With the help of blockchain, can driverless cars be popularized globally?

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With driverless cars already on the horizon, you may soon get used to this new concept of future mobility. But what you may not have realized is that these cars could create a whole new market and make transportation safer, greener, and more efficient.

The “Mobile Open Blockchain Initiative” (MOBI) is a non-profit organization whose members include the world’s largest automakers such as BMW, General Motors, and Ford, as well as the World Economic Forum, Bosch, Denso, IBM, and Accenture. They launched a three-year “Grand Challenge” with more than $1 million in prize money. The winners of the first phase of the competition have just been announced, with Chorus Mobility taking first prize in the Grand Challenge for its use of machine-to-machine payments to negotiate road space, infrastructure use and rights of way. A trial by Oaken Innovations, which showcases vehicles that charge for road use, congestion and pollution in Portugal, took second place. Their focus is on the modular construction of next-generation mobile networks. The competition attracted a total of 23 teams from 15 countries to participate in the competition.

Connected devices and sensors have their own complex network of machine-to-machine communication, but there are not enough funds to communicate information between them. Car companies are constantly collecting vast amounts of data that can help other machines make better decisions, or drive new services that optimize the entire system—as long as the data is shared. Money can stimulate the sharing of these data, make the interests of different participants reach a consensus driven by money, and ultimately help people and things work more efficiently.

Businesses, entrepreneurs, and even governments are looking for ways to harness the unique capabilities of blockchain and digital currencies to realize this vision of the future. Chris Ballinger, CEO of MOBI, explained: “We envision a world in which vehicles can communicate their intentions to drive with other vehicles and coordinate their behavior with each other. Micropayments enable machine-to-machine communication. Conditions, whether it’s about transportation or other elements, the data is valuable. Many of the innovations that we can do with cars and other transportation vehicles will require micropayments to enable.”

For example, an ad-hoc network could be safely formed as vehicles drive near each other, and by agreeing to share data in exchange for a small payment, the car could extend its sensing capabilities beyond the range of its own sensors. It can see around corners—for example, by taking data, a car can predict a collision and adjust its speed to avoid it.

When not just vehicles, but even infrastructure are equipped with digital currency wallets, the entire transportation ecosystem can work together to optimize flow. Cities can offer incentives for micropayments to encourage people to use alternative routes or modes of transportation to ease congestion and prolong the life of aging physical infrastructure. For example, commuters get a bonus if they take public transit or walk instead of driving, or take a route with less traffic. The amount of the bonus may depend on how many passengers are in a car. Through micropayments, car owners can conveniently find parking spaces while reducing scratch accidents. Passengers catching a flight can have their vehicle negotiate with and pay those around them for the right of way.

But the winning formula in mobile is extracting more value from the physical infrastructure. The infrastructure built to meet demand is often prohibitively expensive, and traffic jams still occur during peak hours. When connected cars have their own form of currency, sensible pricing mechanisms can balance supply and demand without costly infrastructure investments. And, they could be more accurate, wider, and more realistic than current toll roads. This “congestion pricing” functions similarly to peak pricing for the grid. The same principle could be applied to charging for the environmental impact of mobility options or “pollution pricing”.

Blockchain-powered digital currencies are particularly well-suited for machine-to-machine transactions. It can govern complex rules known as “smart contracts”. For example, in an escrow-like arrangement, it can release payments based on certain conditions. Each machine or sensor can have a unique identity and a wallet associated with that identity for receiving and paying. Transaction costs can be reduced to the point where micropayments are feasible without the need for intermediaries.

“It makes sense to buy and sell small amounts of data when you can do a transaction worth a penny, or even a tenth of a penny,” Ballinger said. When it comes to carpooling rights for a block, or windshield wiper data to provide weather information, these small transactions of data become very valuable. From where we are today, it is hard to imagine that when data is in this ecosystem. When buying and selling at such a low transaction volume in China, all kinds of business models will become possible.”

Many people are already working on the basic elements of these new business models. Chorus Mobility won first prize in the Grand Challenge for its use of machine-to-machine payments to negotiate road space, infrastructure use, and rights of way. A trial by Oaken Innovations, which showcases vehicles that charge for road use, congestion and pollution in Portugal, took second place.

Dovu, a startup backed by InMotion Ventures, Jaguar Land Rover and Creative England, is developing a protocol that local governments can use to guide the way citizens move around their cities. Citizens are rewarded when they change their travel habits, reducing traffic congestion and emissions. The company recently announced a partnership with Go-Ahead, one of the UK’s leading transport providers, to incentivize data sharing and change passenger behaviour. This is the company’s first launch of Thameslink and Southern Rail services.

Zurich, Switzerland-based DAV is building a protocol that will allow transport assets to connect, communicate and process with each other without human intervention. For example, a self-driving car can make decisions on its own based on parameters set by its owner. It can rent out itself, performing tasks within its domain. When its fee is low, it can determine the lowest price and the most efficient service according to the previously set standards, negotiate directly with the trading platform and charge the service fee. According to each agreement, funds will be transferred from the wallet of one machine to the escrow platform, and as each task is completed, the funds will be transferred from the escrow platform to the wallet of another machine. Car owners can transfer amounts in these wallets at any time. “These are open networks that anyone can use,” said DAV CEO Noam Copel. “Businesses or consumers with transportation assets can build services on top of them, and they can earn revenue by putting those assets to use. .”

In the supply chain, goods are transferred from one mode of transportation to another, usually undertaken and operated by different companies, which makes the transportation of goods extremely complicated. As goods travel along supply chains, more and more ships, ports and railroads can recognize and transact with each other. With each transit, money is transferred from one wallet to another without any time consuming paperwork and accounting. The blockchain records all circumstances of transactions securely and without omission.

The stakes are high, and the potential impact is wide-ranging. The shift to transaction-driven transportation could affect nearly everyone who commutes to and from get off work, and the supply chain of almost every company. Of course, none of this would be possible without the supportive infrastructure and regulatory environment. In addition, there are other obstacles to face. Innovators have made great strides in using blockchain to facilitate the security of machines and other identity data, but the technology is still immature. And most importantly, it depends on the scale. “It’s easy to put a bus or a car on the blockchain. The hardest problem is how to achieve network effects. It’s going to be a team effort,” Ballinger said.

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