Blockchain, a system which allows digital transactions to be conducted without a third party intermediary, is best known for the role it plays in Bitcoin. The famous digital currency was invented in 2008 by an anonymous genius going by the pseudonym of Satoshi Nakamoto, only two months after the collapse of Lehman Brothers. But Bitcoin is only one of about seven hundred applications – some of which in the mobility industry – that use the blockchain system today. Blockchain is to Bitcoin what the Internet is to emails if you will, and it is described by many as the biggest technological invention since the internet.
It’s really not that complicated
The blockchain is a ledger, that is, a collection of transactions between people. These peer-to-peer transactions are not necessarily monetary, they can also be an exchange of goods, of information, of shares etc. It is decentralised and distributed, which means that the record of the transactions is not kept solely on one computer but shared by a network of computers across the world. Up to now, all traditional databases – banks, governments, accountants etc. – were centralised. Who owns these computers? They’re called miners, and anyone who wishes to become one can after a few clicks and downloads.
Transactions are stowed in an encrypted block, available to all miners. They are in competition to be the first to solve the complex mathematical problem safeguarding the block, in exchange for a small fee. Once the code has been decrypted by a miner, the others check that the right solution has been found and that all the transactions in the block are valid. If more than 50% of the computers validate everything, then the block is added to the chain. A new block, with an individual ID, is created every ten minutes and contains all the transactions which have taken place in this time-lapse. Hence the name « blockchain », a chain of blocks. Blocks are thus piled up chronologically, keeping track of every transaction that has ever taken place in the history of the blockchain. The chain is continually updated so that every miner has the exact same copy of the register.
Just so we’re clear, there are no actual geeks spending their days behind a screen to keep the blockchain going, they install softwares which do the work independently for them.
The use of cryptography ensures records can’t be counterfeited or changed by anyone. Should someone try to hack a particular block, they’d have to hack all the blocks above it, which could be millions, simultaneously, in order to reach it. The system is safer than safe. Note that a blockchain network can be private, and thus restricted to authorised members, or public and open to everyone.
Just a trend or the real deal?
Here are a few key facts which will give you a sense of the potential of blockchain technology:
DLT = distributed ledger technology
Source: World Economic Forum
- A recent survey entitled « Building trust in government », conducted by IBM’s Institute for Business Value, spanned 200 government leaders from 16 countries, and revealed that 90% of government organisations plan to invest in blockchain technology by 2018.
- It can be applied to basically any field, urban mobility included.
While a wide-spread adoption of blockchain technology still faces many challenges, its advantages are undeniable. I would have done it myself, but Deloitte did such a good job of summing up the 9 benefits, that I decided to borrow their words:
- Disintermediation & trustless exchange: two parties are able to make an exchange without the oversight or intermediation of a third party, strongly reducing or even eliminating counterparty risk.
- Empowered users: users are in control of all their information and transactions.
- High quality data: blockchain data is complete, consistent, timely, accurate, and widely available.
- Durability, reliability, and longevity: due to the decentralized networks, blockchain does not have a central point of failure and is better able to withstand malicious attacks.
- Process integrity: users can trust that transactions will be executed exactly as the protocol commands removing the need for a trusted third party.
- Transparency and immutability: changes to public blockchains are publicly viewable by all parties creating transparency, and all transactions are immutable, meaning they cannot be altered or deleted.
- Ecosystem simplification: with all transactions being added to a single public ledger, it reduces the clutter and complications of multiple ledgers.
- Faster transactions: interbank transactions can potentially take days for clearing and final settlement, especially outside of working hours. Blockchain transactions can reduce transaction times to minutes and are processed 24/7.
- Lower transaction costs: by eliminating third party intermediaries and overhead costs for exchanging assets, blockchains have the potential to greatly reduce transaction fees.
Let’s jump to a near future in which blockchain technology has been fully integrated into our daily transportation.
Everyday, you use a car-sharing service to go to work. It’s cheaper than having your own car, especially since third party intermediaries, and thus transaction surcharges, have been removed from the game thanks to the use of blockchain. Your personal commute information, such as what time you leave home or what radio you like to listen to, is stored in the database so that you don’t have to worry about a thing in the morning. When you enter the highway, the toll is paid automatically thanks to a cryptocurrency transaction from your digital wallet to the toll company. In fact, any mobility service can now be purchased through smart contracts running on blockchain, thanks to companies like Oaken.
Most cars are now obviously electric thanks to a combination of improved battery efficiency, reduced total cost of ownership and political measures. Your neighbour has his own car – he finds it more practical with three kids – and has installed a charging station in front of his house. It used to spend most of the day sitting there unused, but that was before various blockchain services started popping up. Like eMotorWerks that lets drivers pay each other for the use of their home chargers.
Last week, when you ran into him while taking out the trash, your neighbour explained that he spends about $1,000 on charging each year, and that the revenue from billing people $3 to $5 per hour usually zeroed that out. But he didn’t do it just for the money. He’s had the charging station for some time now, and his other motivations when installing it were to improve local air quality and help fellow drivers tackle range anxiety. A cool guy your neighbour.
Systems like these helped solve the lack of public charging points by making private points “public”, and by encouraging EV drivers to install their own station as they were now able to make money out of it. More charging points meant more people inclined to buy an electric vehicle, thus creating a virtuous circle.
This system may not last much longer, seeing as EV range has greatly improved and authorities have installed more and more public chargers, but it was a great solution to the issue at hand up to now.
More and more cars are now autonomous, and blockchain really helped people accept what seemed, until recently, like a futuristic means of transport. A few years back, companies like Toyota initiated research to pool the data captured by the many onboard sensors of autonomous vehicles during their test trips. I believe it was in 2017. With the help of MIT’s Media Lab, and other companies working in the broad blockchain field, they made it easier for companies and communities to have access to and analyse these huge amounts of data. Congestion, topography and social norms differ from one place to another. Compiling data from different areas thus allowed to teach vehicles not to mistake one thing for another, or that you can’t turn right on a red light in Europe for instance. Using blockchain also enabled to share the data efficiently and securely, therefore ensuring trust among users and manufacturers. One of the many fears at the dawn of self-driving vehicles was indeed that the artificial intelligence could be hacked, which is close-to-impossible with a blockchain system.
I recall Chris Ballinger, director of mobility services and CFO at Toyota’s Research Institute, had said this at the time:
“Hundreds of billions of miles of human driving data may be needed to develop safe and reliable autonomous vehicles. Blockchains and distributed ledgers may enable pooling data from vehicle owners, fleet managers, and manufacturers to shorten the time for reaching this goal, thereby bringing forward the safety, efficiency and convenience benefits of autonomous driving technology.”
Another field blockchain has revamped is insurance. Thanks to the increasing number of vehicle sensors and onboard devices, usage-based insurance has become widespread. Companies like Gem, a Los Angeles-based blockchain application developer, collects driving data and stores it in a blockchain available to the driver’s insurance company. This increased transparency allows the company to reduce fraud and to reward drivers who drive safely.
Back to the present
If you’re curious to discover more futuristic mobility scenarios, subscribe to our newsletter! Next week we’ll be talking about the end of fuel and diesel cars. And don’t miss our annual October event in Paris: there will be over 100 speakers presenting and debating on various subjects concerning, what we have dubbed, « ADESA » (Active Mobility, Data Analytics, Electric Vehicles, Shared Mobility, and Autonomous Vehicles).
Let’s get our cities moving!