Over the last few years, blockchain technology has grabbed headlines for various reasons. A large number of people are still not aware of the technology and are subsequently not aware of the possibility and applications. At the outset, we’ll begin with what blockchain technology is.
What Is Blockchain Technology?
Primarily, blockchain technology is used to verify all cryptocurrency transactions. Bitcoin and other cryptocurrencies rely on blockchain for safe, secure peer-to-peer monetary transactions. This technology calls for the least data manipulation and discrepancies due to a fraud of human error.
Here's how blockchain technology affects our daily life.
Applications in the Automotive Industry
But what are the other uses of blockchain? More importantly, what can it do for the automotive industry? To begin with, blockchain provides a centralised database that can be accessed by all parties involved. It will eventually enable a centralised repository for all automotive data preventing most forms of data manipulation and problems due to human error.
Here are some examples of how blockchain could start impacting the automotive landscape in the near future.
Versatile Payment Options
We are well aware of subscription services that are rapidly becoming a major part of the industry. So are ride-share and pay-as-you-go vehicle borrowing services. As a consumer starts to drift away from standard monthly payments, blockchain will help keep it all straight.
The technology can also improve communication between interrelated agencies. For instance, DMV, Toll Roads, and Traffic Court can all be linked with a single thread. While it might make it harder to dodge a parking ticket, it will mean greater efficiency across all of these services.
Blockchain operates on a centralised system that can minimise human error.
Maximise Vehicle Resale Values
Blockchain technology can be easily used to track vehicle options, repairs, mileage, and auction reports and create a more accurate and consistent basis for vehicle valuation. Hence, blockchain can provide for much less guess-work in vehicle valuation in the future.
Reducing Warranty Costs
From a manufacturer’s perspective, warranty repairs are a huge expense. A few reports suggest that about 30 per cent of all warranty repair costs can be traced to poor practices and processes at the dealer level. As a viable solution, blockchain can help streamline these processes and diminish poor dealer practices.
One of the major problems plaguing the automotive industry is the sale of counterfeit parts. A centralized database of parts can help sell authentic parts in the marketplace. Furthermore, blockchain can be widely used to help with parts availability and distribution across channels and between dealers as well as manufacturers. Imagine, tracking the stock through the distribution chain in real time.
Optimise Insurance Claim Management
Insurance companies are infamous for inefficiency in issuing policies and managing claims. And a lot of this can be blamed on poor access and distribution of data. Reports suggest that at least 39 per cent of total insurance costs are directly attributable to claims management, policy issuance and servicing.
In addition to this, blockchain can also help with mitigating insurance fraud. An estimated 5-10% of all insurance claims are fraudulent. Blockchain can help with verifying claims and preventing fraud.
Blockchain’s application will become a part of everyday life across many industries, that’s inevitable. With the automotive landscape evolving at an exponential rate, it is only fitting that blockchain will find its way into the industry in the early stages of its development.