July 12, 2018

Principles of Decentralization and Automated Systems Suits Blockchain Economy

Building decentralized automated systems on blockchains requires a sense of purpose and proper integration of smart contracts with blockchain’s core infrastructure components. This article outlines a set of principles important for both automotive parts manufacturers and distributors as they would be the first to reap benefits from vehicle data on blockchains, and the potential revenue opportunity to grow their enterprise footprint or to acquire market share in the fast emerging blockchain driven business models and the token economy [1].

The five principles of decentralization presented in this section, namely simplicity, repetition, transparency, security, and speed were derived from an analysis of several automotive industry use cases: manufacturers, distributors, repair centers and consumers . These principles are important for the development of digitally automated systems and bots that would analyze the demands from any connected vehicle in real time, process and share it with permissioned and permissionless distributed ledger technology implemented by both OEMs and aftermarket industry.

  1. Simplicity: Simplicity is a prerequisite for reliability [2]. This is especially important in the context of finite and smart state machines that comprise of special purpose programs used to analyze vehicle information so that decisions can be made on the nature of the issues to diagnose and the replacement part transactions to facilitate on blockchains.
  2. Repetition: Many service events are repetitive in nature such as periodic maintenances at mile intervals. However, over the course of several thousand miles, the programs would have to run through more car check procedures and identify degradation of serviceable components. Repetition built into automated systems therefore needs to be coupled with machine learning capabilities to identify and relay faults to distributors and repair centers quickly. Where early failures are detected, the blockchains would also have to include OEMs and parts manufacturers for instant recalls and removal of defective parts from distribution channels.
  3. Transparency: Whenever automotive parts are referred to the manufacturers and repair centers for replacement, customers would want to have greater confidence in the programs recommendations. This requires transparency of the prior symptoms and an accurate account of the issues that were resolved. Blockchains can capture such events along with deterministic fixes on the distributed ledger.
  4. Security: Achieving reliability with automated systems requires security of runtime environment to ensure the programs are not only performing all their tasks and transactions safely but guaranteeing system recovery in the event of cyber threats. Advances in network and cyber security protocols also allows super nodes and peer to peer networks to be more resilient. The blockchain technology offers additional security for communication of sensitive vehicle data over public and private transport protocols. This would ensure access to critical emergency services and roadside assistance whenever the customers need them.
  5. Speed: Fast throughputs and cycle times are essential for enterprises to build a differential position in the marketplaces that increases market share and to develop capabilities to serve their customers effectively.

Leveraging these principles in the design of decentralized automotive systems will allow manufacturers and distributors to create value-aded programs for their customers such as instant access to nearby dealers and service centers, availability of parts on arrival, fast recalls and replacements when parts fail unexpectedly in service, stocking of right parts matching to the current and predictive needs of the vehicle, reduced inventory levels across all the distribution channels, and services tailored to an individual customer’s needs.

Automated blockchain systems and smart contracts would also provide the operating flexibility necessary for organizations to create reward programs and tokens that add value for their ecosystem. More on types of tokens in our next blog series.


[1] 1988 McLaughlin Williams and Randy Lee Williams, Gonzaga University, The Token Economy

[2] Oct 20 2011, Rich Hickey, Simple made easy, Credit: Edsger W. Dijkstra