Global automakers are rushing to adopt blockchain technology to prepare for the future mobility market.
The automotive blockchain market is expected to grow at an average annual rate of 65.80% starting in 2018 to reach US$1.57 billion in 2026, according to a report released by market researcher BIS Research on Nov. 14.
This forecast was made based on a financial analysis of major projects in the blockchain market including Etherium and Ripple.
The report said blockchain technology would significantly benefit the automobile market as it enhances transparency, reliability, security, and immutability in data exchange.
In fact, blockchain technology ensures transactions among individuals without an intermediary controlling the central server. The entire process of creating, modifying, and trading data is distributed and stored in a network.
When a blockchain is applied to a used car, its entire history including its shipment, accident and repair records is stored in the blockchain so that anyone can see them. This means that information asymmetry can be easily resolved.
Specifically, when a new car is sold, a block is created at that moment. If there is any change in the car, its manufacturer, insurer, maintenance service provider and regulatory authorities among others will create a block with new data. These network participants will connect this block to the first block with a chain after mutual verification.
In the event of an accident, the car’s repair histories of the maintenance company are automatically shared with the car’s manufacturer, insurer, and regulatory authorities while creating a new block. After that, even if the owner of the car asks the maintenance company to erase the maintenance record, it is impossible to do that as the record was created as a block which was connected through a chain.
These advantages have led French automaker Renault to apply the blockchain platform VeChain to its management system.
Toyota of Japan built a collaborative system with MIT Media Lab through the Toyota Research Center under its North American corporation and is conducting research on utilizing blockchain technology to develop autonomous vehicles through the collaborative system. In Korea, Seoul City is studying the application of blockchain technology to the used car market. Its goal is to build a vehicle history system based on blockchain technology.