Brave New Wheels? Potential Uses for Blockchain Technology in Auto Finance

Authors: Kyle A. Owens & Erin F. Fonté

Cryptocurrencies have captured the imaginations of individuals and emerging businesses drawn to their potential to serve as alternative stores of value, to reduce transaction costs by eliminating intermediaries, and―most notably in popular culture and media―to provide eye-catching opportunities for speculative investing. Coin valuations for well-established players Bitcoin and Ethereum have fallen sharply since late 2017/early 2018, and new players continue to enter and leave the marketplace. As noted previously in this blog, regulators are taking interest.

Much less appreciated and often overlooked is the business potential for the distributed-ledger, or blockchain, architecture that makes cryptocurrencies possible. Distributed-ledger systems present enormous opportunities for businesses to operate more efficiently and mitigate risks. The financial-services industry in particular stands to gain from the adoption of blockchain technology due to the significant variation and complexity of products, business processes, and relationships among industry participants. We have seen great interest in blockchain technology in the banking and securities industries in particular.

First, Some Terminology

A distributed ledger is a decentralized database system that records transactions and analogous data inputs using the cooperation and collaboration of numerous actors that together possess, maintain, and update a distributed database using blockchain. We’ll spare you the technical ins and outs here and instead refer you to two blockchain-industry participants that have done a nice job illustrating the concepts in a straightforward way.

Read the entire article.