Can Blockchain Jump-Start Detroit? Ford, GM And Others Are Helping Make It So
By Michael del Castillo
From global vehicle identities that can’t be forged, to auto-supply chains without the fat, blockchain is being explored by some of the largest auto manufacturers in the world. But perhaps no auto center has more to gain than Detroit, Michigan, whose auto industry was knocked to its knees in the early 2000s as U.S. vehicles were increasingly made abroad.
Since the heyday of 2000, when Michigan employed 330,000 auto industry professionals, according to the Upjohn Institute for employment research, the Michigan industry fell to 89,000 jobs in 2010, and has only slowly started to recover. While many factors from policy changes to consumer demand have contributed to that increase, auto manufacturers in Detroit and elsewhere are now looking for new ways to improve the manufacturing process and diversify revenue streams.
Perhaps the most concrete example of this evolution is a vehicle identity proof-of-concept that tracks the entire life of a car and is being built by Detroit giants Ford and GM in a rare partnership with fellow international competitors BMW, Groupe Renault, Honda and other members of the Mobility Open Blockchain Initiative (MOBI). But the potential new revenue streams and savings from moving work flows to a shared, distributed ledger like that which powers bitcoin, go far beyond the auto industry.
“We are moving towards a new era of mobility as a service and creating an economy for pay-for-use, connected vehicles with car wallets and tokens,” says Lucy Hakobyan, 29, head of program at MOBI and a former PwC senior associate. “Blockchain keeps auto manufacturers in the value chain and gives them a major role in intermediating new revenue streams.”
Los Angeles-based MOBI was founded in May 2018 to help auto manufacturers find new efficiencies in a wide ranges of business applications. Because the potential benefits of blockchain are relative to the size of the network, blockchain experiments frequently benefit from the formation of such consortia. Of the more than 100 MOBI members, Detroit-based GM employs 97,000 people around the world and neighboring Ford employs 199,000 people. Possible applications being explored by the members range from streamlined, transparent supply chains and trustworthy records of automobile histories, to more exotic applications like self-driving cars that automatically negotiate micropayments for the right to pass each other.
The most mature of these use-cases is a vehicle identity proof-of-concept, first revealed earlier this month. Built in alignment with a previously announced vehicle identity standard intended for global use, the proof-of-concept tracks a car’s history on a blockchain and could eventually be used to link vehicles together into what Hakobyan calls “mobility networks,” in which they communicate with each other, track speed, location, direction of travel, braking and driver intention. Next week, MOBI founding members Ford, BMW and Renault will speak about the obstacles and opportunities of working with competitors at the Forbes 30 Under 30 conference in Detroit, the first of three events tracking the resurgence of the city.
Some innovators in Detroit are looking beyond the auto industry alone in their use of blockchain. For example, the Detroit Blockchain Center was founded earlier this year to broadly advocate for blockchain development in the city, “including a business center and accelerator for blockchain-related startups, community outreach and educational programs around financial and digital literacy,” says executive director Nate Talbot, 42.
The nonprofit organization registered in Michigan was founded by Detroit blockchain startups BitDepth Media, EOS Detroit, Totle and Kazzalogy and is currently pursuing its 501 (c) 3 tax-deductible status. While the center was originally founded to explore possible use cases in the automobile supply chain and elsewhere in the auto industry, according to Talbot, the group has expanded to exploring other Detroit industries, including medical, financial and telecommunications. Other blockchain startups taking root in Michigan include blockchain production company Greymass, building a platform to simplify building blockchain apps, and investors Blocktown Capital and Inveniam Capital.
The first in-house project being developed by the center is a mesh-network that connects cellphones via Wi-Fi into a distributed network with less reliance on centralized internet service providers like AT&T, making them more resilient to outages. While mesh networks have been around for years, adoption has been slow, limiting the strength and reach of the service. The center is integrating its system with the EOS blockchain to reward participants with cryptocurrency and incentivize adoption. The effort is part of a larger project called DACtroit (as in “distributed autonomous community”) that seeks to automate several municipal services using self-executing blockchain code called smart contracts.
“The way we view it is, if you want a strong financial background, you go to New York, for tech you go to San Francisco and the Bay Area,” says Talbot. “But when you want actual use cases for blockchain, we feel there’s no better city than Detroit.”