The CEO of Berkshire Hathaway Warren Buffet has said, “Regarding cryptocurrencies, generally, I can say almost with certainty that they will come to a bad ending.” Plenty of people have their doubts and anxieties about blockchain, such as Bitcoin and other cryptocurrencies. However, if they prove to be a long-term success, in what ways could cryptocurrencies revolutionize large industries such as automotive?
Some of the Crypto-Risks to Automotive
Indeed, a cash-based currency system has well-known perils, such as bank liquidity risks. However, cryptocurrency is young in comparison. Therefore, some of the potential dangers are still getting worked out. Moreover, some, naturally, are yet to be discovered. Already significant cases of fraud and malware have occurred. With major industries such as automotive, breaches in security are not only a massive concern but also a current one.
On a more ground-floor level, the risk to car dealers accepting cryptocurrency may be where a big part of the gamble exists. Bitcoin's value can fluctuate more than $400 in a half-hour. Some digital currency services require multiple confirmations before they convert into dollars. These programs can also be slowed down by network congestion. Imagine a line to exchange arcade coins for money, but your arcade coins can drop in hundreds of dollars in a single hour. Now imagine an extensive line ahead of you before you can make your exchange. If you’re dealing with car sales in the range of hundreds of thousands, that can change the profit of your sale significantly.
The Benefits to Buyers and Businesses
Traditionally, in dealing with more hefty purchases of items such as cars, a middleman such as a bank or credit card company is required to complete the transaction. Not only do consumers have to deal with applying for car loans, worry about their credit if it’s less than ideal, but the credit card companies and banks charge fees for their use. These third-parties also store consumer information and their centralized system. Blockchain was created to solve that problem. Cryptocurrency creates a decentralized environment for buyers and businesses where the middleman is no longer in control.
Motorcars of Georgia, a high-end dealership of Lamborghinis and Ferraris, has seen some exciting business with cryptocurrency. In 2013, they started taking payments via Bitcoin—a year in which the cryptocurrency experienced fluctuation as low as $100 up to over $1,000. The dealership now accepts Bitcoin using BitPay. BitPay is a third-party company (so a middleman in a sense is still involved) that permits transactions for a one percent fee to the dealership. In fall of 2017, Peter Saddington, cashed in 45 bitcoins and drove off with a $200,000 Lamborghini Huracan. Saddington, a coder, had early interest and initially bought those 45 Bitcoins for less than $155.
Variations on Cryptocurrency for Cars
Dearborn, Michigan-based Ford Motors was granted a US patent for a cryptocurrency-run technology to power its cars. Cooperatively Managed Merge and Pass (CMMP) is a token-based system, run within its own network and out on the highways. Participating drivers must enable CMMP via GPS, so cars can “talk” to one another. For example, giving information about traffic conditions. In addition, CMMP would gather info on drivers—a potential privacy concern for some. However, it could be helpful regarding the safety of the roads and those who drive them. It allows the user vehicle “preferential lane access” through phases of heavy traffic. This access permits them to weave around the congestion for a price.
MOBI and Porsche
Motor companies like BMW, GM, Renault, and Ford are pioneering partakers in the Mobility Open Blockchain Initiative (MOBI). The mission of MOBI is the test how this technology can effectively and safely obtain data, allow transactions, manage ride-share and car-share transactions, and provide better service in general to buyers. Installing a system like this could have long-term implications. Automobile histories, car sharing and ride sharing, and insurance information will concern some people. However, MOBI believes faster and simpler dealings and more secure data sharing could be a massive upside.
Porsche has also studied the ways that a blockchain server could enhance customer dealings. Because these customers didn’t have to deal with third-party permission, they cited rapid response times for commands on the Porsche blockchain app. Porsche suggested their app could showcase features like unlocking the vehicle, allowing a third-party to use the trunk of the car and speeding the sending, receiving, and storing of information. In the case of car accidents, insurance payments could go through much quicker with blockchain.
If Porsche and organizations like MOBI ensure that security is encrypted, and they use ethical practices, widespread use of not only cryptocurrency but vehicle variations of blockchain may be in the very near future.