Cars on blockchain

by Mike Birdy via StockSnap
by Mike Birdy via StockSnap

Something’s up in the car industry. The past week saw a couple of major announcements that point to a radically different future that suddenly seems pretty close:

Replacing a CEO is a big thing. It implies a change of culture, strategy and direction, which – coming from the second largest car maker in the US (by sales) – sets the tone for the entire market.

According to the New York Times, outgoing CEO Mark Fields failed to convince the board and investors that the company was moving fast enough on driverless cars.

He’s being replaced by Jim Hackett, who had been running the “mobility services” division, which covers future products such as autonomous cars and ride-sharing functions. Previously Mr. Hackett was CEO of office furniture maker Steelcase – in other words, he knows a thing or two about usability.

The change highlights the automaker’s awareness that just making cars is no longer an option. Profits have been declining, and competition is looming from outside the industry ­– Apple and Google are investing heavily in driverless car technology, and Tesla has a greater market capitalisation than Ford even though the latter’s sales are more than 22x.

It’s not like Ford has been doing nothing on this front. Earlier this year it invested $1bn in Argo AI, with the aim to build driverless cars. It’s a bit behind the competition, though: early last year, GM spent almost $600m on Cruise Automation, with the same aim.

More interesting news came from Toyota, which last week announced that its research institute (TRI) has embarked on a new initiative with MIT Media Lab, BigchainDB, Oaken, Gem and Commuterz to investigate the potential impact of blockchain technology on the cars of tomorrow.

Toyota began work on autonomous vehicles back in 2005, and allegedly holds more patents in the field than any other company. Earlier this year it test-drove its second-generation prototype autonomous vehicle.

Once the mechanics are worked out, blockchain is the logical next step. Why? Because of the data.

With autonomous driving, data is just as important a fuel source as electricity. Data on the surrounding environment feeds the decision-making process that propels the cars down the road and avoids obstacles.

To build intelligent algorithms, a lot of data is needed, much more than one company’s sensors can generate. What’s more, data held in proprietary silos is obviously not as useful as data shared across a decentralised database that can be verified, updated and easily accessed by all operators.

One of Toyota’s partners, BigchainDB, last week revealed the Autonomous Vehicle Data Exchange (AVDEX), a live prototype which allows researchers to buy datasets from data producers. The objective is to pool and monetise collected information.

Another partner, Gem, will adapt the blockchain applications it has been developing for the healthcare industry to the automotive sector, developing usage-based insurance policies.

Dallas-based Oaken Innovations, winner of the Dubai Blockchain Hackathon and finalist in CoinDesk’s Consensus 2017 startup competition, is developing a blockchain-based car sharing application which handles access and payments through a mobility token.

And Israel-based Commuterz is working with TRI on a P2P carpooling solution.

These are by no means the first blockchain applications aimed at the automotive industry. Among other projects underway are the blockchain-based platform developed by German energy conglomerate RWE’s subsidiary Innogy to charge electric cars. AT&T recently filed a patent for cryptocurrency car payments. German auto parts maker ZF Friedrichshafen, Innogy and Swiss Re are working together on a blockchain project called Car eWallet, which hopes to enable cars to pay for their own tolls, parking and charging. And startup BlockBox won the Consensus 2017 Hackathon with its application to collect crash data in blockchain-based “black boxes”.

Also, other car makers are looking at the technology. In April of this year, Porsche launched a blockchain startup competition. And Daimler announced that it was joining the Hyperledger blockchain consortium.

These pilots and applications are merely scratching the surface of the potential – just the data handling alone will be huge. But they are a good start, and provide a relatively broad base on which to build.

And as the developments at Ford attest, the entire sector is pointing towards an intensification of driverless car development – which in turn, will fuel the development of blockchain applications aimed at making our roads safer and cities cleaner… and saving users money.

Does JP Morgan’s exit hint at changes at blockchain consortium R3?

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CoinDesk reported earlier this week that JP Morgan has officially exited R3.

This is not a surprise – last year when Goldman Sachs and Banco Santander left the banking consortium, rumours abounded that JP Morgan would stay out of the funding deal that R3 was trying to put together. Disagreement with the structure of the financing was one reason cited for the exit of the two large financial firms.

Speaking of the funding deal, you know, the one that David Rutter assured us would be completed in Q1 and would be biggest ever in the sector…

“We will be closing the largest round in the industry, with the largest number of market participants, now, in the first quarter.” (from CoinDesk, January 11, 2017)

Where is it? The first quarter has come and gone, and still no news. And then we hear that JP Morgan are leaving.

R3’s reaction is disconcerting. Managing Director Charley Cooper gave the following comment to CoinDesk:

“JP Morgan parted ways with R3 to pursue a very distinct technology path which is at odds with what the global financial services industry, represented by our 80-plus members, have chosen.” (from CoinDesk, April 27, 2017)

So, the “global financial services industry” (as represented by a mere 80 firms) has chosen a certain technology path? Do the tens of thousands of financial firms not in R3 know this?

And are they really comfortable with choosing only one path this early in the game? They are so sure that R3’s solution is the correct one? Whether they are or not, it’s R3’s assumption that they should throw all in with their solution that makes me splutter.

JP Morgan’s leaving is quite a big deal – it was a founding member.

Back when Goldman Sachs (also a founding member) and Santander left, my hypothesis was that they were backing away from consortia in general. Consortia are especially useful when investigating a marginal activity. When it becomes key, and when businesses feel that they know enough, it makes more sense to “go it alone” for competitive advantage.

JP Morgan, however, is active in both Hyperledger and the Enterprise Ethereum Alliance, and has contributed code to each. It’s not rejecting consortia as a concept. (Also, Santander since then has joined the Enterprise Ethereum Alliance as a founding member.)

So, it does sound like there were issues with R3 in particular. And it sounds like R3’s funding round isn’t going as smoothly as hoped.