Application of Blockchain in the Automotive Industry

When we think of the word “blockchain”, the first thing that usually comes to mind is Bitcoin and very rarely cars. But despite being most often associated with cryptocurrencies, the blockchain technology can, in fact, find implementation in a variety of other spheres and can just as successfully be used in the automotive industry, as well.

What is Blockchain?

To put it into simple words, blockchain is a type of database, a system of recording and storing data securely. The records, holding a certain amount of information, are called blocks and are sequentially chained together. This whole database is being stored not in a single computer, but among a system of computers, with each participant in this system having a copy of the blockchain. Therefore, if data in a block was to be tampered with, this would immediately become evident, as it would no longer match the copies of the original data existing in the rest of the computer network. What’s more, a new information input into the database needs to be first validated by the whole network, after which it is added to a block and the block is added to the chain.


Credit: PwC

What all of this means is that the blockchain technology ensures security, decentralization, traceability of records, and transparency, which many sectors can benefit from.

Implementation of Blockchain Technology in the Automotive Industry

We now have an idea of how blockchain works, but how can it be applied in the automotive industry? The automotive industry is complex and vastly changing, with companies constantly innovating and optimizing their processes, products, and services in their strive to keep up with regulations and to offer superior solutions to final customers and other businesses. And blockchain can actually be the base on which a number of these solutions are being developed.

Supply Chain Management

Supply chains, just as the automotive industry itself, are complicated, multilayered, and involve a large number of parties. This poses a variety of challenges to both suppliers and buyers, ranging from unethical sourcing of raw materials and counterfeit parts entering the supply chain to components going missing or being damaged along the way.

All above-mentioned issues can be overcome by implementing the blockchain technology into the supply chain management. There is a massive amount of data that needs to be managed, regarding every step of the car manufacturing process - from the origin of raw materials, through them being made into car parts and then assembled into vehicles, to the vehicles reaching final consumers. By collecting and storing all data using blockchain, this data becomes easily handled and tracked down and impossible to be interfered with, eliminating or at least minimizing the risk of the current common problems occurring.

Autonomous Vehicles

Another area that the blockchain technology can be beneficial for is in autonomous vehicles. AVs have been under development by a number of companies for over a decade now and are only becoming more advanced, taking us closer to the time when cars will be able to drive us, without the driver doing anything apart from a location input. The ways blockchain can be used in self-driving cars are the following - to provide a security system, protecting AVs from hacking attacks, to collect and store infrastructure and localization data in a way other AVs can access it, as well, or generally to enable AVs to safely “communicate” with one another.

Car Sharing

Shared vehicle ownership is nowadays a growing trend for a reason, as it offers numerous benefits - reduction in traffic, in emissions, in road wear and tear, and in the need for parking spaces to name just a few.

A blockchain-based car sharing system eliminates some concerns that people might have regarding data privacy and security when using the service. Thanks to the way it operates, the blockchain technology ensures that each process, such as payment transactions and storing users’ personal data, is safe and secure. The result is car sharing becoming more reliable and thus increasingly popular.

Blockchain is a revolutionary technology that, even though initially known for being used in cryptocurrencies, offers innovation possibilities to countless other areas of business and everyday life. It holds the potential to alter how the automotive industry conventionally works, as well, and to make its activities and processes more convenient and, most importantly, reliable and secure. Supply chain management, autonomous vehicles, and car sharing services, that we mentioned here, are just a few of all the areas to benefit from the technology, and we are yet to see how far it can be taken in the future.


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