Blockchain use case autonomous driving – the car as a business entity on the blockchain

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Blockchain use case autonomous driving

The Blockchain use case autonomous driving

In the post “The blockchain use case for micropayments” I show how blockchains can act as a global settlement layer for payments with diminishing transaction costs. In this article, we will have a look what blockchains can and cannot do in a world of autonomous cars. For future fleet operators such as Waymo, Uber, Tencent, Baidu, Alibaba, BMW, Daimler, Tesla, etc. it is important to answer the questions: the blockchain use case autonomous driving, is it hype or fruitful symbiosis?

WHAT is this about – the autonomous car as a business entity

In the future scenario where autonomous cars are deployed on our roads we need to have answers to the following questions (not exhaustive):

  1. How will autonomous cars pay for services they use: toll roads, parking, charging, etc.
  2. How will autonomous cars get paid for services they provide: giving someone a ride, moving out of the city center to free up parking space, etc.
  3. How will autonomous cars compensate each other: incentive for one car giving way to another?
  4. How will (real-time) billing between fleet operators, car manufacturers, mobility providers, data and map providers, insurance providers, city municipalities, etc. work?
  5. How will autonomous cars authenticate riders?
  6. How will miles driven be logged properly so that the fleet owner knows how much taxes he needs to pay to the road operator in real-time?
  7. How will services inspections be logged (service history) and who owned the car before (owner history)?

It is clear that autonomous cars will become own business entities. How can blockchain technology help to make this transition?

HOW will it work – blockchain use case autonomous driving

If we cluster the 7 questions above we arrive at 4 distinct properties that are required for an autonomous car to act as business entity

  • A system to “stream” money (1-4). 
  • A set of rules (aka smart contracts) that trigger payments between the involved parties (1-4). 
  • A unique, fully digital identity (5). 
  • A tamper proof data store (6-7). 

Blockchain use case autonomous driving

Let us now dig deeper into the blockchain use case autonomous driving along these properties:

  • A system to “stream” money (1-4). The beauty of the major cryptocurrencies (Bitcoin, Ethereum, NEO, etc.) is that they allow to send value around the globe instantly. With the introduction of 2nd layer scaling technologies, “streaming” money will become a reality. One such example is the Lightning Network for Bitcoin that operates on bidirectional, secure peer to peer payment channels that are managed outside the main blockchain. The ultimate settlement of the final balance still happens on the Bitcoin blockchain but only after a large number of (micro) transactions happened on the channel. This will drastically (by orders of magnitude) improve confirmation times. Also, transaction costs will go towards zero in this scenario. Similar as with data APIs today where we moved transactional APIs towards streaming API’s, the same will happen with cryptocurrency. Right now we are in the transactional age, due to the existing transaction fees to motivate miners. In the not too distant future we will arrive at the age of “streaming” money at almost no cost.
  • A set of rules (aka smart contracts) that triggers payments between the involved parties (1-4). With many different actors providing services for the autonomous driving ecosystem, billing will become messy. Let us consider the following case: most of the cars on the road will be collecting data via its sensors and upload them to a cloud storage for processing. This will be required to make autonomous driving work to warn other cars of changing road conditions, accidents, etc. but also to update the high-definition maps that are stored on the backends. Since everyone is benefiting from this data the entity that collected it should get some kind of compensation. Things can get complicated quickly here. Is every data set worth the same? What if the same dataset was sent already by another car? If this is a premium autonomous car with the best sensors available out there, should data sets from this car be worth more? The list goes on and on. What often happens in practice is to make billing less of a nightmare, participants are compensated either based on assumptions made on a yearly basis or someone will come up with an approximation formula. It is important to know that in today’s corporate world billing is far from real-time and often happens much after the service was provided. This is where the smart contract layer on top of a cryptocurrency can help to make a real difference. A smart contract is basically an deterministic algorithm (same output at same input) which is executed by all nodes in the network at the same time. This would allow much more complicated billing algorithms to become a reality. Once agreement on the algorithm is established, the reliable execution of the contract and automatic triggering of payments to the involved parties can greatly improve billing among multiple parties. This way, every party can rely on the blockchain that correct and real-time billing will happen and saves each party from implementing their own version of the billing algorithm.
  • A unique, fully digital identity (5). Right now you need to go through a lengthy authentication processes if you want to use any of the mobility providers. Personally, I find it very frustrating that you constantly need to proof to a third party who you are, where you live, and that you have a driving licence, etc. Every single time the same process. Often, I found myself in situations where I didn’t become customer of a new mobility solution simply because of the “getting started hassle” was too big. You see a new scooter sharing service on the street next to your apartment. Super exciting! But in order to use it you need to go through a lengthy registration, one that you did 5 times before already with other mobility providers. Frustrating! Even worse, when Drive Now and Car2Go were introduced in Europe it was necessary to physically show up in one of the registration offices to become a member. One of the promises the blockchain brings along is a true digital and tamper proof identity. Instead of bringing your passport, your divers licence, a proof where you live, etc to the registration – the data resides encrypted on a blockchain and you can proof who you are by showing that you own the private key to that information. See the new scooter sharing across the street, just go ahead, authenticate with your private key, and let the sharing being instantly.
  • A tamper proof data store (6-7). An immutable database where multiple people can write, everyone can read, but nobody can change the history of the database. This would be the answer to how we proof the maintenance history of the car or how many miles we have been driving. Well, a public blockchain in its most fundamental way is exactly this. Everyone can write, everyone can read all the information, and nobody can change any of the history of the chain.
REALITY CHECK

If a new way of doing things will be adopted is never only about technology but much more about the business opportunity, the regulatory framework, and ultimately if it makes a difference to the customer. This is my initial assessment on how likely blockchain technology will be adopted for autonomous driving use cases

  • VERY LIKELY: A tamper proof data store. IMHO this is the most obvious use case that will see adoption soon. Multiple parties have interest in making this a reality (car owners, OEMs, service providers, fleet providers, etc.) and today there is a lot of manipulation going one that could easily be avoided. The blockchain acts as an “IT infrastructure” only. It is likely that this case will fit into existing regulation easily.
  • LIKELY: A system to “stream” money. 2nd layer scaling technologies for cryptocurrencies are around the corner and near to zero transaction costs will become a reality. The biggest question for this will be how legislators will continue to treat cryptocurrencies. Will it be possible to use cryptocurrencies within the existing legistlation or do we need to wait for a more friendly regulation to become a reality. And in order to make this work on a global scale, will we find a common solution in all major legistlations?
  • LIKELY: A set of rules (aka smart contracts) that triggers payments between the involved parties.  In the current discussions about smart contracts there is a lot of confusion about what a smart contract can deliver and what not. While smart contracts will make a good platform to automate complex payments, the current throughput of smart contract platforms is still several orders of magnitudes too slow to do real-time billing for data sets from autonomous that are transferred to an open cloud in the backend. To make this use case happen, we need to have another technological breakthrough (similar as lightning in payments) for the smart contracts side. In a smaller, less performance heavy setting, billing on base of smart-contracts can make sense even today.
  • LESS LIKELY: A unique, fully digital identity. A digital identity would simplify our daily life significantly. This is, however, the least likely scenario to happen anytime soon. What you need to believe that the digital identity happens is (i) governments are willing to move from traditional passports and other form of identity documents to a fully digital one and (ii) governments can agree on some sort of common standards to make it an internationally usable ID. While a digital identity will come eventually, I am sure this is something that cannot happen overnight.
Where are we standing in terms of development projects and adoption? 

Here is a list of projects that I could find that are working on the blockchain use case autonomous driving:

  • ZF Friedrichshafen AG, a German car parts maker headquartered in Friedrichshafen is working on a project called eWallet. According to their website, it is a technological transaction platform, that allows a full end-to-end integration of mobility services, vehicles and infrastructure. The goal is to enable cars to pay for services like parking or charging. The project is based on an IBM private blockchain solution. Given the private blockchain nature of this project it is unclear what kind of settlement layer is used.
  • A showcase prototype was developed by a team in Germany that goes by the name “Blockchainfirst” where a simple wallet is integrated into an BMW i3 via it’s API interface. No hardware was modified, this is a software-only solution.
  • BMW, Ford, and GM formed the Mobility Open Blockchain Initiative (MOBI) to tackle, among others, the mileage history use case  outlined above.

Instead of exploring the blockchain use case autonomous driving the Chinese internet titan Alibaba is going a different way. Alibaba is currently integrating it’s own ubiquitous payment system AliPay (> 500 million users) into cars with partners from the automotive industry. Without any ambition to use blockchain technology at all. Why should they? The big advantage of Alibaba: AliPay is already a very dominant brand, they earned the user’s trust already, and it also works as a form of credit score. On top of that AliPay already collected the identity for 500 Mio users.

Other automotive OEMs are also getting into the game and start to integrate conventional wallets, often referred to as e-Wallets, into the infotainment system of their cars. One such example is Hyundai. The Korean automaker is integrating a non-blockchain wallet into its own Blue Link infotainment system. The way it works is that a credit card is bound to the infotainment system and thus purchases are being made possible from within the car. Hyundai is teaming up with Seattle based automotive technology provider Xevo.

Summary

Autonomous driving and blockchain technology are two of the most exciting innovations of our time. With the amount of investments that went into both fields I am more than optimistic to see them making our daily life much easier within the next 5 years. It is important to understand that the future of mobility will only come to life if open ecosystems are build where fleet operators, data providers, technology providers, etc. will cooperate to provide the best service possible to the consumer.

The recent alliances in this space, for example the Nokia HERE acquisition by the German OEM consortium Audi, BMW, and Daimler and the BMW, Intel, and Mobileye collaboration show that automotive OEMs are realizing that it is not about doing everything along but to provide open ecosystems to win this game. This new way of thinking aligns well with the fundamental principles of public blockchain technology. A open system where everyone can contribute.

Let me know what you think about the blockchain use case autonomous driving in the comments below.

About the author

Dr. Thomas Reinbacher is former computer scientist and McKinsey management consultant and works as independent adviser in Munich and Beijing. If you want to work with me on the blockchain use case autonomous driving,  please find my contact data on on http://dr-reinbacher.com

Disclaimer: This analysis on the blockchain use case autonomous driving is an outside-in analysis, provided without warranty or any claim for completeness. All opinions expressed about the blockchain use case autonomous driving are my own. All information on the blockchain use case autonomous driving is given strictly on a non-reliance basis and under the exclusion of any responsibility or liability, in particular with regard to loss or damages and/or administrative and regulatory sanctions.