iCrowd Newswire – Sep 17, 2020
The key trends that drive the adoption of blockchain technology are enhanced logistics systems, an increase in automation, digital transformation, and financial technology proliferation.
Fast, secure and transparent transactions are the three main reasons for the adoption of Blockchain Technology in various industries. The technology companies along with the banks are investing heavily in research and development activities for recording and verifying financial transactions using blockchain such as using distributed ledger for smart contracts, electronic wallet, crypto token and others. Major technology companies in the U.S. such as Microsoft and IBM are investing heavily in developing blockchain-based applications such as digital ledger, smart contracts, electronic wallet, crypto token and other services.
The increasing automation and digitization in the automotive industry will also increase the use of blockchain for making smart contracts, digital ledger, electronic wallet, crypto token and others. The key trends that drive the adoption of blockchain technology are enhanced logistics systems, an increase in automation, digital transformation, and financial technology proliferation. Blockchain provides key advantages in streamlining the supply chains, eliminating the middlemen, reducing fraud, improving security and reducing the paperwork as every transaction is recorded and audited for later use.
The impact of blockchain on the automotive industry is expected to increase gradually, especially in the medium to long term. Blockchain deployment will be completely dependent on the industry mandating the use of the technology and also on the level of automation companies or industries would like to focus on. Blockchain has the capability to provide a common platform where the complete ecosystem is able to interact.
Blockchain technology is increasingly being piloted in various industries. For instance, in early 2018 Maersk and IBM entered into a partnership to establish a new blockchain platform to serve the shipping industry. This partnership is a direct product of The Linux Foundation’s Hyperledger Fabric, an open source project hosted by The Linux Foundation, wherein more than 180 companies are collaborating to bring industries together using blockchain. By implementing Blockchain technology, the shipping industry would enjoy a reduction in cost and time across various applications such as insurance services, leasing, maintenance, refueling, cargo safety, and freight brokering. This will further enable the industry participants to view and share information with the complete ecosystem in real time.
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The blockchain and its dispersion in the automotive industry are restricted to certain truck market solution providers such as Hyperledger, BigchainDB, Blockchainfirst. These platforms enable recharging, toll collection and vehicle tracking. According to Automo analysis, blockchain based transaction will be approximately 10 to 15% by long term. The industry will witness a number of players entering the market in the medium to long term. The industry will witness partnership with the financial institutions, regulatory establishment and technology consortiums.
IoT stakeholders are evaluating more efficient approaches for blockchain implementation such as distributed implementation architecture which will not have a single point of failure. Every year, the automotive industry is changing the landscape. The convergence of technologies is creating numerous opportunities for the automotive market. Digitization and connectivity will give rise to a huge amount of data, which will further enable various new revenue streams. Blockchain has the potential to improve driver safety and vehicle performance, minimize the development and usage of counterfeit products and make autonomous driving a reality.
Developers have built the Blockchain technology on two platforms, namely data encryption and user-to-user network. These platforms together create a ledger of an important transaction called a digital public ledger. The blockchain system is secure, transparent, open to the public, and decentralized. The information on the blockchain is continuously updated based on the transactions. As data is the new oil, it is very important to keep track of all the data in an effective way. Thus, blockchain has the potential to benefits multiple participants in the complete automotive ecosystem. Blockchain can cater to consumers, insurance companies, used car companies, manufacturers, aftermarket distributors, dealers, and others. In a blockchain, the distributed digital ledger is created by recording events in blocks and further securing them by using the cryptographic technique. Each and every block is linked to some other block, forming a chain.
In the medium to long term, blockchain technology will help track every vehicle sales and vehicle parc by creating a ledger. In addition, it will help keep track of discrete parts from the day the vehicle is bought. The key pointers while tracking the parts will include assembling, manufacturing, malfunction, usage limit, and any previous replacement. It will also provide a preventative maintenance update to the driver. With the advancements in electronics and ICT, it will be possible to extract details for every part of the vehicle. This will further help the customer to check the part performance, and in addition, help him/her to take a better decision about the part replacement and the price involved. Once the part replacement is completed, a digital record will be added to the car. Over a period of time, it will enable better vehicle tracking and further lead to improved vehicle performance and increase the return on investment.
The counterfeit spare parts market is valued at several billion dollars. The growth of the counterfeit market is a major concern for automakers and suppliers. The fake products are brought into the supply chain either via online channels or the grey retail market. This further impacts both the suppliers and automakers. The likelihood of failure for these kinds of parts is early in the life cycle, which further hampers the brand image of automakers. This further increases the maintenance cost and significantly impacts the vehicle value. At present, companies are using hologram labels and QR codes to identify the authentic parts but these can be easily hacked. The real solution to address this challenge is to assign a digital value to each part. This will further reduce the fake parts in the market and increase the automakers’ brand image. The digital value for each part can be assigned with the help of blockchain technology.
Blockchain will also help track the parts back to the manufacturer in case of a parts failure. This will clearly establish the liability and also be transparent to all the parties in the ecosystem. This will also help resolve the disputes much faster and will also help in customer management.
With multiple benefits and applications, blockchain is bound to disrupt the complete ecosystem in the automotive industry.
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Keywords: Blockchain, Supply chain/Value Chain, Automotive, distributed ledger, basic attention token, smart contracts, electronic wallet, crypto token