Cars That Truly Drive Themselves: Blockchain-Enabled AVs

At a few hundred thousand dollars per car to start, AV owners are going to be eager to start monetizing these cars ASAP. As they put their individual car or managed fleet on the road, they are bound to encounter a variety of questions:

How do riders pay for all of these quick trips? How do these cars refuel and recharge? How do vehicle owners / fleet managers think about insurance? And what happens to the proliferation of data AV will generate?

In my previous series “The three companies poised to deploy Level 4 AVs first: a 4-part series”, I explored the integrated and modular approaches to AV currently, using Tesla and Waymo as the benchmarks. Yet one of the most important keys to commercializing AVs is answering these questions above. Without a solution, these cars will never be ROI positive ventures, forever stuck in the R&D phase.

Cue blockchain and digital assets.

A blockchain is a distributed ledger for transactions across a network of nodes, which can be either private or public. Ethereum is a specific type of blockchain that enables easier application development and smart contracts using the cryptocurrency Ether. For more foundational resources, check out the Bitcoin & Ethereum white papers, and these posts / websites.

What does that amount to? In short, low infrastructure peer-to-peer (p2p) interactions and transactions. That massively (Blockchain’s CEO claims a .07–.08% fee v Visa 2–3%, more than a 40x improvement!) reduces the cost of payment processing, finally making micropayments viable. It also amounts to a means to permanently store data in an immutable, auditable way, powerful for insurance and data consortia needs.

Possible Applications

There are 4 key AV areas that blockchain and digital assets are well-suited for: ridesharing, micropayments, short-term insurance and data consortiums. Keep in mind, each of these use cases exist independently, so micropayments could work with an incumbent ridesharing applications, etc.

The only common underlying assumption is that the user (rider or cargo) is distinct from the AV owner(s) for at least some period of time, necessitating micropayments and a platform. Beyond that, all AVs will require a service plan, authentication, insurance and data sharing amongst providers and owners at the very least.

1. Enabling a carsharing / ridesharing platform

A blockchain could serve as an exchange, logging an order book of supply & demand (riders and cargo) and facilitating matches. We, the consumer, would interact with a decentralized application on the blockchain (aka a dApp) that would allow us to seamlessly use or monetize vehicles, engaging a real-time market. While similar to competitors like Lyft and Turo, this methodology would be lower cost with less overhead / intermediaries, as the decentralized application supplants the infrastructure of a corporate entity. A blockchain-based solution would also work better in a world with fractional / complex vehicle ownership, as specified in the next point.

2. Micropayments

With negligible payment processing costs, the blockchain supports a whole new type of monetization via micropayments. This is a major application of a blockchain-based dApp, as it would be critical for all types of p2p transactions. For example, a car could be outfitted with a node that creates a tokenized identity for the car, allowing it to be truly “connected”. That tokenized identity would link into ridesharing / delivery applications, to be matched with riders & cargo.

The car can automatically charge users per mile. Usage revenue would be directly sent to the appropriate owners, triggered via smart contracts and easily divisible amongst many parties. Along the way, the car’s node would be able to communicate directly with servicing centers for refueling, recharging and parking as necessary. These payments could occur in fiat currencies or cryptocurrencies, as there may be use cases that would prefer to have network effects built into the token.

If consumers are using an identity dApp like uPort, they link their wallets, preferences and verified identities with the blockchain and the car. These identities can be used for permissioning and authentication around specific circumstances such as when a child can ride alone or valuables can be dropped off.

3. Short-term insurance

With complex usage patterns and vehicle liability, car insurance is the next industry to change. In a scenario of full autonomy (Level 5), we could be simply charged for pro-rata insurance along with a mileage fee per ride, further utilizing the micropayment capabilities discussed above. That simply adds one more stakeholder into the mix — the insurer.

And while AVs are stuck in Level 3 and Level 4, stored sensor data could result in more dynamic usage-based insurance. Sensor data compiled on a blockchain would reveal driving patterns and habits. While a blockchain is not the only way to accomplish this, the insurer will appreciate the immutable and auditable nature of a blockchain ledger, and likely lower rates as fraud decreases.

4. Inevitable data consortiums

“Hundreds of billions of miles of human driving data may be needed to develop safe and reliable autonomous vehicles,” said Chris Ballinger, Toyota Research Institute’s director of mobility services and chief financial officer. “Blockchains and distributed ledgers may enable pooling data from vehicle owners, fleet managers, and manufacturers to shorten the time for reaching this goal.”

In a scenario with so many stakeholders, smart contracts that objectively manage revenue and data sharing are critical. On a blockchain like Ethereum, features like multi-signature, permissioning and escrow create trust and order in chaos. If you’re wondering where that chaos comes from, here are various types of AV data that could be captured and shared:

With a blockchain ledger and smart contracts, mapping could be decentralized as a public good. That removes the concern of the first-one-thru (one AV will have to encounter a road change in order to alert the rest) and decreases the barrier to entry created by an expensive HD mapping process. Like mapping, a common source of testing data could enable shorter AV innovation cycles, pushing the industry forward. A common data infrastructure means consistency and compatibility across inputs.

Aggregated environmental and road data could allow for better public services and utility management, saving tax dollars. Congestion data could lead to government-based mobility incentives, smoothing demand for cars over bikes at certain times. And time-stamped GPS & usage data would help alleviate security concerns around connected cars. Finally, personal data can remain personal, or individuals can choose to monetize their data as they wish.

Keep in mind, these 4 opportunities represent problems that every initial AV will raise: payment, servicing, authentication, insurance, data sharing. Given the initial price point, these AVs must be deployed and monetized to start.

While all 4 of these represent massive opportunities, it seems like micropayments and data sharing are the two most uniquely served by a marriage of blockchain and autonomous technology. In both scenarios, it’s hard to imagine an existing solution for either need. A blockchain’s inherently low cost and smart contract capabilities would facilitate the necessary functionality. That said, if the dApps and consumer reach are wide enough to enable both use cases, that would likely make ridesharing and insurance a likely tack-on blockchain-enabled application as well.

Granted, as the blockchain stands currently, many scaling issues remain around both overall storage and volume of transactions. Recent forks have only just begun to address this issue, so scaling the blockchain will have to be in focus ahead of many of these applications described above.

Companies / Consortia to watch

Some of this is already in test mode, with existing infrastructure and vehicles. For example, Oaken Innovations won 1st place in the 2017 United Arab Emirates Virtual Blockchain Govhack Hackathon by connecting a Tesla to Ethereum and paying tolls with Ether. Here are a few names in the space, to be updated as more (inevitably) enter:

• Toyota Research Institute led the way by announcing a consortium earlier this year with MIT’s Media Lab, Berlin-based BigchainDB, Oaken Innovations, Commuterz and Gem. BigchainDB is working on a scalable ledger necessary for these data applications. Oaken and Commuterz are developing ridesharing / carsharing solutions and Gem is porting its healthcare tech over to integrate telematic data sources for insurance learning. Oaken is also focused on the security complexities surrounding AVs and has spoken about micropayments as a means to dynamically fund infrastructure.
• DOVU, backed by Jaguar Land Rover’s innovation arm InMotion Ventures, is working on building a ecosystem to facilitate mobility dApps. Their first dApp is their API, which hopes to yield consistent and compatible data infrastructure. Their DOV token could be used as a means of payment, a rewards system or a data key.

• EY’s Tesseract was just announced with plans to facilitate fractional vehicle ownership, so presumably the focus here is micropayments.
• Arcade City launched in January 2016 as a blockchain-based p2p ridesharing app on Ethereum, and while it now has an app in 155 countries, traction remains questionable.
• Blockchain in Trucking Alliance (BiTA) launched in August 2017, looking to apply the technology to trucking. Currently, they seem focused on applications around transactions and data transfers.