Blockchain: The driverless car that picks up the bill
If human drivers are to be completely replaced, autonomous vehicles will need new digital technology such as blockchain.
It’s time to say goodbye. The automaker of the 20th century – once regarded as a daring engineer who could confidently push vehicles to their physical limit – is now a discontinued model. Recently they have become more like pilots, supervising a host of assistants. Either way, it has always been man that has controlled (ever more powerful) machines. However, these are now fading myths of an analogue age. Developers have long been working on an automated world, where routine tasks can be performed without human supervision. It’s time for new thinking in many fields.
Whether in autonomous mobility services, logistics or production, the focus is the same: the aim is to develop a machine-to-machine economy in which robots are not only able to take over physical activities, but also communicate with each other and conclude binding contracts. To be truly autonomous, vehicles need digital agents that can independently perform tasks and approve payments – completely taking these responsibilities away from the driver. This includes paying for parking, road tariffs or battery recharging.
A heterogenous paying landscape
At present, a wide range of billing systems, credit cards, parking cards and fuel cards are still required to navigate the extremely heterogeneous mobility landscape. What’s more, trustworthy identities are necessary in order to guarantee the validity of these transactions. When paying for something online, for example, a credit card helps little if you do not trust the provider of a good or service. This form of decentralized organization is not always secure enough. In addition, the process is designed for human actors: the customer must accept the displayed price by pressing a button – and remain the acting and legally responsible subject.
In a machine-to-machine economy, such human actors are no longer necessary; provided the business rules are clearly defined and the identities of trading partners cannot be manipulated. To date, it has mainly been information that has been exchanged on the internet; with criminal data theft presenting one of the biggest problems. But there is another potential security breach: the identification of actors involved also needs urgent improvement. Blogs written by machines rather than humans have led to public debates regarding the reliability of authors. Business participants must therefore agree on cross-industry security standards before values or critical data can be securely transmitted.
So far, distributed-ledger technologies, such as blockchains, have been considered unhackable. This is in fact the central promise: a technology without middlemen that can organize data security in the swarm. Instead of storing data in a central database that is vulnerable to attacks, information is replicated on thousands of servers. Every record, whether a transfer, a contract or technical parameters, becomes inseparable from previous transactions. These chained together data blocks (hence the name blockchain) theoretically expose any third-party manipulation automatically. As each participant has an original of the digital cash book, so to speak, values such as money, shares, patents or property rights can be clearly assigned to an owner and securely transferred.
"The use of blockchain technology depends largely on the relationship of the participants and less on the technology of a use case," says Kurt Lehmann, Corporate Technology Officer at Continental: "Conventional systems solve the trust issue by employing a reliable third party, making these systems unnecessarily complex. A blockchain offers a more elegant and efficient way to implement the actual use case."
Bitcoin: a trustworthy alternative?
We are all familiar with trusted third parties such as notaries, banks or credit card companies, whose services, not to mention trustworthiness, can be paid for in the form of transaction fees. When it comes to micropayments or nanopayments, however, these fees can be higher than the actual usage fee. Another trustworthy entity is a central bank that can control its currency. But counterfeit security also plays an important role here, while financial markets or political influences are always subject to certain new rules and restrictions. Digital currencies such as Bitcoin have emerged as an alternative means of payment – even if the recent extreme price fluctuations weren’t great for boosting confidence in the new technology.
Blockchain-based mobility platform Car eWallet, introduced by German firm ZF Friedrichshafen AG in January 2017, can do without a new currency. It significantly simplifies technical services, digital commerce and cashless payment between manufacturers, suppliers, service providers and customers. "We are building a B2B marketplace where we connect service providers with customers. This marketplace has to be neutral, otherwise it will not be accepted," says Alexander Graf co-inventor and manager of Car eWallet.
As the business partners on this B2B platform know each other, they can work with payment terms and schedules. In this standard post-pay procedure, the delivered goods and services are added up and invoiced after 60 days. Distributed ledger technologies work well as every partner has a piece of the system, thus making it transparent. "It is clear who is doing business with each other. This is also ideal from a security perspective," says Graf.
The big promise: unhackable transactions
"Blockchain uses the latest encryption and digital signature practices, based on asymmetric cryptography, which are currently considered unbreakable," says Kurt Lehmann. "A technological threat will only emerge once quantum computers have the ability to calculate the cryptographic key in adequate time." Continental researchers are therefore currently working on so-called post-quantum cryptography procedures. Blockchain concepts that are less processing-intensive than Bitcoin for example are also a top priority.
For now, it’s a matter of first making the new technology known in the traditional automotive sector. At the beginning of May, several OEMs, suppliers and other players launched the Mobility Open Blockchain Initiative (MOBI). The initiative will initially develop uniform international standards, as well as a network for new mobility services in which industrial giants can connect with start-ups.
New business models: who will be the winner?
Driven by new shared-mobility providers and a large number of start-ups from the financial sector (so-called fintech start-ups), automakers will have to become active. "We can certainly imagine managing topics such as payments or contracts (smart contracts), logbooks or repair checkbooks with the help of blockchains," says a Daimler spokesman. BMW is interested in identifying each vehicle with a VIN (vehicle identification number) and providing individual maintenance histories using blockchains. With all the technical parameters, services such as predictive maintenance can be developed into digital business models.
If this logic is broken down to the level of the individual vehicle parts, the required processing capacity becomes even greater. Audi experts are examining how far linked-database technology can be used to map and document international logistics processes. Theoretically, the entire flow of parts during production could be tracked, including purchasing and quality control. It would then be possible to determine whether original parts remain in use throughout the service life of a vehicle. Even classic automotive suppliers want to combine their detailed vehicle knowledge with new data-based business models. The advantage is higher margins – although in the development of such business models, Silicon Valley has so far been more creative than German engineers.