Blockchain Based Car Data Market place: the Unresolved Challenges

by | Dec 31, 2018

Source : Cryptox trade


Data created by IoT devices in a car can be used for a variety of purposes from vehicle related service to business and research. However, utilization of car data (storage, collection, sale) has many problems such as transparency and compensation to data owners (car owners). Recently, blockchain is ]receiving the spotlight for being able to resolve these problems. Many projects like CarBlock and AMO are aiming towards blockchain based car data marketplace.

However, the car data marketplace project still has issues to resolve such as the oracle problem and user verification. This article will look into how to facilitate robust utilization of car data and what the unresolved issues are.

  1. The Value of Car Data Marketplace
  2. Advantages of Blockchain
  3. Example of Car Data Marketplace
  4. Unresolved Challenges

1. The Value of Cara Data Marketplace

High Value Car Data

As IoT and communication technology developed, we are now able to collect car data in various forms that could be saved. Vehicle IoT devices create various data related to driving (driving distance, time, tire pressure, fuel efficiency, location, etc.). Such data has high value to various fields because of their commercial application. Specifically, car data can be used by automobile services (car insurance, repair and maintenance, used car sales, rental and sales) marketing, and research (traffic analysis, self-driving cars, etc.). This is why ‘car data marketplace’ or services based on car data are at the center of attention.

Let’s use a simple example for more clarity. Ben installs an IoT device named ‘Decon’ on his car, A. Ben is now informed on the status of his car’s tires and transmission which is simultaneously also fed to maintenance shops nearby. Maintenance shops send relevant coupons to the Decon app. With this, Ben visits a maintenance shop next to his workplace.

Apprehensive, Ben looks into car insurance. Though his car has stacked up some mileage throughout the years, his safe driving habits have levied little damage to his car’s parts. Decon IoT devices identify pertinent data including unintended sudden acceleration, abrupt braking, and abrasion of other parts, provides them to an insurance company, and signs an insurance policy at an affordable price.

This was just a simple example on automobile service. Once self-driving cars become commonplace, the volume of car data will significantly grow and be used in more areas combined with AI and big data technologies.

2. Advantages of Blockchain

With the example above, we looked into why car data marketplace is receiving so much attention. Then why are people trying to couple car data marketplace with blockchain? Blockchain can clear away obstacles for the conventional car data marketplace. We will focus on two key issues.

Raise Transparency

The biggest strength that blockchain has is that it can transparently manage personal information. One of the main obstacles for realizing data marketplace is ‘ensuring safe storage and transparent transaction of personal information’. Up to now, it was up to the intermediaries on how much personal data were sold to whom. Because the intermediaries held actual control and selling rights of personal information, people had to bear considerable risk. In response to this, many projects provide transparent management on the storage and transaction of personal information with blockchain. This decreases the risk and increases participation of individuals.

Bestowing Incentives to Information Providers

Second, incentives can be given to information providers through blockchain. Another reason why car data marketplace could not be realized was that information providers were not compensated. However, through token economy design and smart contract, individuals who provide their information can be compensated. This will play a major role in luring participation of data owners (car owners).

3. Example of Car Data Marketplace

< Example of car data marketplace >

*This figure is only an example. The data transfer and compensation model can differ in each project.

Car Data Marketplace Structure

We referred to projects in progress to explain the typical car data marketplace structure. Generally, the structure would resemble “data creation → data collection/processing(commoditization) → data purchase and utilization”.

  1. Data creation and storage : Data owner’s IoT devices create car data
  2. Data refining : Data sellers collect and process data
  3. Data purchase and utilization : Data consumers buy data and utilize it in their company’s services


Based on the model above, we will learn about the role of the users/participants. The participants’ role could be changed, and the participants could be added or excluded depending on the network design.

  • Data Owner (Car Owner)

As an owner of IoT devices, car data is created as a person drives his car. This data is sent to a data collector or data consumer, and the data owner is compensated for providing data. In general, data owners are individuals who own a car equipped with IoT devices.

  • Data Seller

Data sellers collect, categorize, and sell data provided by data owners to data consumers. They act as intermediaries and claim commission profit. In a typical project, IoT equipment providers will assume the role of data sellers.

  • Data Buyers

Data buyers purchase data from data owners or data sellers. These would consumers of data from automobile service companies (insurance, repair and maintenance, used car sales), other companies (marketing using car data), and researchers.

  • Storage Providers

Storage providers offer storage to network users including data owners and buyers , and are compensated in accordance with the storage size they provide.

4. Unresolved Challenges

A network that trades and utilizes car data has been created, which is all good so far. However, they are still some hurdles that need to be overcome. Especially, due to the technological characteristics of blockchain, new problems arise.

Manipulation of Car Data

Data marketplace presents an economic catalysis for data creation/manipulation. This data which was once worthless, suddenly becomes something different if economic compensation is involved. Therefore, considering the projects that are out there, the problem of car data creation/input manipulation is a significant issue.

What would happen if fabricated data is created and sold using hacking devices? What if such data is uploaded onto the blockchain?

Some projects believe that mass production of false driving data by car owners will hurt car owners. Creating driving data means car owners disclose on the network that they are consistently using their car which will have negative effects on their insurance and used car price.

However, what about cars that are so old that creating data is more profitable than selling it at market price? Slightly tweaking data that is disadvantageous to the data owner is also possible. For instance, someone could hack into and manipulate the taximeter.

Source : Hankook Ilbo

Hacking a taximeter is simple and only takes 5 minutes, leaving no traces.

  • Hacking IoT Devices

Malicious data owners (car owners) could create data by linking their IoT device to a hacking device instead of their car. If data creation compensation brings more returns than the cost invested in hacking, there will be such abuse attempts. Therefore, constant verification of data should be considered in network design. Projects need to review who the verifier will be and what verification method would be used.

Yet, the hacking problem would be ruled out if security of IoT devices is impeccable and impregnable. Would that still free us from the manipulation problem though?

  • Car Hacking

Aside from data fabrication, manipulation in initial data input could be a problem. What would happen if IoT devices are connected and information is registered on the network after the car’s data devices like the taximeter is hacked?

For example, Ben hacks his taximeter and drops the car’s mileage from 12,000 km to 40,000 km. Afterwards, he connects his IoT device and registers his car verifying 40,000 km mileage. After driving the car for another 10,000 km, he sells his car as a used car with 50,000 km mileage (while in fact it is 130,000 km) and earns ill-gotten gains.

To complement the problem above, verification and evaluation must be introduced in network participation. Numerous standard values can be set as default on the protocol and a verification entity can be introduced. Consequently, substantially complex reviews on verification entity, method, and level are required.

Data Price Evaluation and Compensation Distribution.µµ

Evaluating the proper price of data is not a simple task. Because low data of many data owners (car owners) accumulate to build up metadata, one data commodity could have many stakeholders.

For example, let’s say we are selling a month’s worth of data of car owners living in Seoul. Who should be the entity to decide on the price? It could be the n number of data owners and data consumers, or data sellers and data consumers. Even when selecting a price mechanism, a fixed price based on the volume of data or a floating price based on ask & bid could be implemented. Choosing the most appropriate pricing mechanism requires much review.

Next, we’ll look into the compensation problem. If there are n number of data owners who participated in data creation, will simple distribution of (price — commission of data sellers) by 1/n be fair? Some people would create more data by driving more while others create relatively more useful data. But, would it be right to evaluate all data equal?

5. Conclusion

Blockchain technology could be a new solution for car data marketplace. However, because blockchain does not have a central entity, there are still cryptoeconomic issues that cannot be solved by technology. Let’s revisit the data sales compensation problem. When selling data, setting the smart contract to equally distribute the profit to all data owners is technically possible. However, it is difficult to address whether this would be fair and reasonable in economic terms or whether this could induce sufficient participation of users.

Cryptoeconomics is a field that seeks to achieve healthy growth and development of the network through anti-abuse and economic design surpassing simple realization of blockchain network. Decon strives to contribute in blockchain projects creating a sustainable network through research on cryptoeconomics.