How blockchain and the auto industry will fit together Posted on : Aug 07 - 2018

Automakers, insurers, and related partners see a big role for blockchain. What will change in the realms of payments, insurance, security, and safety?

When it comes to cars and blockchain, no one has all the answers yet. But there is plenty to prepare for and think about – not only in the auto industry but also in related industries such as insurance.

First things first: While we have found interesting examples of blockchain in action, most companies and industries remain in an early stage of exploration and adoption. Anyone who tells you they’ve got it all figured out is exaggerating at best. Worse, they might be hawking blockchain snake oil.

“At this point, most of the specific potential uses for blockchain in various industries are quite speculative and a number of years out,” says Gordon Haff, technology evangelist at Red Hat. “What we can do, though, is think about the type of uses that play to blockchain strengths.”

It is plenty productive to explore sectors where, as Haff says, blockchain’s strong suits might be a good fit. The automotive industry quickly stands out. Some of its fundamental characteristics and concerns – think about the massive global supply chain, the complex web of licensing, taxation, and other regulations, and the important safety and trust issues – make it a fascinating candidate for blockchain-enabled innovation.

Haff points to the various entities that must communicate and transact with each other to keep cars on the road today – such as manufacturers, insurers, toll authorities, even (increasingly) the vehicles themselves – to spur some forward-looking thinking about how blockchain and the auto industry fit together. Keep in mind that is the short list of stakeholders, and you begin to see the potential here.

A new kind of car payment

“Payments might be made based on congestion charges or mileage,” Haff offers as an example of a blockchain-enabled automotive transaction. “This could be a case where the distributed trust model and smart contracts associated with blockchain are a fit.”

Factor in the sheer size of this sector (there were some 253 million passenger vehicles on the road in the U.S. alone back in 2014) and the evolving nature of transportation (think ride-sharing apps, self-driving vehicles, IoT and “smart” cars, and so on) and the possibilities grow.

We’re not likely to see an overnight blockchain revolution in the automotive industry. Haff points out that there will be headwinds fueled by a longstanding industry with entrenched players who may be reluctant to buy in; considerable government policy and regulatory issues; security and privacy concerns, and so forth. View More