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Blockchain: the next big thing for ITS? Really?

First publishedin ITS International
SeptemberOctober2018
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Everyone’s heard of blockchain – but most people are less sure about what it really is, and how it might be used in transportation. Andrew Williams peers into cyberspace to find some answers

A growing number of organisations in the ITS industry are exploring how blockchain technology could be used for ITS and mobility applications. So, what exactly is blockchain technology? What are the key current and potential applications in the mobility and ITS sector? And what practical benefits might it bring?

In basic terms, blockchain is a distributed ledger technology (DLT) made up of individual ‘blocks’ of data. It uses a combination of encryption, distributed computing, consensus and ‘immutability’ to ensure that transactions are carried out in a manner that can be fully trusted by all participants. As such, supporters say it is the first technology ever built that directly addresses the issue of trust by ensuring that there is no middleman or ‘honeypot’ that can be hacked. This is because no single participant can witness a transaction unless permitted to do so. Instead, everyone involved in the network must agree to the transaction - and transactions cannot be arbitrarily edited.

One area where several pilots are active is the transportation logistics sector, with a number of projects currently focused on reducing the cost of operations when shipping containers around the globe. One example is the cross-border supply chain solution being developed by Maersk and IBM, based on open-source, hyperledger technology. 

“We have a perfect example in tracking containers end to end, the Global Trade Digitisation Framework,” says Norbert Kouwenhoven, industry solutions leader - public, HC&LS and global trade digitisation, authorities leader at IBM Benelux. “This is focused on the container, rather than on the conveyance, but demonstrates all the basic features you need to make a ‘copy, change or paste’ towards a pure mobility platform.”

As Jim Beveridge, telecom and cybersecurity expert at ERTICO-ITS Europe, explains, shipping companies burdened with the capital expenditure of having to run hundreds of vessels and millions of containers are looking for ways to improve the return on their outlays and reduce their operational costs by digitising the complex documentation associated with clearing customs in multiple jurisdictions. Blockchain-type DLTs integrated with smart contracts are perceived by many in this sector as having the ability to simplify processes and reduce costs - simultaneously providing “extra trusted information on the position and quality of container cargo, eliminating fraud and errors and minimising the time products spend in transit”. Beveridge adds: “Building a digital shipping platform dedicated to simplifying custom clearance, improved inventory management will ultimately reduce waste and cost.”

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Cary: not sure whether ride-hailing based on blockchain will be a success

Ride sharing

Meanwhile, although Nic Cary, director at Waysphere, points out that the list of mobility blockchain applications is growing, he stresses that “few have escaped out of the lab, or at least early investor rounds as yet”.  In addition to the Maersk-IBM collaboration, he also highlights a number of ride-hailing and sharing initiatives, including the DOVU rewards system, which aims to encourage the use and sharing of transport resources like cars, and Malaysian scheme DACSEE (Decentralised Alternative Cabs Serving & Empowering Everyone), a ride-hailing platform built on blockchain technology targeting the Asian market, which aims to reduce costs and the high level of fees charged by centralised providers like Uber.

“It remains to be seen whether such a service could provide sufficient protection against abuse, including stranger danger and poor vehicle condition,” he says.

In the field of co-operative ITS (C-ITS), where a high level of trust and integrity is required to ensure that communications have not been tampered with, Cary also points to a range of other applications, including vehicle-to-vehicle (V2V) communications for activities like lorry platooning and vehicle-to-infrastructure (V2I) communications.

He also highlights the fact that professional umbrella body IEEE has proposed a distributed lightweight vehicle certificate validation and revocation system that would essentially validate the identity of a vehicle’s encrypted certificate governing encrypted communication, which “would avoid the delay and increased risk of interception involved in checking the trustworthiness of a vehicles communication with a central authority”.

Digital vehicle ID

Elsewhere, the Mobility Open Blockchain Initiative (MOBI) has been established with the stated aim of working alongside forward-thinking companies, governments and NGOs (non-governmental organisations) “to make mobility services more efficient, affordable, greener, safer, and less congested by promoting standards and accelerating adoption of blockchain, distributed ledger, and related technologies”.

MOBI’s initial projects are focused on the creation of blockchain use cases and technology standards for automotive applications - with an inaugural scheme aiming to develop a vehicle digital identity prototype, or ‘car passport,’ capable of tracking and securing a vehicle’s odometer and other relevant data on distributed ledgers.  Project participants expect that the scheme will lead to a radical reduction in fraud associated with used car sales because buyers have access to a totally accurate vehicle history.  The organisation’s roadmap also envisages a range of additional high-value use cases for blockchain in mobility, ranging from the establishment of common and interoperable data and technology standards to addressing existing challenges in blockchain R&D like protocol and application scalability and security.

“Our members are exploring many different applications throughout the value chain, from a digital twin of the VIN with immutable updates, to ownership transfers, to real-time usage-based services like insurance, taxes and carbon credits, to live routing negotiations, to addressing asymmetry of information issues solved by having a living vehicle history report stored immutability on the car itself,” says Dave Luce, chief operating officer at MOBI.

What is blockchain?

The key attributes of any blockchain, or other distributed ledger technology (DLT) platform, are “trust, transparency, traceability - all working together to provide distributed governance,” says Jim Beveridge, telecom and cybersecurity expert at ERTICO-ITS Europe.

Technically speaking, he explains that the blockchain consists of a database (or ‘blocks’) of online transactions, that are securely linked (or ‘chained’) using cryptographic functions to other blocks in a distributed meshed network - with participants in the network validating each transaction before any new block is added to the chain.

A key feature of blockchain technologies is smart, or self-executing, contracts. These legal contracts are embedded in software code and stored, replicated and supervised by the network of computers that run the blockchain. In Beveridge’s view, the disruptive aspect of the technology comes about as a result of the ease of forming a secure trusted network of information without recourse to a central decision-making authority and the ability for the blockchain to execute legally-binding contracts.

He thinks of blockchain as analogous to a WhatsApp group: a network that is easy to form with trusted friends - the equivalent of a private blockchain.

“You are invited to join the group - in the blockchain world this is a ‘permissioned’ blockchain. WhatsApp messages are encrypted and no-one who is not part of the group can read your messages. All WhatsApp messages are organised chronologically, as are all blockchain messages,” he explains. “If messages are deleted on WhatsApp then all the group can see that a message has been deleted. Similarly in blockchain any change is recorded as a new block. Data records are classified as immutable, they cannot be changed. This supports the principles of trust, transparency and traceability, enabling distributed governance,” he adds.

Thinking differently

Looking ahead, Kouwenhoven believes there is also room to use the technology for movement tracking across corridors, particularly since blockchain platforms are “especially suitable to support multimodal transport” – and, he predicts, “not only form tracking and dynamic invoicing, but also even more for forecasting, as well as trajectory and modality planning”.

Beveridge points out that the autonomous transport sector is also considering the use of blockchains, and cites one potential example where an autonomous vehicle could use a tokenized DLT alongside artificial intelligence (AI), smart contracts and Internet of Things (IoT) technologies to make the vehicle work for its owner.

“The car drops off its owner at work. Its surface sensors report that the solar sensors are reading low, this information is sent to the cloud where AI works out, using blockchain-logged transaction information, that this is due to the car being dirty, not having being washed for two weeks. The car contacts the local car wash which has a slot free. The necessary conditions being met, the blockchain issues a smart contract which is accepted by the car wash system. The newly-washed car arrives to pick up its owner from work,” he says.

Ultimately, Beveridge believes that the ‘key innovation’ will occur when public authorities come to “understand the potential of these new technologies and embrace them in a way that provides better service for the customer and helps them reduce operating costs”.  That said, he argues that the main challenge facing mobility and ITS sector organisations adopting blockchain technology is ‘institutional inertia’.

“To use these new technologies requires a completely different way of thinking and a cultural change within the organisation,” he concludes. “Public transport operators, car manufacturers and taxi companies will have to innovate, attract and retain users, or simply not survive. In addition to the companies having to adapt to realise the benefits of these new technologies so will regulators have to adapt. It is uncertain as to how fast the current conservative regulatory environment can adapt to support these innovations.”

Appetite for disruption

Although it is difficult to deny that blockchain technology looks set to shake up many aspects of the ITS and mobility industry, ERTICO’s Jim Beveridge (right) warns that the technology shouldn’t be considered in isolation as the ‘disruptor in chief’  for the sector. In his view, the innovations inherent in blockchain are only fully realised when it is used in combination with other disruptive technologies such as 5G, artificial intelligence, IoT, edge networks and machine learning. Within such systems, he argues, blockchain provides a “secure transactional mesh on top of which new MaaS applications can be enabled using the scale and reach provided by cloud computing combined with smart networks”.

For him, a key aspect is the use of blockchain in the support of seamless urban mobility services and the delivery of MaaS using open standards - meaning that transportation will be “profoundly transformed by blockchain and other DLTs allowing decentralised applications to run within meshed peer-to-peer networks”.

This meshed, decentralised architecture is ideal for the ‘Internet of Mobility’, he insists: “It encourages new business models, new applications and new structures to be developed to the benefit of the travelling public. Blockchain is still very much in its infancy, especially in support of MaaS.” The success of blockchain and other DLTs will depend on whether or not decentralised ledgers can deliver better value than the traditional ledgers transaction systems that we use today.  “It also depends to a large degree how far the future regulatory environment will support the innovations derived from the use of these advanced systems,” he concludes.

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