This technology is still in its infancy and has a long way to go before it is in practice in the industry. For now, here are some predictions and potential applications of the technology in the auto industry.
Depending on how much attention you pay to technology articles in the papers or online, you may have heard of something called blockchain. Most frequently it’s mentioned in association with Bitcoin and other crypto-currencies. While it may sound mysterious, it isn’t—which is good, because blockchain may very well change the industry.
What is Blockchain Technology?
Blockchain technology refers to a decentralized, distributed database on which digital transactions are recorded and confirmed. Information is stored across the world instead of in a single location.
The technology itself was developed for use with cryptocurrencies, such as Bitcoin, to help enable the creation of a decentralized bank. Blockchain is virtually incorruptible and unhackable, and its data is accessible across the globe in real time.
According to IBM, with blockchain “…the transaction record cannot be edited or erased; it can only be appended.”
How Blockchain Tech Could Apply to the Automotive Industry
The automotive industry stands to benefit greatly from blockchain technology in the coming years. Far from being something to be afraid of, blockchain could be used in everything from manufacturing to retail automotive dealerships, from customer payment methods to recall notifications. The reason? All these areas stand to benefit from error-free, undiluted, and verified data.
Arguably the most relevant application for blockchain in automotive is at the manufacturing level. Using it, parts suppliers could fulfill orders based on real-time inventory levels monitored in the blockchain.
Those same suppliers could be paid for orders within minutes or hours instead of a typical multi-week period, alleviating the stress of carrying multi-million-dollar debt loads. Vehicle identification numbers (VIN) could contain source information that identified parts origins for each component, down to the minute of manufacture. Headlights through tailpipe, with blockchain it would be possible to trace every vehicle part and transaction.
When it comes to sales, blockchain technology could mean factory vehicle orders can be whittled down from months to weeks as real-time transactions take place on a decentralized platform.
Finding a customer’s ideal build in national inventory would take just moments.
Financing would be simplified as immediate credit approvals would be possible, and financial institutions could fund car loans within minutes instead of days or weeks.
And as blockchain-based cryptocurrencies are further developed, car shoppers might soon pay with Bitcoin or other crypto funds from their digital wallets.
Aftersales implications are far-reaching also. Renault is already piloting a digitized car maintenance program, using blockchain to accurately record car servicing records.
Other implications include issuing targeted recalls since part manufacturers, lot numbers, and manufacturing dates could be traced to their roots for each component. In the future, a connected car may be able to diagnose its own faults, pre-order the parts, and schedule its repair.
Seamless Blockchain Integration—Just Around the Corner?
The takeaway? While blockchain is still a new technology and has a long way to go before it becomes a mainstream technology; don’t be afraid of blockchain. It promises a future of fewer errors and faster transactions.
The question, then, shouldn’t be “What do we need to do to prevent blockchain from changing the industry.”
You need to be asking yourself, “How soon until it gets here?”
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