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

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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.   

Blockchain use case micropayments for mobility services (Uber, Lyft, Car2Go, Drive Now, Wundercar, etc.)

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Blockchain use case micropayments for mobility services

The automotive industry is undergoing a radical transformation. Most of the experts do agree that the future of the automobile is electric and autonomous. Another scenario that is likely to happen is that there will be a shift from the individual car ownership model to a scenario where more and more people are using cars on-demand and participate in some form of car sharing. In on of its recent reports, McKinsey and Company stated that we will see a move from “one vehicle for every trip” to a scenario where there will be “A mobility solution for each situation”. Is the blockchain use case micropayments for mobility services hype or a real opportunity? In this article, I will try to shed some light on the merits of using blockchain technology for mobility use cases.

The race is on: building mobility solutions is a software-first game

On the technology side a lot of effort goes into the development and application of technologies such as machine learning, high-definition mapping, and real-time analysis of car data. While software first startups such as Uber, Waymo, and the Chinese Didi ChuXing are pushing on AI and machine learning, incumbent companies such as Ford, GM, Daimler, BMW, and Hyundai leverage on their strong brand and powerful partnerships.

It will remain to be seen, if software-first companies will be able to learn building cars faster than hardware-first companies are learning to build highly scalable and reliable autonomous driving software. There are definitely very exciting times awaiting for us. Let us now focus on the blockchain use case micropayments and its applications in this field.

The future of the automobile is electric, autonomous, and based on mobility tokens.

With so much focus on AI, machine learning, and the electrification of the drive-train in the automotive sector nowadays, it is surprising that there are not more news about how the blockchain, as another fundamental technology innovation of the last decade, will shape the sector.

I think the first important question to answer is: what is the goal of the mobility of the future? Remember the multi-pass from the 5th element that Leeloo Dallas used in the movie to get around?

mobility-blockchain-micropatments-mulit-pass-5th-element

I think the future will be similar to this. In the end it is all about the seamless transition between different modes of transportation with a single point of payment for anything on the continuum. Who owns the customer wins. The future of mobility will be the platform that provides these service.  Micropayments will be a big part of this game. The blockchain use case micropayments – what do you need to know about it?

WHAT is this about?

Using a cryptocurrency token as a means of payment for mobility solutions (Uber, Lyft, Car2Go, DriveNow, Wundercar, etc.)

WHY this makes sense?

Processing payments can become complex and can become costly if multiple currencies and payment corridors are included. One such example are payments from a country within SEPA region to a country outside of the EU corridor. For mobility providers this is especially relevant as they often provide services on a truly global scale. As of May 2018, UBER operates in about 60 countries and 400 cities around the world. With the introduction of an own cryptocurrency token “MOV” the following problems can be solved:

  • Cryptocurrency payments are extremely cost-effective. With new technological breakthroughts right around the corner (e.g. lightning and raiden as 2nd layer off-chain transaction technologies), transferring value around the world will become as inexpensive as sending an internet package. It will be possible to send euro-cent equivalents in cryptocurrency with negligible transaction costs.  In blockchain literature this is often refereed as to “the internet of money”. With more and more people travelling internationally and mobility as a business on a global scale cryptocurrencies will enable to real-time billing of mobility services, no matter in which jurisdiction the service is consumed.
  • A second benefit a cryptocurrency can bring along is to foster an own economy around its services and products. For example, the fictitious Car2GoCoin could not only be used to pay for borrowing a car from Car2Go to go to the supermarket, it could also be used to award customers for good-behavior within the Car2Go community. One such example would be to go and refill the car, or for making useful suggestions to improve the services. This could even go so far as to let Car2GoCoin holders participate from the business success of Car2Go, by distributing a small amount of profits back to the Car2GoCoin holders. This would naturally rally a strong community around Car2Go. Which mobility provider would you recommend if you know that you will participate from each ride?
HOW is it done – Blockchain use case micropayments?

We are looking at a scenario, where a large mobility player issues its own cryptocurrency and lets users pay for services in their own ecosystem with this token. For simplicity let us call this token MOV. In reality this could be the UberCoin, the LyftToken, or the Car2GoDiamond, etc.

In order to bring the MOV token to life, roughly the following steps (including a thorough legal check and getting official approval from authorities for MOV) need to be followed

  • Step 0: Decide if an own MOV token should be issued or an already established cryptocurrency (Bitcoin, Litecoin, Ethereum, NEO, etc.) should be accepted as a form of payment. The former allows to create your own economy around the MOV token the later has the advantage that both liquidity and availability (i.e., is traded on all major exchanges around the world already) problems are solved already for you.
  • Step 1: Decide on the base blockchain the token should be created on. The most common ones are: Ethereum, Bitcoin, and China-based NEO. This will also define the “Token-standard” the MOV token will need to follow. For example, on Ethereum ERC20 is the most common one, while the NEP-5 is the de-facto standard token format of NEO.
  • Step 2: Write a smart contract that specifies the economy that you are building for the MOV token. Important parameters will be set in the smart contract: Will there be a finite supply of MOV tokens, what is the denomination of MOV like, will the economy be inflationary or deflationary in nature? How many of the tokens will be sold to the public and how many are you keeping in reserve? These are all critical questions where including an economist into the team will pay off.
  • Step 3: Start selling/issuing the token and get it listed on the major cryptocurrency exchanges. Following market dynamics the MOV token now will have an external evaluation  (e.g. 1 MOV = x USD) defined by how many people are willing to buy your MOV token idea.
  • Step 4: Start to integrate the MOV token into your systems and services. This way, users can use MOV tokens instead of fiat money (EUR, USD, RMB, etc.) to pay for your mobility services.
REALITY CHECK – Blockchain use case micropayments

The blockchain use case micropayments focuses on issuing an own cryptocurrency has to deal with two problems:

  • ACCESS: How can the user get hold of the MOV token?
  • ECONOMIC FEASIBILITY: Given the technical limitations within today’s major blockchains that yield to significant transaction costs often prohibit sending true micropayments, since transaction cots > value of micropayment

Let us turn to the graphic below to shed some light on this two limitations:

Blockchain use case micropayments for mobility providers - analysis by Dr. Reinbacher

Regarding the ACCESS problem, there are two scenarios that we need to consider.

First, if the MOV token gains a big followership it is likely that it is listed on the major fiat/crypto exchanges. In this case, users of the MOV token can conveniently buy the MOV token from these exchanges. This also means that MOV token holders need to bear the fluctuation risk. Tokens that you buy today and use to consume mobility services next month with can have a totally different valuation at the day of consumption.

Second, the issuer of the MOV token can decide to hold back a certain share of tokens (for example 20% of all MOV tokens generated) that act as a “stabilizing reserve”.  These tokens are then managed by a trusted 3rd party and sold for a fixed price at the mobility platform directly to the customer. These tokens then cannot be transferred or sold to third parties, but remain within the wallets of the mobility provider. This solved two problems: everyone gets easy access to MOV tokens and can buy them with FIAT money directly at the mobility platform without the need to register at a fiat/crypto exchange first and it does not expose the user to fluctuations in price of the MOV tokens.

Regarding the ECONOMIC FEASIBILITY problem, we need to distinguish between two cases. Refer to CASE A and CASE B in the picture above.

  • Case A: This depicts the scenario as of today. The limiting factor in most micropayment use cases is the prevailing transaction fees for cryptocurrency tokens. For example, at the year end 2017, a single bitcoin transaction cost 55 USD (https://bitinfocharts.com/comparison/bitcoin-transactionfees.html). While this was an extreme scenario at Bitcoin’s peak hype times, transaction fees are still significant as of today: about 3 USD for every bitcoin transaction. The immediate conclusion here is that micropayments do not make sense since the following equations does not hold VALUE OF TOKENS >> TRANSACTION FEES. Given the current transaction fees, use cases that require payments for tiny amounts of value are thus building what I call a “Thick Mobility Platform” (cf. Top-right part of figure). The basic idea here is in order to make payments with cryptocurrency feasible, MOV tokens remain in a wallet within the mobility token platform for most of the time. The thick mobility platform, keeps track of all users and the value of MOV tokens that they possess. An user can only “cash-out” by transferring MOV tokens from the platform to his own wallet when the value of the MOV tokens in his account is significantly bigger than the transaction fees required to transfer the tokens. While this is a fix that will work for a lot of use cases and in fact this is the architecture that most blockchain projects that use cryptocurrency as a payment are implementing it comes with a series of drawbacks. The thick mobility platform bears the same operational risk as an exchange. Thus, security and availability standards of the mobility platform need to match those of the leading exchanges. Remember the now famous Mt. Gox hack? Imagine what kind of reputation damage a hack of the cryptocurrency wallets at the mobility platforms of Uber, BMW, Daimler, etc. would have. However, this is still the prevailing architecture that we find today.
  • Case B: This depicts a (near) future scenario. While the general public has been busy with speculating about the bitcoin price in the last years, a lot of brain-power went into the design of what is called 2nd layer scaling technologies. The two most promising approaches are the Lightning Network for Bitcoin and Raiden for Ethereum. Without going into much details, the main innovation here is that not every transaction needs to be done on the blockchain. Instead, payment channels can be opened between two participants. The two participants can then perform thousands of transactions among each other and either participant can close the payment channel by writing the final balance on the blockchain. It is easy to see that the equation from before VALUE OF TOKENS >> TRANSACTION FEES is much easier to satisfy in this case as transaction fees will go near to zero in this case. This will also greatly reduce the operational risk of the mobility platform. Instead of replicating the functionality of a fiat/crypto exchange it is enough to manage a wallet that holds the fees that he mobility platform charges to its users. This is a less risky undertaking as holding a large amount of all tokens in your economy as in the first scenario.

What does all this mean for mobility providers? It is important that executives are aware of one of the biggest innovations Bitcoin and the blockchain brought along: a new global payment layer with near to zero transaction costs. This will make real-time, cross-border billing a reality.

While 2nd level scaling technologies are at the verge to gain mainstream adoption it is important to enter the game now. Are you a mobility provider and are you still only at Powerpoint level with your mobility token use case? You might be missing out on one of the greatest opportunities of the last decade. Let me know what you think about the blockchain use case micropayments 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 or have more information on that particular use case,  please find me on http://dr-reinbacher.com

Disclaimer: This analysis on the blockchain use case micropayments is an outside-in analysis, provided without warranty or any claim for completeness. All opinions expressed about blockchain use case micropayments are my own. All information on blockchain use case micropayments 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. 

Blockchain use case analysis on tracking diamonds from mine to jewelry retailers (De Beers Sa)

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Blockchain use case analysis on tracking diamonds

De Beers Sa is an international corporation with USD 6.1 bn in revenues specializing in everything about diamonds: exploration, mining, retail, and trading. Chances are high that your engagement ring comes from one of their mines. Diamonds require at least a billion years under extremely high pressure to form naturally. How can a 10 year old technology such as the blockchain make a difference here? De Beers Sa announced that they started to track diamonds on their way from the mine to the retail outlets using the blockchain. This is my blockchain use case analysis on tracking diamonds.

WHAT is this about?

De Beers Sa tracks diamonds from mines to jewelry retailers on the blockchain.

HOW is it done ?

A unique ID, a fingerprint is calculated from the physical properties of the diamond. One such ID is generated for each diamond. Physical properties of the diamond include weight, color, clarity, size, etc. When combining all these generating an ID is similar to a hash function, every single diamond will result to a different ID. Calculating the ID from the same diamond will always yield the same ID. In computer science this property is called deterministic. To illustrate, the ID 261b152862d1d614014496a63 is generated for the parameters [clarity=2, color=6, weight=245, mine=294]. This ID is then registered on the blockchain. Registered means that a transaction is written to the blockchain and that this transaction included the ID 261b152862d1d614014496a63 in on one of the fields of the transaction. The blockchain itself is a concatenation of such transactions.

Since the individual blocks on the blockchain are in deterministic order to each other, the blockchain itself takes care of the time-stamping. For example, if the transaction including the ID of the diamond was included in block 5633148 of the Ethereum blockchain we can use https://etherscan.io/blocks to check at what time this block was generated.

Blockchain use case analysis on tracking diamonds how does it work

Suppose all diamonds mined by De Beers Sa are documented this way. It is then an easy exercise to trace the diamond back from the retail outlet to the mine. Whenever a diamond shows up in the supply chain everybody can measures the physical properties re-calculate the ID and checks if that diamond (i.e. that ID) was registered before with the blockchain. If not, the diamond was injected into the supply chain from an unknown source.

WHY this makes sense?

Supply chains can become complex, especially when sourcing from different countries. The gemstone industry has an painstakingly complex supply chain. Among other ethical considerations, small-scale mining has been tainted with rumors of child labor. The industry is working on different fronts to clean up its image and rebuild its reputation. Regarding additional transparency, this blockchain use case makes sense because

  • The blockchain acts as a tamper proof digital record in this case. Once a diamond is recorded on the blockchain it will remain there forever. Due to the technical foundations of blockchain technology it is extremely hard to change these records. While you can perform a “DROP TABLE X FROM Y” to remove a database on your standard corporate IT setup, deleting the blockchain is almost impossible.
  • Not only De Beer Sa can use the information. Each supplier and even customer does not need to rely on the information given by De Beer Sa. Instead, they can check by themselves if the diamond was registered on the chain before. In current supply chains this is often not possible as the data resides in proprietary IT backends that are controlled by one company. Not so with a (public) blockchain,  where everyone can read all entries and append new information.
REALITY CHECK

Supply chain use cases have to deal with the oracle problem. How do you know if the real-word data, in this case the physical properties of the diamond, were entered correctly? Garbage in, garbage out still holds true in the blockchain age. It is true that the blockchain creates trust among participates due to the consensus algorithm that ultimately decides on a single version of the truth. That promise quickly ends when the blockchain reaches out to the physical world. In the De Beer Sa use case this is what you need to believe in to make it work

  • The personnel registering the diamonds on the blockchain are trustworthy. How can De Beer Sa prevent that wrong information intentionally or unintentionally was used as inputs to the function that generates the ID? For example, if the diamond was registered with the property “mine=281” how can we be sure that the diamond really comes from this particular mine? While the blockchain helps to minimized the required trust once registration is done, a few weak links will still remain.
  • Everyone in the supply chain needs to agree on how the ID is calculated. In complex supply chains, a few dozen suppliers are working together and aligning them on one methodology is easier said than done.
  • If the primary goal is to be transparent to end customers we are also facing the educate the customer problem. To convince customers that the diamonds of their engagement rings aren’t fake or were used to finance war, De Beer needs to educate its customers about the blockchain and why this information ca be trusted. A simple “Checked by Ethereum” sticker will not do the trick.

Interestingly, most of these points hold true for all use cases of the blockchain that deal with digital representations of real-world items. Everyone needs to agree on how the link from the trust-less blockchain to real-life works.

COST estimation (outside-in)

I would assume that the following team-setup is required to implement this use case (without integration into existing legacy IT systems)

  • 1 Experienced product owner with understanding of blockchain and the business of De Beer Sa
  • 2 Blockchain developers to (i) develop the smart contract that represents the diamond and (ii) come up with the deterministic ID function
  • 1 Diamond supply chain expert (part-time)
  • 1 Diamond measurement expert that assists in selecting the parameters to generate ID from
  • 2 front-end developers, 2 backend developers

Duration to develop pilot-use case: 4-5 months.

Blockchain use case analysis on tracking diamonds further data points
  • Idea, Pilot, or in Production: Pilot, 100 diamonds were tracked through manufacturing process to a final retailer. Plan to go into production in 2018.
  • Blockchain technology used: Ethereum (assumption)
  • Industry | Function : Mining | Supply Chain
  • First time use case was reported: May 2018
  • Link to announcement: https://www.bloomberg.com/news/articles/2018-05-10/de-beers-tracks-first-gems-from-mine-to-shop-using-blockchain
  • Included industry players: De Beers Sa (https://en.wikipedia.org/wiki/De_Beers). The De Beers Group of Companies is an international corporation, operating in 45 countries, and specialises in diamond exploration, diamond mining, diamond retail, diamond trading and industrial diamond manufacturing sectors. The company is currently active in open-pit, large-scale alluvial, coastal and deep sea mining.
  • Internal project name: Tracr
  • Related projects: Everledger  (https://www.everledger.io) – at least they started in the earlier days with a similar value proposition, now expanded to different asset classes
About the author

Dr. Thomas Reinbacher is computer scientist and management consultant and works as independent adviser in Munich and Beijing. If you want to work with me or have more information on that particular use case,  please find me on http://dr-reinbacher.com/

Disclaimer: This Blockchain use case analysis on tracking diamonds is an outside-in analysis, provided without warranty or any claim for completeness. All information presented herein 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.