How Blockchain Will Revolutionize the Cars of the Future


The cars of the future have long passed from our imaginations to the real world. The high-profile successes and failures have created a polarized discussion around the industry’s prospects, but no conclusions have emerged.

As more automakers contemplate the direction of the industry, there are still too many unanswered questions. For one thing, companies continue to focus exclusively on their cars, and not the ecosystem in which they drive. Still, the emergence of blockchain as a viable way to seamlessly store and communicate data is a promising addition to the equation.

The key ingredient in the successful deployment of autonomous vehicles is creating environments that foster two-way communication between cars and their supporting infrastructure. While the Internet of Things (IoT) and smart cities have taken this in a positive direction, blockchain technology offers a significant upgrade that could revolutionize the future of driving.

Key takeaways

  • For autonomous cars to enter the mainstream, they must continue to improve their ability to collect and communicate data from the environment around them.
  • To stay safe, self-driving cars need to be constantly aware of road conditions, their own condition, and the condition of other cars.
  • By using blockchain’s decentralized ledger, driverless cars could access key traffic data almost simultaneously and with greater precision.
  • Enabled by blockchain technology, smart contracts could simplify many aspects of driving, such as paying for car insurance, repairs, and tolls.

Connecting cars and cities

One of the biggest barriers to self-driving cars entering the mainstream is the fact that they are not yet sufficiently connected to the environment around them. While cars can perceive millions of data points per second, they must view them in isolation and without context.

The use of IoT devices improves this functionality significantly, as they can collect and communicate crucial contextual data to cars to improve their performance. This includes information about road conditions, traffic accidents, and other vehicles on the road that could affect a vehicle’s drivability.

Even so, IoT devices are still subject to the limitations imposed by current technology. Centralization makes data vulnerable and the inability to communicate data quickly between points reduces its usefulness in real-time situations. However, blockchain technology can significantly improve the status quo.

SAE International Drive Automation Levels for On-Highway Vehicles

Source: SAE International

Blockchain advantages

An advantageous benefit that blockchain brings to the table is the ability to spread data more efficiently and quickly. Driverless cars need to be constantly aware of a few key factors: road conditions, their own condition, and the condition of other cars. Traditional IoT makes this process complex due to its communication protocols.

Blockchain’s decentralized ledger means that every node on the network, in this case every car and data point, has access to all data almost simultaneously and with greater precision. Companies are already working to integrate better vehicle tracking and communication to improve overall connectivity. Creating decentralized networks that transfer data more seamlessly to all points is the first step towards building a secure, driverless ecosystem.

In its 2021 automated annual vehicle survey, the American Automobile Association (AAA) found that only 14% of drivers would be confident traveling in a self-driving vehicle.

Put microservices on the Blockchain

Another increasingly popular use case for blockchain technology in driverless cars is enhancing transactions that repeatedly occur between vehicles, as well as between vehicles and the infrastructure around them. It may not seem significant, but it could reduce friction at various points, improve communication, and reduce traffic jams.

One important area where this will likely be employed relates to vehicle-to-vehicle (V2V) microtransactions. In this model, car owners could use tokens, such as Streamr’s DATA token, to pay for the data they need from other cars. This could include weather forecasts, nearby gas prices, congestion data, and more. Vehicles could earn tokens simply by sharing their data or choosing to sell it to advertisers or manufacturers. With this strategy, blockchain creates a closed V2V ecosystem that simultaneously incentivizes and rewards participation.

In terms of vehicle to infrastructure (V2I), blockchain offers cars a significantly optimized payment ecosystem that is designed to simplify many aspects of driving. Instead of having to manually pay for various things (car maintenance, tolls, insurance, and more), blockchain could enable automated payments thanks to smart contracts.

Smart contracts

A brilliant example of an attribute that smart contracts could improve is usage-based insurance (UBI). Instead of paying annual insurance premiums that can vary due to shady factors, drivers could automate paying for their insurance based on usage.

These UBI systems require significant data entry to ensure accurate quotes and premiums for drivers. However, by leveraging public blockchains, insurers could instantly calculate a driver’s premium and simply run pre-existing smart contracts to automate payments.

Another interesting application of blockchain-based microservices for vehicles relates to carpooling. The industry is currently controlled by ride-sharing apps like Uber and Lyft, but there is growing competition emerging from popular ride-sharing services like Google’s Waze, which instead emphasizes car sharing over taxis.

The Toyota Research Institute (TRI) has already advanced in terms of study and planning for the integration of the automotive sector with blockchain. TRI works with several startups to create systems that improve ride sharing through blockchain, possibly even including car sharing for seats and empty trunk space. In April 2021, Toyota purchased “Level 5,” Lyft’s autonomous driving research department.

The bottom line

Blockchain has been showing its disruptive muscles in various industries, but the automotive sector offers immense potential. By changing smaller aspects of the driving experience and improving driver safety on the road, the technology could prove a revolutionary catalyst for a more autonomous experience. As more automakers and infrastructure companies discover new ways to integrate blockchain, consumers will soon witness the transformation of transportation driven by distributed ledger technology (DLT).

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Mark Holland

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