Part 1 - "Mobility in the Blockchain Series: Click & Drive"

Blockchain and Bitcoin are all the rage. My objective is to present an overview of Blockchain technology, its developments, lay out the need for a legal framework (Part 1), and outline its opportunities and challenges including practical and possible business applications in the automotive business environment (Part 2).

He who has insight can understand. He who has perspective can make decisions. And he who has vision knows how to lead," says Peter Amendt. I see four concrete scenarios for the future of mobility: Optimized mobility, mixed mobility, individual mobility and, last but not least, mobility as a service (MaaS) by click & drive.

I see four concrete scenarios for the future of mobility: Optimized mobility, mixed mobility, individual mobility and, last but not least, mobility as a service (MaaS) by click & drive.

In the coming years, disruptive and innovative developments will lead to different levels of mobility for each individual. One will literally "experience" this. In addition to autonomous vehicles, one of the key drivers is the Blockchain technology development, which has a major impact on our future mobility and allows new business models and processes to emerge. In the meantime, everyone is talking about Blockchain. But Blockchain is not just Bitcoin as a cryptocurrency that consumes a lot of energy for security reasons (according to Cambridge Bitcoin Energy Consumption Index (CBECI)) estimated at 78TWh - equivalent to Belgium - in 2019). But what exactly is Blockchain and which kind of applications will there be in the automotive sector? Simply put and according to Yuji Ijiri, "Blockchain implements the concept of triple bookkeeping in a highly automated way.

Blockchain easily explained

Distributed Ledger Technology (DLT) explains Peter Schnürer, CEO of Daura, quite simply in such a way that two parties agree on a transaction (transfer of ownership) and the third party confirms the transaction, checks the authorization and documents the process. The consensus in case of ambiguity is ensured by a third party. A public transaction register provides transparency and clarity of the process. The legitimation against the Blockchain is done with a private key or in other words a cryptographic key, the so-called token. This is known only to the authorised party and, in my humble opinion, one of the greatest risks. If the electronic key is lost, indeed everything is lost forever (possessions, assets, ownership rights, etc.). This can, however, be prevented by additional measures and through newly emerging service providers. The assignment to the recipient takes place via a public key. By the way, this can be made public and is derived from the respective private key of the person entitled to dispose of it. So far so good.

Johannes Kuhn summarised this in the Süddeutsche Zeitung as follows: "The Blockchain is a digital account statement for transactions between computers, which records every change exactly, stores it decentrally and transparently distributes over many computers. Thus, the information is not manipulable (or only with an enormous expenditure) and is verified". The implications are quite powerful, as it means that the data stored on the Blockchain is online available, "fresh" and "updated". Moreover, the update is decentralized and democratised as each Blockchain owner and its parties involved ensure that the data is correct. In other words, a highly trustworthy technology is emerging. No central database is needed any longer. This development has the potential for far reaching new business models to originate.

Blockchain prerequisite and new legal framework in the Principality of Liechtenstein

The prerequisite for Blockchain becoming "socially acceptable" is comprehensive legislation that provides legal certainty in the settlement of transactions, that is granted and is enforceable. Thus, a token economy with smart contracts can arise. The Principality of Liechtenstein, as a pioneer, is in the process of creating new laws and directives to ensure that companies, consumers and citizens receive the necessary legal framework to conduct business in a safe and sound environment.

The prerequisite for Blockchain becoming "socially acceptable" is comprehhensive legislation that provides legal certainty in the settlement of transactions, that is granted and is enforceable.

The Token Container Model and its Trustworthy Technology

The government's current proposal for legislation, as Dr. Thomas Dünser, an Expert of financial innovation at the Ministry of Presidential Affairs and Finance, points out, was under discussion (first reading in June and second in October 2019) in Parliament. At an event of the "Center for European Policy Studies" in Brussels, he presented the cornerstones of the innovative Liechtenstein concept for a regulation of the token economy by the so called “Token Container Model” and also explained the new roles that will be defined: such as, for example, Trustworthy Technology (TT), Token issuer, Token generator, Physical validator, TT Protector, TT Verifying Authority, etc. It is important to note that in the area of due diligence law and its obligations, compliance with international standards (e.g. know your customer (KYC)) and effective monitoring for anti-money laundering (AML) is ensured. An adapted due diligence law and corporate law to transfer value also constitutes an integral part of the new Act.

On 3 October 2019, the Liechtenstein Parliament passed the Act with an anticipated entry into force by 1 January 2020. The Liechtenstein Blockchain Act (2019) with the notion of the Token Container Model and its Trustworthy Technology approach has the potential to become the legal international "golden standard" of conducting business in the Blockchain.

General Data Protection Regulation (GDPR) for privacy and security

The GDPR that was put into effect on 25 May 2018 by the European Union (EU) is currently "the toughest privacy and security law in the world. GDPR will levy harsh fines against those who violate its privacy and security standards, with penalties reaching into the tens of millions of euros". The combination of the new Liechtenstein Blockchain Act in conjunction with the GDPR will ensure a robust business environment with clearly defined rules and responsibilities where commerce and innovation can grow and thrive within the EU. Closing the loop, the Financial Market Authority (FMA) Liechtenstein is the regulatory body for licensing, admission and supervision of financial service providers as well as for ensuring compliance.

What is more, Part 2 of the "Mobility in the Blockchain" Series will discuss possible business applications (so called Decentralised Applications or short DApps) in the automotive industry and critically outline its opportunities and challenges that need not only to be addressed, but also solved. In addition, it will introduce the notion of the "electronic" person. What is more, I will postulate that "absolut(e) digitalisation takes over and the Blockchain technology constitutes the bridge for a new Economy of Things with digital tokens". Time to get ready for click & drive.

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This article was written and published as an introduction to the "18th Blockchain Meetup Liechtenstein on the new token law". It is a contribution to the panel discussion.

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Author: Dr. Otto C. Frommelt is Director of the National Road Office of the Principality of Liechtenstein, a Member of the Platform Future Mobility and the Cardossier Association. He worked at the Volvo Group in leading Management and Board positions worldwide for more than 30 years. He is also Business Ambassador, Mentor, Keynote Speaker, an international Scenario, Strategy and Foresight Expert. @DOCFTWEET

(c) first published 26 June 2019, updated 14 July, 20 August and 11 October 2019 with my learnings from the Oxford Blockchain Strategy Programme, Sa?d Business School, University of Oxford