Connected Vehicles and Blockchain in the Automotive Industry

Connected vehicles are readily available in greater numbers than you might think. From cars and trucks on our roads and trams, subways, and trains on our rails to ships in our oceans and airplanes in our skies, connected vehicles are all around. SpaceX launches its Dragon and Dragon Crew into space with a connected vehicle, heading straight to the International Space Station. Though most would simply call it a badass rocket.

All these human made machines are all connected to software, hardware, monitoring technologies, sensors, safety and security solutions, machine learning, and so much more. It all started in 1996 with General Motors their initiative with OnStar to bring emergency responders to accidents quickly through cellular telephone calls. For the last couple of years, the automobile industry started to explore a variety of blockchain use cases, of which some with great success.

To Blockchain or Not To Blockchain, Let’s be Honest

As our Founder and Architect Joe Roets has said before, a lot of the coolest innovations out there don’t necessarily require a blockchain. So if you were already asking yourself ‘what does blockchain have to do with connected vehicles’ or ‘where should we add blockchain based technology to our automotive industry solutions’, you’re asking the right questions. We’ll get to the blockchain side of things shortly, promised.

What is connected vehicle technology?

Before we dive deeper into connected vehicle technology, let’s be aware of the differences between connected and automated vehicles. Though eventually, every car will be both connected and partially or fully autonomous.

Connected vehicles

Connected vehicles communicate with internal and external software, sensors, IoT devices, applications, services, and technologies through WLAN, Bluetooth, 4G/5G, WiFi, etc. This allows maintenance notifications, traffic lights to go green, and downloading new software patches. Connected vehicles can not only recognize their surroundings, but they also communicate directly with it, allowing a smooth ride or traffic flow, or opening your garage doors when you’re in range. Vehicle-to-vehicle (V2V), vehicle-to-pedestrian (V2P), vehicle-to-cloud (V2C), vehicle-to-infrastructure (V2I), vehicle-to-home, vehicle-to-power-grid, and so on. V2X is known to be used for vehicle-to-everything communications.

Automated Vehicles

Automated vehicles can operate partially or fully autonomous, allowing a self driving experience. Automated vehicles mostly use cell technology, ultrasonic sensors, cameras, GPS signal, radar, short range radio, and computers. Well known benefits of automated vehicle technology today include parking assistance, emergency brakes, and adaptive cruise control. Some universities have fully automated food delivery robots riding around campus. Those robots almost always still require human interference at some point. There are especially a lot of videos in circulation showing these robots getting stuck in the snow, smiling towards and thanking pedestrians who save them. Theoretically, technological advancement can get past seasonal and occasional obstructions or situations, allowing vehicles to reach the highest level of self driving autonomy, which is level 5.

Self Driving Cars?

While SpaceX’s Dragon is pretty much self-driving - or rather self-flying - already, automobiles and other connected vehicles are definitely not. Let’s take the automotive industry as an example throughout this article. Tesla and other car manufacturers, or software companies such as Google come a long way. Many of their cars are all connected and communicating with software, not just internally, but also externally with your mobile device, transmission towers, satellites, and so forth.

Billions of Lines of Code

Millions, or in some cases even hundreds of millions of lines of code, all manually written by passionate developers and engineers who care about technology, safety, and driving experience, are giving their everything to enable self driving vehicles in the near future. The software in cars contains more lines of code than the Space Shuttle, an F-35 jet, the average iPhone app, and the Hadron Collider combined.

For the largest part, connected vehicles are still only communicating with cell phone towers and internal software. Not that much (yet) with other (moving or even self-driving) vehicles on the road in their direct environment, or traffic lights even. Thanks to machine learning and other innovative technologies, the software inside of trucks, cars, and other vehicles recognize shapes, signs, and patterns. The complete autonomous self driving experience is still far away, as the details and integrations are more complex than the initial innovation itself.

Software on the Road

Car manufacturers and technology companies in the likes of Tesla, BMW, Ford, Google, and many others are thriving because they create software, not just well designed cars or a search engine. BMW is heavily innovating with blockchain already, or at least they are very vocal in public about their use case explorations. Another car manufacturer, Volvo, is well known for its emergency brake system and collision warnings. They should definitely consider adding blockchain-based proof to that capability for liability reasons at least. But we’re still not getting to the blockchain side of things just yet.

There is a demand for the luxury of Lamborghini, Rolls Royce, Mercedes, Range Rover, Porsche, Cadillac, Aston Martin, and Bentley too, of course. Meanwhile, demand for electric cars is growing rapidly, as well as demand for the software inside of cars. Tesla owners can leave their dog in air-conditioned cars, showing the current temperature on the large screen for any pedestrian worrying about the safety of the dogs. Data, or software perhaps, has been the most valuable resource for a vast majority of companies for years already, and this will only increase more. Car companies don’t care too much about your name or food pictures though, they care about your loyalty to their brand. The smallest details you're not even aware of increase your affinity with a good car, including the sound of closing a car door. If a good car manufacturer can make that a more satisfying experience, they will. Loyalty to the manufacturer increases if they can offer you various things beyond a good looking design and well manufactured vehicle.

Safety perhaps is one of the most important factors apart from functional reasons. Tesla cars already come with the maximum 5-Star Safety Rating, so the only way to increase safety, even more, is software. Beyond safety, the software also improves your driving experience, the entertainment systems you have inside the car, and many other important things. The more connected cars become, the more important consumers will value security and privacy.

How it Helps Drivers

Connectivity already changed all of our lives, and this is no different for drivers of automobiles, flying cars, or electric cars traveling through tunnels developed by Elon Musk’s The Boring Company in Los Angeles, Las Vegas, and other areas in the United States. Autonomous and connected vehicle technology is just getting started. As vehicles become more connected, security, safety, city development, insurance companies, the entertainment industry, will all benefit from it.

Current startups, connectivity platforms, regulators, and established industry players explore use cases all the time. From rewarding drivers for sharing their data privately and securely, to services for producers and distributors of spare parts, insurance companies, as well as fleet management companies. And of course, the supply chain for visibility in the origin of raw resources used to produce car parts.

Our blockchain software can act as the proof and security layer, glueing all these innovations from startups and established companies together for a holistic solution. Finally, this is starting to feel like the transition towards talking blockchain technology you hopefully came here for…

Software will help drivers get from A to B safely, waiting times for traffic lights will reduce, cities will be designed better, the entertainment on board will be similar to what you have in your living room at home, software updates come regularly without the need of buying the latest model, there will be tokenized incentives for car sharing and loyalty, you can trust the transparent usage and maintenance history of any car. Innovation is only limited by the number of developers writing new lines of code, and companies integrating the solutions that are made available to them today.

Overlap in Blockchain Use Cases for the Automotive Industry

There is a lot of overlap between different blockchain use cases for the automotive industry. Currently, most use cases for car connectivity are focused on one or more specific implementations, such as loyalty or supply chain. In the coming years, blockchain technology will be implemented in more holistic approaches, working in synergy with existing technology and software, including machine learning, augmented reality, and artificial intelligence. But also in cohesion with solutions developed by smaller innovative software and hardware companies.

The question is not if blockchain technology should be used in the automotive industry. The question is which blockchain platform is decentralized, hybrid, affordable, interoperable, easy enough to implement, and reliable to be deployed at a massive scale without congestion and unpredictable rising costs for business.

Insurance Premiums

This is somewhat of an ethical conversation too, where blockchain definitely plays a role in terms of protecting one’s privacy. It’s not unlikely that in the near future, insurance companies have access to your driving behavior. Software can prompt you to slow down when speeding, but provably and immutably register that you didn’t slow down at all. Worst case scenario, you caused an accident. Sensors, cameras, and smart devices registered that you were in good health, didn’t fall asleep, and didn’t drink. You just weren’t being careful or wanted to rush to a party instead of the hospital for an emergency situation. This can have a negative influence on your car - or even health - insurance, which potentially could legally refuse to cover your expenses. They have proof by timestamping all of this data on chain. While one sensor perhaps malfunctioned and timestamped inaccurate data on chain, the other evidence is clear from multiple angles. Whether it is video footage, GPS data, and other unaffected sensors, all timestamped on chain.

Responsible Driving Behavior

On the more bright side of the spectrum, there are incentives for responsible driving (or flying) behavior too, lowering the premium you pay to your insurance company for any motorized vehicle or aircraft in use. Both cases require external parties to have access to sensitive data. Beyond ethical questions, there are privacy and security concerns in play too, where blockchain, decentralized identity, and immutable proof again play an important role. Do you share your personal driving information voluntarily, not at all, or is it required by law?

Other examples one could think of include keeping your motorized vehicle clean on a regular basis. Sensors can be covered in mud, dust, and other dirt, which could negatively impact the performance with potentially dangerous consequences. One would want to capture proof of cleanliness on an immutable chain, such a simple thing when you think about it. Drivers should be aware of the various sensors on their vehicle, what the purpose of those sensors is, and why it’s important to keep an eye on them. Additional certificates or courses may be legally required in the future for owners of drivers licenses, as technology advances.

A Black Box to Timestamp All Activity

One of the more obvious overlaps between distributed ledger technology use cases is insurances and accidents involving any motorized vehicle, boat, or airplane. Airlines already have black boxes in all their aircraft, though blockchain is still out of the picture.

Meanwhile, Google and Tesla are having incredible results with self-driving under supervision, but there are still accidents, and sometimes even fatalities. In the automotive industry, there are 5 levels of autonomy. The first level includes tasks such as parking assistance, whereas level 5 is completely autonomous, meaning under any circumstance and condition, the vehicle operates on its own without any human interference. Even in a future world where every vehicle on the road is at level 5, the need for insurance companies and the sad events of accidents involving vehicles and people won’t go away.

Liability and Registration of Data

As more software and liability is added to connected vehicles, it will be important to register all the data in an immutable, decentralized, affordable, secure, and privacy-friendly manner. Artificial intelligence continuously improves with machine learning, to detect the awareness of the driver such as fatigue and distractions. This includes eye tracking, facial gestures, and the recognition of different emotions. Everything is registered, and as a driver, it’s important to have proof you were paying attention and nothing was wrong with your health. Imagine you being the driver of a station wagon, luxurious convertible, or your employee’s truck during a crash. Besides hopefully still being in good health, you’d also like to be assured any and all data captured is not tampered with, even if the data from a sensor is inaccurate.

Decentralized Black Box Timestamping

A decentralized black box timestamping everything on Dragonchain that is happening inside and outside the vehicle would be radically valuable. If in the very worst case a hacker managed to attack the software or system used by your connected car and took over your steering wheel, you’d want to have proof that this happened. The same goes for malfunctioning systems, sensors, or connectivity beyond your control, potentially leaving a car unresponsive to obstacles. Even if a traffic light gives you a green light, you’d want to have indisputable evidence of this event with an immutable timestamp nobody can alter, just in case.

Trillions of Transactions

We’re talking about trillions of transactions every day on a global scale, so using a fully public blockchain such as Bitcoin and Ethereum is simply too expensive and would congest the network before seeing the light of day. On the other hand, using a fully private or private consortium blockchain system that can’t interoperate with additional external systems, payment providers, third parties, or other blockchains isn’t flexible enough. We see it throughout various industries that in the end a hybrid blockchain solution like Dragonchain is highly preferred.

The architectural scaling of systems for independent companies, very affordable immediately usable transactions, interoperability between systems and other blockchains through Interchain, mixed with Factor - our decentralized identity solution for not only humans but also any device and sensor - is a powerful and unmatched combination of innovations. Beyond that, every single transaction on Dragonchain is Interchained to public networks such as Bitcoin and Ethereum with no added costs to a business. This is important to mention because no other private blockchain system can offer this much transparency and security when necessary.

Selective Public Exposure

This public timestamp can be just the hash of a transaction, for increased Security Value, without exposing any sensitive information. Or, it can selectively expose some information with driver consent. For example, real-time location data, which could be used by external parties and governments to improve city infrastructures, or by map providers in the likes of Google to improve estimated time arrivals. We’ll dive deeper into smart cities and city development further down in this article. It’s another example of how much overlap there is between all the different use cases for connected vehicles where distributed ledger technology plays an important role. This is an important piece to realize for any company or startup looking at these solutions, as much of the technology can be largely reused in different types of applications inside and outside of the car industry.

Loyalty, Rewards, Payments and Tokens

We will get to the more fun side of loyalty, rewards, payments, and tokenization in connected vehicles soon. There are endless opportunities to empower drivers with a better driving experience in this area. First, let’s look at a more serious use case we have to consider. One that has overlap with… Yes, you may have guessed it right, insurance, accidents, and liability.

Hit-and-Run Accidents

Unfortunately, even in today's world, there are still far too many people driving away after an accident, leaving one or more victims to death without calling emergency responders. With connected vehicles and decentralized identities, on impact, the decentralized black box already registered which vehicle was involved with the accident. Including the person holding the steering wheel at that very moment. Even if someone would decide to drive off, police investigators and insurance companies will always know the full details of the suspect.

If you are running in a park, and a scooter hits you, your smartphone or smartwatch can act as your personal black box, registering the identity of the scooter as well as the identity of the driver. All of this can optionally be sent to the cloud in real-time, so even destroying your smartphone would be useless for the scooter driver. This can be achieved in ways similar to how states and governments are trying to contain Covid-19 with Android and iPhone applications, using a combination of for example Bluetooth for short range identifiers, and decentralized technology for best privacy practices.

Frictionless Claims and Payments

Since theoretically, we are already using blockchain and decentralized identity, a lot of the hassle with insurance companies, investigations, and payments that come with accidents, can be partially or fully automated. It removes a lot of friction and repeatable tasks that come with filling out paperwork or digital forms.

The more fun use cases are heavily attached to loyalty and better - or maybe smarter - driving experiences. Collect contactless payments automatically in fast food drive-thrus, right after your order is confirmed. Or pay the highway toll gate fees while cruising through the landscapes of France, Switzerland, and other countries in Europe. Without ever having the need to stop the vehicle or open a window. The toll gate collects while you drive by. Maybe you’re part of a new revolutionary loyalty program from BMW or Ford, allowing you to pay toll gate fees with tokenized loyalty points you earned through their program. It’s not just the hotel industry or supermarket industry reaping the benefits of reinvented loyalty programs. The automotive industry can unlock business models similar to how Google and Apple unlocked new business models with their app stores.

Cruising The World

When on the road on Route 66, in your beautiful and classic Volkswagen van, with kids and family in the back, we need entertainment. Tesla is leading the way currently when it comes to infotainment systems in their electric vehicles, but others continue to innovate as well. It might be hard to imagine today, but holographic augmented reality infotainment is here to stay. The useful benefits are navigation systems directly displayed in front of you, allowing you to keep your eyes on the road. Or notifications and alerts in regards to safety, software, and environmental warnings.

Infotainment and Exclusivity

Every car will be filled with WiFi enabled entertainment and audio systems, together with all the applications we have available on our smartphones today. From popular gaming platforms in the likes of Fortnite, Overwatch, and APEX, to your favorite streaming platforms such as Netflix, Amazon Prime, and Disney+. Some will be exclusively available to certain car brands only for customer retention, similar to how Spotify signed an exclusive deal with popular podcaster Joe Rogan and former first lady Michelle Obama. Elon Musk already tried to get an exclusive deal with Nintendo as early as 2018, for their Mario Kart franchise. Which Nintendo declined...Now just three days ago at the time of writing this article, Tesla is hiring more engineers for the development of an even more diverse set of in-car video games

Sensitive Personal and Business Data, Security, Privacy

Now we established a decent understanding of the hard to grasp the amount of valuable and sensitive data that is being collected in so many different areas, the industry has an obligation to keep sensitive information private and secure. And to restrict access by external users and devices without permission. Theoretically, an individual should have the right to consent before sharing any personal data with any external party, including the car manufacturer itself. We’re not just talking about location data or which games your children play.

We’re talking about video and image footage of yourself inside your own - or shared and rented - car. Every button you press, every function you use, the patterns of your travel behavior and whereabouts. It’s a honey pot for hackers, a honey pot for people who want to cause harm, a honey pot for advertisers, a honey pot for governments, a honey pot for the car manufacturer itself. But it’s your personal data. Most drivers would allow Tesla to improve its software by sharing their data. It might be a different story when it comes to a controlling government that simply wants to track the movements of its citizens.

Semiconductor Companies, Startups and Platforms

Semiconductor companies, startups, and platforms also play an important role. If anything, blockchain brings all sorts of disciplines together, even from competing companies, to create the strongest solutions. One of the top 10 largest semiconductor firms in the world, NXP which is based in The Netherlands, is exploring the power of blockchain in the area of RFID and NFC technology. They work on incredibly powerful innovations combining different components and technologies in an all-in-one solution. NFC is already built into most smartphones, while at the same time RFID and supply chain technology is what they are in particular really good at already. Embedded tags sensing environment variables are directly timestamped into the blockchain, such as location and weather data. This has a huge overlap with the supply chain which we will get into very shortly. More importantly, NXP understands that the data on a blockchain is only as good as the data entered into it. Throughout the Internet of Things (IoT) ecosystem, they work on end-to-end automation and protection, from individual sensors to smart devices and gateways.

“When used with a blockchain solution, these technologies can authenticate assets, deploy and protect the credentials used to authenticate blockchain participants, enable secure processing and device management at IoT endpoints, and can provision secure secrets for use with any embedded hardware that connects to the blockchain”, - Mahdi Mekic, NXP.

Capture The Good and The Bad

Even though at Dragonchain we wholeheartedly agree the data is only as good as what is entered into the system, one would still want to capture all data coming from it on chain. If one wants to prove data is accurate, one would also want to prove data was inaccurate, but at least not tampered with by attackers. Or use the data to improve machine learning and complex algorithms. It is very important to note that vehicles, or sensors for that matter, might trigger actions on data, even if the data is inaccurate or false. Any pattern or abnormal error recognized and applied could reduce critical and non critical actions automatically taken by vehicles. There are endless angles on security - just like all other use cases mentioned in this article - to consider and research in the automotive industry. Research and development should accelerate, as there is an enormous amount of value to be unlocked. All these advanced sensor technologies, and the data coming from it, will be collected and handled in many different ways, and by many different technologies including machine learning. Blockchain itself is simply a part of the final solution.

Car Sharing

One interesting benefit coming with more autonomous vehicles is the growth of car sharing services. The sharing of any motorized vehicle, car pooling, ride sharing, bike sharing, scooter sharing... There are many platforms already enabling consumers to share their car and earn passive income from it, allowing them to cover (a part of) their electric bills, gas, benzine, or vehicle maintenance.

Mobility as a Service will allow passengers to take cars on the go, just like you can grab electric scooters in many cities around the world today. Various things need to be considered, including liability of passengers, the liability of the car sharing service provider, maintenance of the cars, registration of driver history, and so on. Theoretically, every driver will have their own decentralized identity passport containing all their historical information.

With Factor, only the information necessary to jump in a car on the go will be shared with third parties. For example proof of having a driver's license without needing to share your complete driver’s license every single time. Proof of good driving behavior, proof of eligible credit score, and so forth. Over time more trust is built, your cost to share a car could go down, and risk and liability for both the car owners and the platform providers decreases.

Proof of Maintenance and Vehicle History

Proof of mileage is perhaps the most obvious piece that would benefit anyone looking to purchase a used car on the market. It’s radically valuable to have Proof of Maintenance. We can have automated software updates and automated vehicle maintenance, but the indisputable proof is just as important. Which car parts have been replaced over the years? Which sensors malfunction currently and need replacement if one decides to purchase a vehicle? Was maintenance always done at the appropriate and official car dealer? How many unique individuals have driven this vehicle throughout its entire existence? Was this vehicle ever involved in an accident, and what was the damage? Has this car ever been stolen, or do you even have full ownership rights to this car?

Again, there is a big overlap between proof of maintenance, insurance use cases, decentralized identity use cases, and passport use cases. Many of these use cases will come to fruition over the course of several years, and consolidate as the value chain brings more parties together.

Traceability, The Origin of Raw Resources, Supply Chain, Manufacturing Process

The supply chain is another broad topic that can be improved in so many angles. Just looking at the 3D printing of materials and car parts alone comes with so much potential. 3D printing companies and manufacturers of car parts should want to have proof of ‘ingredients’ making up any 3D printed part. Much like we want to know which ingredients and additives are in the food & beverages we consume. We can find additive manufacturing in the automotive industry too, where a 3D printer builds parts and pieces layer by layer by continuously adding materials. As a consumer, we want to know the raw materials and resources that have been used to build a car. Where do these resources come from exactly, and was there any child labor involved? To refer back to the semiconductor industry again, forced labor and human trafficking is a problem in that sector which NXP recognizes and tackles as much as possible.

Blockchain is particularly interesting for social and human good, too. As BMW states on their website: “’Some raw materials like cobalt or wolframite come from sources that are difficult to monitor, like mines in developing countries”. One brilliant example of how they tackle this in their blockchain pilots is using a rather brilliant method to make the path of raw minerals more traceable, and identify if batches have been replaced or mixed: ‘Innovative techniques like chemical tracers. These are chemical additives that are added to a batch of material to make it individually identifiable and machine-readable with a scanner’

With blockchain, transparency can be achieved throughout the entire complexity of the automotive supply chain. From the cobalt or wolframite to the hardware, software, firmware distributors, dealers, regulatory agencies, insurance companies, and more.

Tracking Intellectual Property

Beyond respecting human rights, and the growing need to know we are purchasing fair products from respectable companies, we also take into consideration the protection of intellectual property. It’s a very complex process and manufacturers spend a lot of money on designing the digital files. Like any other document or image, source files for 3D materials can end up in the hands of competitors, or in the hands of consumers with their own 3D printers at home. It’s somewhat of a problem in some countries that there are files available on the internet which can be used to print guns at home.

For a car manufacturer, 3D printing company, semiconductor companies, and supply chain software however, these files allow for better tracking and smarter digital supply chain networks powered by blockchain technology. ‘Using blockchain to support these evolving infrastructures can eliminate security vulnerabilities, protect intellectual property from theft, and streamline project management, ultimately helping the 3D printing and additive manufacturing sectors to grow and scale’, as stated by The Genius Works.

City Development and Smart Cities

Let’s pretend we have all of these different use cases and solutions implemented, and the entire world is truly connected in a safe and decentralized manner. What does this mean for city development and smart cities such as Dubai and Singapore? Or the city you reside in currently, whether big or small? Big data is already monitored all around the world to improve traffic flows or to prioritize where to build a new train station, or which bus lines to connect with certain cities and towns. The more data, the better actions city architects and governments could take. Hopefully reducing the waste of money on very ineffective and expensive infrastructure investments paid for by taxpayers.

It should be rewarding for drivers to share their data with external parties, and micropayments with loyalty-based tokens are a good way to do this. In return, citizens get a more streamlined and better functioning city. Think of Improved safety on crossroads by designing roads better or by improving warning signs. Or the automated detection of hotspots where accidents occur and quicker action to resolve this. Real-time traffic flows and visualization dashboards, secure access to API data feeds, environmental data for federal, state, and governments to tackle climate change better, parking availability, responsive traffic lights, and better peak management.

The Power of Factor, Proof and Anti-Fraud Systems

On a recent podcast episode of Super Happy Dragon Lucky, a Dragonchain community member asked Joe the following question. If we look at the automotive industry and connected vehicles. What is one powerful advantage of using Dragonchain’s blockchain solutions all together with startups and industry giants their latest innovations? Let’s say decentralized identity Factor technology combined with your Proof Systems and anti-fraud and compliance solutions, registering any and all internal and external, software, connectivity data, and activity?

Joe Roets: The great thing for that would be with Factor, you can get really, really cool stuff. Anything that would have some legal liability, for example, the acceptance of terms, you would know that it really was the leaseholder of this vehicle that accepted the terms. In that case, Tesla is not going to be sued. That's a huge one.

The other one would be, again, for liability, it's a really easy case to make. You want a shield against the attorney. Let's say you’re Tesla, or some notably advanced auto firm, who is building this incredible stuff. The beauty is you would have the ability to have a black box in every car, so you would know the exact system state. They have some of that already. But the problem is that you can have data quality issues. Especially if you're in a wreck, especially for anything out of the ordinary going on. This would at least be able to verify the data we have, and that we can prove it. We know that it's legit. We know that we didn't just have something go bad with the drive or whatever else.

On top of the fact it can be connected, the outgoing data can be live going out. There are all types of interesting products that can be built on top of the black box, based upon that. You imagine when everything is a little bit smarter, and the traffic lights can interact with cars, not just operate on a timer, they would at least be able to connect to some of the other cars that are out there today. A lot of it isn't absolutely blockchain. The proof is. The proof of these connections is where blockchain is crucial.