A plethora of cryptocurrencies flooded the market recently. However, over 800 of them were scraped off because they were either a scam or the product did not materialize.
Cryptocurrencies are not a new phenomenon. In fact, they have been in around since the late 1990s. However, it was not until 2009 that Bitcoin was launched, and the technology started gaining traction.
A financial value was not attached to the currencies until 2010 when someone exchanged 10,000 crypto coins for two pizzas. Had he kept them, their value today would have been around $100 million. In 2013, the Bitcoin hit $1,000 for the first time, but the prices crashed soon.
In December 2017, the cryptocurrency hit the peak of $20,000, increasing by 35 percent in just seven days. Today, the Bitcoin is around $6,000. The multiple price fluctuations show the volatility of the cryptocurrency market. Nonetheless, the currency and the blockchain technology behind it is having an impact in various industries other than banking.
Automotive is one sector that has been slow to adopt the blockchain technology, but now the technology is taking center stage due to its benefits. Companies like The Autoblock are facilitating car trade worldwide through the use of auto coins, which is a form of cryptocurrency made specifically for transparent, safe and secure transactions for automobiles around the world
In case you are not aware of how blockchain works, it is basically a decentralized ledger that records all the trades in a chronological order via cryptography, which increases security and stops anyone from tampering with the data.
The world’s four largest automakers BMW, Ford, Renault and General Motors are working in a group to bring this technology in the sector. These automotive companies are a part of a group of 30 companies in the Mobility Open Blockchain Initiative that has the objective of speeding up blockchain adoption.
Here is how the automotive industry can leverage the technology.
1. Reward system
Recently, the German car manufacturer Daimler AG announced its own cryptocurrency, Mobi Coin at the Mobile World Congress 2018 in Barcelona. The project was initially launched in February 2018 to reward drivers that follow environmental-friendly practices such as low speed, and proper braking. The vehicle data will be linked to an online wallet where the company will transfer the Mobi Coins. Participants that have the highest number of Mobi Coins will get to be a part of Mercedez VIP events such as MercedesCup, DTM races or Fashion week held in Berlin.
It is still not clear if the participants will be able to convert the rewards into standard currency. The company is currently testing the idea with 500 drivers. The cryptocurrency will not only promote safer driving practices but also help the company’s marketing strategies.
2. Car sharing
Accounting and consulting firm, EY, which is a part of Ernst and Young Global, is working on a blockchain technology-backed system that will make it easier to share ownership of cars and get access to trucks and other vehicles. Car sharing is not a new concept, however, using block technology to record the logs is definitely a new idea. According to EY’s Simlett, this technology could allow people to share a large fleet of vehicles. For example, residents using a group of cars parked in a building. The move makes sense especially now when millennials are not really interested in owning a car.
There are a few existing players in this market that allow car sharing via a peer-to-peer network, but they act as intermediaries and charge high commissions. Blockchain technology, on the other hand, will allow owners to directly connect with renters in a similarly secure and trusted environment. Helbiz Coin has come up with a Helbiz Mobility System that works on the concept.
Today, car insurance involves a lot of manual paperwork, which is prone to error and missing information. The auto insurance world hence is in dire need of simplified solutions. Blockchain technology in the form of a distributed ledger would make it simpler to process information, claim handling and subsequent payouts related to repairs and maintenance.
Automotive companies can use blockchain technology in the form of smart contracts or private keys to automate insurance claims, and deployment of services. The distributed ledger would increase the level of trust between the insurance provider and the client. Also, it will help the companies craft insurance products for niches.
Once blockchain insurance kicks in, it will change the dynamics of the insurance industry. Smart contracts will eliminate the requirement for third-party verification, and extensive documentation. With this technology, if a car gets into an accident, the insurer can immediately pay a small percentage of the insurance so that the client can get back on the feet. This will save a lot of frustration and hassle for both parties.
4. Auto financing
People who do not have the purchasing power take loans to purchase cars. A typical loan approval system requires a lot of verification steps such as bank validation, classifying risk, issuing letters of credit. Applying blockchain technology would make the entire system quite efficient. During the Auto Captives Summit in 2016, the chief innovation officer of IBM said that blockchain technology can be used to track a vehicle from the moment it is assigned a VIN till the end of its lifespan. Also, the technology would increase trust, reduce risk and eliminate intermediary cost in the auto finance industry.
In 2016, Toyota Financial Services also collaborated with R3’s CEV blockchain consortium to explore opportunities offered by the technology. According to Chris Ballinger, Toyota Financial Services CFO and Chief Officer of Strategic Innovation, blockchain “will ultimately lower costs, increase efficiency, and make auto finance more transparent.
It is certain that blockchain technology can completely revolutionize the automotive industry by making it more transparent and efficient. The critical thing for success in this sector is the network of users. Bitcoin is famous because of the number of users that have adopted it. The same momentum would come about for automotive industry only if a network of automotive companies embrace this technology.
About the Author
Erica Silva is a blogger who loves to discover and explore the world around her. She writes on everything from marketing to technology, science and brain health. She enjoys sharing her discoveries and experiences with readers and believes her blogs can make the world a better place. Find her on Twitter: @ericadsilva1