By 2020, experts estimate that 250 million connected cars will be on roads across the globe. With each vehicle equipped with more than 200 smart sensors, a deeply-connected infotainment system, and advanced cloud-based core informatics, the need for data management will be as crucial as maneuvering through rush hour traffic.
The marriage of blockchain and automotive technologies provides exciting solutions to some of the most pressing automotive issues, today — especially those facing the connected car industry. And as with most marriages, one partner is likely to do most of the driving. In this case, the power of blockchain technology will drive innovation and solutions across the entire automotive ecosystem. Indeed, we are seeing the emergence of the blockchain automotive industry even now.
Connected Car Basics
Before we delve into the complexities of our topic, let’s pause for a brief review of connected car technology.
Connected Car Definition
The definition of “connected car” is a moving target. From its humble beginnings in 1996, when General Motors introduced OnStar, to the latest IoT-compatible models, advances in technology keep redefining what a connected car is.
At least for now, we can characterize a connected automobile as one that:
- facilitates connections between vehicle systems, driver and passenger devices, and external devices, networks, or systems
- employs Internet, Bluetooth, and evolving V2V communications technologies
- initiates communications with and responds to communications from IoT devices, both internal and external to the vehicle
As technologies emerge while others advance, this list is sure to expand.
From a less-technical perspective, connected vehicles allow drivers and passengers to remain connected to the outside world while on the road. Drivers can not only view GPS information but can relay their specific location to others around the world in real-time. Passengers can view live video of far-away events on the vehicle’s infotainment system. Information on vehicle systems can also be transmitted to remote locations and system firmware updates can be received OTA, or over the air.
Now that you have an idea of what “connected car” is all about, we can move on and explore the fundamentals of blockchain technology, as well. In a moment, we will explore how the two are merging to produce the automobile of the future.
Blockchain and Bitcoin
First, it is important to note that blockchain and Bitcoin are not the same thing. Bitcoin was conceptualized by Satoshi Nakamoto in 2008 as an unregulated cryptocurrency. He devised blockchain as the mechanism through which bitcoin transactions would be executed. For our discussion of automotive applications for blockchain, you can forget about Bitcoin — that is, unless you plan on using the cryptocurrency to pay for your next car.
Although blockchain is still the backbone of the Bitcoin economy, distributed ledger technology has evolved to be useful as a stand-alone and secure data structure solution. As we will see, it lends itself perfectly to many challenges facing automotive manufacturers.
In the simplest terms, a blockchain is distributed ledger. That is, a shared database that exists on multiple computers across a distributed network. As we will discuss shortly, distributed ledger technology includes superior data encryption methods. For now, just be aware that blockchain technology is a database architecture that has the following characteristics:
- a peer-to-peer structure, rather than a client-server arrangement
- the ledger is composed of blocks, which are simply transaction records
- blocks contain contents and an identifying header
- each block is time-stamped
- each block is linked to the preceding and following blocks, forming a blockchain
- a distributed network of computers is used to reach a consensus on whether or not a transaction is valid
- once added to the chain, blocks cannot be altered
- public and private keys are used to prevent unauthorized access to data
We will look at each of these characteristic more closely. For now, it is enough that you understand that blockchain is nothing more than a type of shared database.
Advantages of Blockchain
Blockchain offers the automotive industry a wealth of advantages over other technologies. Namely these:
- unparalleled security
- execution speed
- cost reduction
- ability to audit records
Let us look at these one-by-one to see why automotive stakeholders should adopt blockchain.
Blockchain technology is an inherently secure means of storing and sharing data. The data structure of shared ledgers, as shown above, makes adding to, removing, or altering data nearly impossible once it has been validated and stored in a block.
Not only does the blockchain structure, itself, prevent data hacking, but the encryption of data and block data signatures adds another layer of protection. By hashing the data using 256-bit strong encryption, the odds of a hacker accessing data stored in a blockchain without possession of a unique private key are truly astronomical.
Using Blockchain technology to solve the challenges of connected car data security is not just an option, it is a necessity. If a better solution exists, no one has proposed it yet.
As connected cars increasingly become self-driving autonomous cars, the need for this level of security will be even greater.
Blockchain Execution Speed
Transactions executed through blockchain are generally — though not always — faster than those of other systems. The primary reason lies in the distributed network of blockchain offers, which consists of numerous computers processing each transaction simultaneously. In a centralized network, there is usually one computer or computer cluster that process each transaction so each transaction must wait its turn.
Blockchain transactions for an automobile can include safety information. In order to avoid dangerous lapses in data, the entire data pipeline must be fast and reliable. Distributed networks provide the speed and redundancy that connected cars require.
The decentralized nature of blockchain makes sharing data easy. Unlike centralized processing and storage systems, all stakeholders have equal access to the blockchain. There is no centralized computer or database that is controlled by a single party, who might choose to hide or manipulate data. While access to certain information stored in the blockchain can be regulated by private and public keys, all authorized parties have access to the same immutable information.
Blockchain Cost Reduction Over Other Technologies
Because blockchain is not centralized, one party does not bear the burden and expense of maintaining the database. There is no need for expensive backup servers and remote storage. The data exists on multiple “nodes” and cannot be damaged, accidentally erased, or corrupted.
Ability to Audit Records
Since a blockchain consists of immutable blocks of information, audits can be conducted with confidence that the data stored has not been altered.
If blockchain represented only cryptocurrencies, it would be of limited use among other industries. Fortunately, a blockchain can be designed to not only store units of currency, but other types of commodities, as well. For example, blockchains can store contracts, as we will see shortly, and those contracts can be automatically executed. The ability to embed contracts with other data, such as invoices, makes the technology ideally suited across the entire automotive ecosystem.
Applications for Blockchain in Connected Car Automotive
The numerous advantages of shared ledger technology open a world of possibilities for use in automotive applications. The connected car will soon be the blockchain connected car. While the list is expanding by the day, here are a few ways blockchains can — and will — benefit the automotive industry.
- vehicle safety and data security
- supply chain transparency
- automotive financing
- smart contracts
- fleet management
Safety and Security
As cars become increasingly autonomous, and self-driving vehicles move from the test markets to Main Street, security will become the primary challenge for automakers and other stakeholders. The more connected a vehicle is, the more susceptible it becomes to potentially deadly cyber attacks.
If data streams are to be kept safe from hackers, they must be safeguarded with the highest level of security available, and that would be blockchain. Distributed ledger technology not only facilitates data storage, but also offers immutability, or protection against data being changed once it is stored in a block.
Although the automotive industry has been slow to realize the value of blockchain technology, you can bet it will ultimately be the de facto means of securing connected car data. From cardless fuel purchases made the infotainment system to software updates for critical vehicle systems, distributed ledger technology will increasingly be utilized to keep connected drivers and their sensitive information safe.
Supply Chain Transparency
In the automotive industry, the transparency offered by distributed ledgers can help ensure that manufacturing, shipping, and suppliers see the same supply chain, making it nearly impossible for counterfeit parts to be inserted into the supply chain.
There are numerous opportunities for blockchain technology throughout the automotive manufacturing process. For example, one blockchain might contain bills of lading for vehicle components, another blockchain could contain quality-inspection records created during the manufacturing process, and another could store WIP information for each vehicle assembly from start to finish.
As you know, blockchain was created to support financial transactions. While bitcoins might or might not be the currency of the future, it is safe to say shared ledgers will soon revolutionize the automotive finance industry.
Smart contracts are small programs that may be included in blockchains and that automate the exchange of things of value, according to predefined rules. The thing exchanged may be currency, stock shares, documents, information, or any conceivable commodity.
In the connected car industry, smart contracts can be embedded in manufacturing blockchains to automatically release purchase orders at certain phases of the manufacturing process. Supply chains can benefit from contracts being automatically awarded to the supplier with the largest inventory on hand. And buyer financing can be approved based on smart contracts that automatically evaluate credit ratings.
Do you notice one thing missing in each of these examples? If you said “the middleman,” you would be correct. One advantage of smart contracts is that they can be programmed to execute upon certain conditions being met, without human involvement.
Modern vehicle infotainment systems provide an audio-video experience that rivals the home entertainment system. Blockchain can be a valuable add-on to infotainment technology by making sure that in-car payments for movies, apps, and other services are kept secure.
Telematics is the combining of telecommunications and informatics. In the connected car space, telematics includes software-based navigation, vehicle-to-vehicle (V2V) communications, and a host of other services that can affect vehicle safety and passenger security.
To accomplish the important duties for which is designed, the data sent and received by telematics systems must be kept safe. Hackers must neither be allowed to view or alter the data used. As you have seen, blockchain is ideally suited for just such applications.
The Internet of Things is soon to invade all aspects of society, and transportation is no exception. As smart sensors are increasingly used to not only monitor traffic but to communicate with it, the need for data transport speed and data security become apparent.
Imagine a smart sensor that sends data to approaching vehicles warning of flooded roads, a damaged bridge, or stalled traffic on the highway. Communication speed is obviously important, but so is data security. If the data arrives too late or is altered by hackers, lives could be lost.
Once again, need we say it? Blockchain to the rescue.
Insurance companies are already using connected car technology to set premiums based on actual driver behavior, rather than driving history. New telematics add-on services can provide insurance companies with driver location, drive duration, acceleration and braking behaviors, vehicle speed, cornering behavior, and other information. Blockchain provides a foolproof means of collection this data and delivering it in a secure, unalterable state.
Fleet management companies are already onboard with connected car technology. Early adopters as they are, fleet companies will soon embrace blockchain technology across the industry for all the advantages it offers. The fleet management industry is also a perfect proving ground for consortium blockchains.