Cryptocurrency non-profit, the Fusion Foundation, and the Automotive eXchange Platform (AXP) are joining forces to bring the U.S. second-hand car market and its insurance and financing to a blockchain.
The first step in the partnership, according to a Monday announcement, is to integrate Fusion’s blockchain platform and digitize AXP’s current database of 10.5 million automobiles, so they can be properly tracked and audited.
The auto industry has long struggled with a lack of transparency and widespread information inaccuracies from titles all the way through financing, said Max Kane CEO and co-founder of AXP, adding,
“There’s a million vehicles on the road that have ‘washed’ titles, which means there is fraud there. The insurance industry is hit with billions in fraud because of missing information, drivers providing the wrong information and inaccurate reporting.”
The AXP network encompasses some 25,000 independent car dealers across the U.S. and this extends to relationships with counterparties in finance and loan origination, Kane said.
John Liu, chief product officer at the Singapore-based Fusion Foundation, said the pilot, which is now underway, could be extended to state-based government agencies and the Department of Motor Vehicles (DMV). The system, which will go live by the first half of this year is expected to handle $60m–$100m of car financing loans, he said.
Fusion is known for having raised over $40 million in an oversubscribed token sale a year ago (many investors were turned away and the sale had to be stopped after 24 hours). The firm has ambitious goals when it comes to tokenizing assets, having previously partnered with firms involved in asset management and car financing – opening up a potential $12.3 billion in assets, Reuters reported.
Fusion’s founder, DJ Qian, said the blockchain his company has built was inspired by ethereum and will have both public and permissioned components. “We didn’t want to reinvent the wheel,” he said.
Liu added that “spinning up a node will be as easy as in something like bitcoin or ethereum,” but said only a select group of validators will be running such nodes to begin with.
“We don’t need the government or dealers to worry about running a node yet. We want them to use an application that they are familiar with. The number of nodes will be as much as we need to support a secure blockchain.”
Used cars image via Shutterstock