Tokenization presents the automotive industry with a unique opportunity to take advantage of blockchain technology. Car manufacturers, original equipment manufacturers (OEMs), suppliers, retailers and others can benefit from quick, effective information exchange. However, this requires a secure network.
Blockchain technology can do this. In a previous blog post, we talked about how trustful data provenance can be established by the blockchain. Similarly, tokenization can be used in the fashion of cryptocurrencies where vehicles, in this case, can be bought, sold or have additional services added to them.
Advantages of Tokenization
Tokenization is the process of exchanging sensitive data with unique identification symbols called tokens. It allows essential information to be retained in a network without compromising security.
Secure data sharing is one of the most significant advantages of tokenization. Due to their nature, tokens can be considered to be safe and, therefore, trustworthy. We have previously spoken about the importance of trustful data provenance. Tokenization technology allows the automotive and other industries to trust the data provided to them fully.
It protects against data manipulation and fraud and helps maintain a greater level of security. As we move towards autonomous driving systems, the stakes for better network security and customer privacy have increased substantially.
With information recorded on the blockchain, it will be impossible to change or alter it in any capacity. Therefore, in the future, when a vehicle owner makes transactions, whether it is transferring ownership or simply carrying out any type of transaction, it will be available on the blockchain.
But that is not all. Tokenization is particularly advantageous for the automotive industry due to the following reasons:
- It is more compatible with legacy systems than encryption.
- It costs less than switching to data encryption.
- It requires less time and resource management.
- It reduces the risk of fallout in the event of a security breach.
- It promotes the creation of secure provenance of trustful data.
- It makes it easier to adopt new technologies such as new payment methods like mobile wallets and one-click payment options.
- It allows for the development of new data economies and vehicle lifecycle revenue streams.
Tokenization and Its Impact on the Automobile Industry
Undoubtedly, vehicles will be massive powerhouses of data in the future. However, there is a question about the trustworthiness of said data. The automotive industry has had several scandals with critical mobility data manipulation. It is, therefore, integral that any data used and produced is fully trustable.
Tokenization, along with blockchain technology, can not only lead to more trust in data but also help transform the automotive industry as a whole. It will allow corporations to freely share data across different infrastructure networks without worrying about revealing sensitive information. This can lead to better collaboration between corporations.
It can even lead to the development of better supporting software which can be shared across all vehicles, regardless of their make. Currently, the automotive industry faces the challenge of moving from the supply chain model to a software-based one.
Since each car company has its own ecosystem, it is hard to share critical mobility data without revealing confidential information. With tokenization, this problem will be avoided as the required data will be readily available as tokens.
The key to successful autonomous vehicle development is creating an environment where there is a better way to communicate between vehicles and their supporting infrastructure. With the help of tokenization and blockchain technology, the industry will be able to pilot traceability, smart contract management, supply chain visibility, increase in-vehicle payments and also introduce mobility data monetization incentives.
Prepare for the Future
Considering the incentives and monetization opportunities available, automotive companies should look closely at tokenization. This technology, along with others, has the potential to completely transform the automotive industry as we know it.
Manufacturers can leverage insights from data produced by vehicles to help gain a better understanding of real-world traffic conditions and create compelling use cases for connected cars. The ultimate goal for the automotive industry is to create completely autonomous vehicles. The best way to do so is by ensuring that critical mobility data fed into deep learning models is correct.
It is essential for the evolution of the industry that machine models are exposed to all mobility environments. This goes beyond the scope of simple data collection. Companies need to be able to share information with each other freely. Tokenization provides the unique ability to share this data safely. It is now up to the automotive industry to adopt this technology.
RIDDLE&CODE continues to help the automotive industry transition towards tokenization by providing reference hardware that connects vehicle embedded systems data to a secure exchange-to-exchange (E2E) data & token management system.