Smart economy examples.
Today fraud prevention and investigations of accidents are a large part of the insurance business. With blockchain, it is possible to have these expenses go down significantly because a blockchain network could both collect the necessary data and inform the insurance company when needed.
Here is another example: Bob is a rideshare driver who has an excellent rideshare driver rating. Bob wants to buy a high end car to provide service to customers of rideshare platform and his own customers. If Bob has limited cash funds, his choices when it comes to getting a car will also be very limited and he will need to convince a bank to give him a loan. He will also need proof of a clean driver record and proof of insurance. Today this process involves multiple parties, multiple exchanges of data, wait times, and people making decisions case by case. Bob may be able to get financing from one dealer or in one area of the country, but not able to get financing somewhere else. The eligibility requirements for financing could also vary significantly and be non-transparent.
All of this could be very different with smart economy and smart contracts. In a smart economy, car manufacturers could create a smart contract specifically for ride share drivers in light of the fact that millennials are buying fewer cars. The smart contract could serve as a tool for the underwriting of loans to rideshare drivers who meet certain conditions. The conditions could be clearly states and known to everyone. If Bob qualifies, he could apply for a lease or ownership of a car using a smart contract on a blockchain network. The contract would then verify Bob’s identify with a government blockchain or blockchains, verify with the department of motor vehicles that Bob has a valid driver license, contact the ride sharing service to check Bob’s status as a driver, contact the bank and finally submit the information to a car manufacturer or a car dealer.
All of this could be done much faster than it is done now, without any mistakes or human involvement. Not only that, but also the deal that Bob gets could be determined via a smart contract. For example, if Bob has low funds and low credit score, he could qualify for an offer that consists of a down payment and monthly payments. If he has an excellent score, he could qualify for an offer that has no down payment. The smart contract could also have a case in which Bob pays for his new car with a percentage of fares that he completes as a rideshare driver.
As a driver, Bob will also need car insurance. On a blockchain, an insurance company could have access to all the data it needs to determine Bob’s rate, including Bob’s employment information, driving history, identity information, and more. The structure of payments for the insurance could also vary and include an upfront payment, monthly or weekly fixed payments, or a percentage of fares that Bob completes as a driver. The more organizations share a ledger on a blockchain, the more efficient the process is going to be and the faster it will take to complete it.
In addition to that, performing transactions on a blockchain increases safety for all involved parties. With ridesharing, not only the car manufacturers, banks and insurance companies will be receiving correct data, but also the government and the riders will know that the driver went through multiple checks, including a criminal background check, a verification of the driver license and driving history, and more. A smart contract could also monitor Bob’s driving hours to make sure that Bob is not driving more hours than allowed by law and that his driver score is within a certain range. If the information about the car that Bob is driving is also a part of a blockchain, both the government and the riders will also know that the car is not subject to any recalls and has no safety issues.
The blockchain technology gives organizations and industries an opportunity to reinvent themselves, streamline existing business models, and introduce new ways of delivering value because of its decentralized nature, transparency, immutability of records, and smart contracts.