California toys with digital vehicle titles on private DMV blockchain

Because this is necessary, definitely can't go wrong

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 cutting-edge NFT project to digitize vehicle titles. 

According to CA DMV chief digital officer Ajay Gupta, the move to put 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 come after. A proof-of-concept database has already been tested.

The DMV sees NFT car titles as a way to modernize its process, Gupta said. Its private Tezos chain, once fully fleshed out and accompanying mobile apps are built to act as wallets for storing NFT titles, is intended to be used to make title transfers between individuals and jurisdictions easier. 

"The DMV's perception of lagging behind should definitely change," Gupta opined. 

Is blockchain the answer? Reply 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 the article are any important details about the project aside from it being on a private proof-of-stake Tezos instance.

Plenty of "public good," "reduced workload," and "institutional grade security" is mentioned, but the details don't go much deeper. The Register has reached out to Oxhead Alpha to squeeze out some details, but they haven't responded to our questions.

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

"Phase I/Foundational phase delivers a production ready/deployed shadow ledger of titles on a private blockchain infrastructure. Once phase III is completed, the title transfer process for peer to peer transfers will be streamlined and ready for a public pilot," the California DMV told us, with no mention of what Phase II entails.

"The use of blockchain will allow for 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 for a paper title to be presented and provides for indisputable ownership of the asset."

Another important missing detail is how the DMV's private blockchain is being hosted, how many nodes there are, and who's doing 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 for those wondering who is handling management of the distributed database. 

If it's being operated entirely internally by the DMV, the question becomes one of whether a blockchain system is necessary. Could titles not be tracked just as well - and with less potential for, well, everything that happens in the crypto world - using a centralized database?

If the nodes aren't being run by the California DMV, the question shifts to one of security: Who is doing the validating the data and how secure is the entire thing? There's 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 are interstate title transfers. Smith noted that faulty cars labeled "lemons" in California have notes placed 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 issue 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 the NMVTIS was designed for "protecting consumers from fraud and unsafe vehicles and keeping stolen vehicles from being resold," much like what California's blockchain version would do. Of course, with California being a pioneer, there's no network of other blockchain title systems to connect to, so it's also unclear how interstate transfers would function, at least at this point. 

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

With that selling point having evaporated, Tezos looks like being the second-fiddle NFT blockchain to Ethereum. It does, however, have a troubled business history, including losing a class-action lawsuit requiring it to pay out $25m for selling an unregistered securities during its initial coin offering, though. 

According to Oxhead's Smith, the California DMV is currently using an "18th-century paper-based technology to solve 21st-century transaction fraud." Whether a blockchain is the solution isn't clear in this case - at least not without considerably more information. ®