A study conducted by the Statista Research revealed that 4.1 billion USD were spent on blockchain solutions in the year 2020. Similarly, another research identified that by the end of 2024, it is expected that businesses will spend $20 billion per year for blockchain technical services.
It is no secret that blockchain is a decentralized technology that has the power to revolutionize the world economy. Initially, people paid little attention to blockchain, however, now it has become the center of attention in several industries, including the automotive industry.
But, first, let’s understand the basics of blockchain technology, and how it works?
How does blockchain technology work?
This technology does not need the involvement of any intermediaries or banks in the middle for transactions to take place. The blocks contain digital information, like exchange details or participants’ database. Each block has a unique, fixed code that makes it stand out. Besides this, there is an encrypted version of blocks on the participants’ devices, and every transaction requires approval from all the participants.
The good thing about this technology is that it ensures full transparency among all the participants involved. Apart from this, blockchain leverages protected cryptography for securing the data ledgers.
Still not sure why blockchain has become a must-have technology in many industries? The image below shows the different benefits of using blockchain:
How has blockchain added value to the automotive sector?
It is no secret that in the last two years, many automotive businesses have started using blockchain technology in departments, including supply chain, car service, manufacturing, insurance, security, and others.
Some of the well-known automotive giants, such as General Motors, and Porsche have partnered with blockchain startups, such as Spring Labs, and XAIN because this technology offers a high level of security, data transparency, and full traceability.
Wondering how is blockchain technology contributing to the automotive sector? Here is what you need to know:
Improved Manufacturing Processes
Previously, the authorities seized around 500,000 counterfeit car parts that were being shipped to Australia from Abu Dhabi.
Blockchain technology allows preventing counterfeit issues in the manufacturing departments of automotive businesses. This is because this technology ensures that every vehicle part should have a unique identification number, thereby streamlining the manufacturing process.
Efficient Supply Chain Management
It is no surprise that the supply chain in the automotive industry is quite complex. This is because it involves different types of dealers, distributors, hardware, software, insurance companies, and regulatory agencies.
Besides this, if you operate in the automotive sector, you’d know that the supply chain often involves product transfer, and this costs a considerable amount of time and money due to the intermediaries involved.
But, the good news is that blockchain technology offers transparency, and helps in optimizing vehicle shipments. This is because this technology ensures seamless integration of shared inventory, invoicing, payment and logistics information, and digital contacts. Therefore, the use of blockchain technology offers a high level of transparency because of the blockchain distributed ledgers.
Apart from this, this technology helps detect the inconsistencies in the supply chain processes, and enhances end-to-end visibility.
For more information about the key benefits of blockchain in supply chain management, check out this blog.
Better Financing Options
It is a well-known fact that cryptocurrencies are gaining popularity in the financial industry. Similarly, due to the ever-increasing benefits of blockchain, the automotive finance industry is also leveraging cryptocurrencies for payments.
Buying a car has never been easy. However, with the advent of Bitcoin, you can easily buy car online with cryptocurrency. All in all, the real deal is to find a car dealer that willingly accepts cryptocurrency.
Wondering how to go about it? Don’t worry, there are some reputable car portals available that allow cryptocurrency buyers to purchase new or used cars online with ease.
Purchasing a vehicle online involves a considerable amount of money, thus increasing the risk of a deadly cyber-attack. Are you too scared of buying a car online?
Nonetheless, blockchain allows you to buy a car online without any fear. The good thing is that blockchain technology leverages cryptographic roots that can’t be reverse-engineered in any way. Furthermore, blockchain’s distributed ledger technology offers immutability, and aids in data storage.
Added Infotainment Options
Very few people know that blockchain offers add-ons that let you make in-car payments for movies, and other infotainment services. Besides this, this option allows you to view videos of far-away events while driving.
Apart from this, blockchain contains smart contracts that include the Internet of Things (IoT) technology. This helps streamline the authentication and validation processes. Furthermore, with the use of smart contracts, blockchain enables steady machine-to-machine transactions.
We all know that many insurance claims turn out to be fraudulent as they use concealed methods while managing insurance claims, or when issuing policies. This does not just result in high operational costs, but cause ineffectiveness as well.
However, the good news is that blockchain technology addresses these issues by allowing transparent logging of the vehicle’s sensor data. Apart from this, blockchain offers add-on services that provide insurance companies with important pieces of information, including the drive duration, driver’s locations, vehicle’s speed, acceleration behaviors, etc.
All said and done, the hard work and efforts of different departments, including finance, insurance, security, manufacturing, and supply chain contribute to the success of an automotive business. And, by now, we know that blockchain technology helps improve the functioning of all these areas, thereby making the automotive industry grow by several folds.
The Final Words
In a nutshell, blockchain technology is gaining popularity rapidly because of the various benefits that it offers. And in the next few years, this technology will help resolve the different challenges that the automotive industry is facing.
Apart from this, past research reveals that around 95 percent of automotive manufacturers have plans to make investments, ranging from moderate to significant level, in blockchain technology. This means that blockchain is the next big thing that would revolutionize the world of automotive.