California tries vehicle titles on private DMV blockchain • The Register

The California Department of Motor Vehicles doesn’t want anyone to think it’s a technological dinosaur—that’s why it’s announcing its own groundbreaking NFT project to digitize vehicle titles.

According to CA DMV chief digital officer Ajay Gupta, the move to place titles on a private Tezos blockchain will increase efficiency and transparency while reducing costs. In an interview with Fortune, Gupta said the agency hoped to fully replicate the DMV’s title database onto its blockchain within the next three months, with consumer-facing applications to follow. A proof-of-concept database has already been tested.

The DMV is looking at NFT car titles as a way to modernize its process, Gupta said. The private Tezos chain, when fully designed and accompanying mobile apps built to act as wallets for storing NFT titles, is intended to be used to facilitate title transfers between individuals and jurisdictions.

“The DMV’s perception of lagging should definitely change,” Gupta opined.

Is blockchain the answer? Answer hazy.

The California DMV partnered with crypto software development firm Oxhead Alpha to build its private blockchain, but nowhere in Oxhead Alpha’s press release announcing a successful proof-of-concept blockchain or article are there any significant details about the project other than that it is on a private proof- of-stake Tezos instance.

A lot of “public good”, “reduced workload” and “institutional degree security” are mentioned, but the details don’t go much deeper. The register have reached out to Oxhead Alpha to press out some details, but they have not responded to our queries.

The California DMV responded, but only to confirm that plans were in place to implement title transfers using blockchain technology in phases over the next few months.

“Phase I/Foundational phase delivers a production-ready/distributed shadow ledger of titles on a private blockchain infrastructure. Once Phase III is complete, the title transfer process for peer-to-peer transfers will be streamlined and ready for a public pilot,” California DMV told us, without mentioning what phase II entails.

“The use of blockchain will allow a vehicle title to be a secure digital asset (a non-fungible token) that can be held in a DMV digital wallet. This digital asset eliminates the need to present a paper title and ensures indisputable ownership of the asset.” “

Another important missing detail is how the DMV’s private blockchain is hosted, how many nodes there are, and who does the validation. Oxhead Alpha president Andrew Smith said that “the DMV chain is currently operational and running DMV validator nodes,” but that doesn’t mean much to those wondering who handles the administration of the distributed database.

If it is run entirely in-house by the DMV, the question becomes one of whether a blockchain system is necessary. Couldn’t titles be tracked just as well – and with less potential for, well, anything going on in the crypto world – using a centralized database?

If the nodes are not operated by the California DMV, the question shifts to one of security: Who is doing the validation of the data and how secure is the whole thing? There is a lot of valuable information in a vehicle title database, and bugs abound in the blockchain world.

A sour taste in the mouth

One of the use cases cited by the DMV and Oxhead Alpha is interstate title transfers. Smith noted that defective cars labeled “lemons” in California have notes on their titles, but can be taken out of state, transferred and then brought back to California to lose that designation.

With a persistent digital title, this problem would presumably be eliminated — but there’s no need to involve the blockchain: An interstate title tracking system known as the National Motor Vehicle Title Information System already exists.

On its website, NMVTIS was designed to “protect consumers from fraud and unsafe vehicles and prevent stolen vehicles from being resold,” much like what California’s blockchain version would do. Of course, with California being a pioneer, there is no network of other blockchain title systems to connect to, so it’s also unclear how interstate transfers will work, at least at this point.

It is worth noting that Tezos, the blockchain chosen for the project, is also not without controversy. Tezos’ big difference when it launched in 2017, initially pitched as a smart contract blockchain like Ethereum, was that it ran proof-of-stake, which is far less energy-intensive than the proof-of-work model used by Bitcoin and, until recently , Ethereum.

As the sales pitch has evaporated, Tezos looks like the second fiddle NFT blockchain to Ethereum. However, it has a troubled business history, including losing a class-action lawsuit requiring it to pay out $25 million to sell an unregistered security during its initial coin offering.

According to Oxhead’s Smith, the California DMV currently uses an “18th-century paper-based technology to solve 21st-century transaction fraud.” Whether a blockchain is the solution is not clear in this case – at least not without significantly more information. ®