Blockchain in the automotive industry 2018-2023 — Definition and technologies

Toyota, Renault, Daimler, Porsche, as well as IBM, Visa and JP Morgan to name a few are all working on projects that integrate Blockchain technology in the automotive industry.

In the next few weeks, this blog will be dedicated to blockchain technology and its use in the automotive industry.
Part 1 of this mini series will focus on the definition and technologies behind the blockchain.


Blockchain technology is often compared to a public account book, which can be consulted by all. This technology is based on an open source protocol and a cryptographic system. The aim is to eliminate the intermediaries and to arrive at a system of free exchange, free flow of information.
It is a database where everything is decentralized, that is to say the machines communicate with one another without having to go through a central interface; the intervention of a trusted third party is no longer necessary because the Blockchain now occupies this role. It is a reliable and non-falsifiable process: each node or block contains what is called a “hash”, a kind of code that identifies this block and prevents its modification and that acts as a summary of the transaction; a check of the previous blocks must be carried out before continuing. The blocks are written by miners who decrypt the data and confirm the new ones before adding them onto the chain. So there is a multitude of participants and the information is set in stone, it can’t be modified afterwards.



Blockchains can be public, that is to say open to all: everyone can read and write them. Once the transaction is complete, you can not go back. They can also be private (ref 1): in this case, writing requires permission. Transactions are then faster and reversible; the risk of attack by 51% of minors is reduced by the fact that the identity of the miners is known, the data can be better protected because they do not have to be disclosed to the public and the decrease in the number of checks leads to a lower cost.

In short, “’Blockchain technology’ means distributed ledger technology that uses a distributed, decentralized, shared and replicated ledger, which may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless. The data on the ledger is protected with cryptography, is immutable and auditable and provides an uncensored truth” (Arizona House Bill 2417). The advantage of the Blockchains lies in their transparency and the degree of security they provide: the blocks are tracked and, because of this monitoring, there can be no corruption. Decentralization and the existence of multiple copies of these chains eliminate the risk of losing data. However, in the event of an attack by 51% of miners the consequences would be serious: the chain could be corrupted, but such a situation has never occurred.


Smart Contracts

The fact that Blockchains cannot be corrupted is what makes them ideal for contract signing. Indeed, once both parties agree and the block is created, there is no going back, no changing what is said in the contract. If both parties want to update the document, changes will be made to all the copies. Blockgeeks explained that « smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforce those obligations » (ref 2). For example, company A and company B sign a smart contract on the Blockchain. Company A is supposed to deliver auto parts to company B. If company A honors its end of the deal, it will be written in the Blockchain and the payment from company B will be sent. Blockchains and, more precisely, smart contracts automate contract execution processes; they eliminate the need for a middle man and replace this middle man by lines of code.


Distributed ledgers

Blockchains are a type of distributed ledger or decentralized database, meaning « a database held and updated independently by each participant (or node) in a large network […] records are independently constructed and held by every node. That is, every single node on the network processes every transaction, coming to its own conclusions and then voting on those conclusions » (ref 3). The data is thus more secure.

The very technology at the core of the Blockchains is what could make them essiential for the automotive industry.



The full document can be downloaded here for FREE

Blockchain in the automotive industry




Ref 1: Collomb, A. & Sok, K. (mai 2016), Blockchain et autres registres distribués : quel avenir pour les marchés financiers 

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