management startup, on a project that uses Blockchain to streamline car leasing called “click, sign and drive.” Using this tool, customers would sign both the lease and an insurance policy entered in a Blockchain public ledger.. Blockchain technology can be used to create Smart Contracts which essentially eliminates intermediaries and streamlines the entire process.
Blockchain Smart Contracts Can Redefine Buying & Selling Cars
Using a Smart Contract, the agreement is written into code in the Blockchain. The parties within the contract are anonymous, but the transaction is part of the public ledger. When an event happens (such as the purchase or sale of the car or an expiration of a lease) it triggers the execution of the contract’s agreement instantaneously. Because of this, regulators can then evaluate the transaction while Blockchain maintains the privacy of the parties involved.
Smart Contracts can also help insurance services charge different rates based on the insured driving locations and conditions. Blockchain itself can help insurance companies process claims more efficiently. A Smart Contract can execute automatically at the time of an accident, providing the driver with a percentage of the claim owed and getting them back on the road while the claim can be processed in full.
LenderBot, a micro-insurance proof of concept developed by startup Stratum together with Deloitte and payment services provider Lemonway uses Blockchain technology to help people using home-sharing companies like AirBnB, Tujia, Wimdu to insure assets with a Smart Contract and Blockchain public ledger. If this is successful, they could tackle the complexity of auto insurance.
Blockchain-Verified Car Ownership Prevents Theft and More
Once the Smart Contract executes and you are the proud owner, the automated entry system recognizes you (or your designated drivers and riders) and unlocks the door and features of your new car. Based on the FBI’s Uniform Crime Report approximately $5.9 Billion was lost to automobile theft in 2016 alone. While criminals will always persist, Blockchain-verified ownership can deter theft by simply not allowing anyone not verified to drive the car to drive it away. In that same vein, Blockchain-verified ownership could make auto repossessions immediate and tragic for those who are chronically late in paying their bills.
One major bonus for everyone who has ever had to spend time at the Department of Motor Vehicles is that ownership papers and licenses could become lines of Blockchain code. Traffic cops in the future will no longer need to ask for your license or registration when you get pulled over. Car titles and driver’s licenses could become as quaint as rotary phones.
The Car That Pays For Itself
More and more we are able to pay tolls automatically through existing technology. But what if your insurance could be paid incrementally on demand and your car could pay to refuel or recharge itself? Blockchain can provide instant payment for all the services your car requires. Whether tolls, fees or repairs, your car would essentially be able to pay for itself without you and your wallet as the intermediary.
This opens up the possibility of your car being able to negotiate the cost of getting you to where you are going in the future. Booking its place on a highly-trafficked road or finding folks to rideshare, the possibilities are endless. Especially once autonomous vehicles hit the mainstream, your car could be out driving other people while you are at work, literally making money to pay for itself.