California announces DMV-powered blockchain through partnership with Tezos
The Department of Motor Vehicles has never been an agency that screams innovation. The agency is better known for red tape and endless lines than technological transformation. But this could change following a collaboration between California’s DMV and open source blockchain Tezos and Oxhead Alpha, a crypto-focused software development firm.
Together, the three partners are building a DMV-powered blockchain that will not only digitize car titles for California drivers, but also seek to streamline title transfers between owners.
Ajay Gupta, Chief Digital Officer at the California DMV, said the agency hopes to complete its “shadow book,” or a full replication of the state’s title database on the blockchain, within the next three months before building consumer-facing applications, including digital wallets that hold car title NFT- is.
“DMV’s perception of lagging should definitely change,” Gupta said Fortune in an exclusive interview.
The road to blockchain
At a time when crypto is still searching for mainstream use cases, car titles have often emerged as a potential killer application. A Cleveland startup raised $5 million in 2020 to digitize titles, and the state of California published a report that same year identifying possible blockchain pilots, with the DMV included as one of the options.
Gupta said work on the project began in early 2020, although his team had to take a break due to the pandemic. Still, the agency saw an opportunity to leverage digital ledgers to modernize its processes, with the generation and transfer of car titles emerging as a clear area for innovation.
Andrew Smith, the president of Oxhead Alpha, said he was pleasantly surprised by how quickly the Gupta-led DMV wanted to move forward with the initiative. He described the current system as using 18th– the paper-based technology of the century to solve 21stSttransaction fraud of the century, and points to common sense solutions presented by digitizing car titles and tracking their movements.
For example, if someone buys a “lemon” or a defective car in California, it will have a special designation on the title. If they then move out of state and back to California with the car, they can avoid the “lemon” mark and sell the car without the new buyer knowing.
“In terms of the benefits of having a persistent digital title, this is a very obvious use case,” Smith said.
DMV worked with Oxhead Alpha and Tezos to create a private instance of the Tezos blockchain, which would increase security compared to relying on a public blockchain. Smith said the DMV chain is currently operational and running DMV validator nodes.
For now, the blockchain will operate in the background, but Gupta hopes to create consumer-facing applications soon. One obvious application would be to allow people to transfer car ownership between digital wallets through an NFT version of their title, with the DMV acting as an intermediary to ensure all sales obligations are completed. Gupta said that kind of functionality is on the horizon.
Another possible area of use is the transfer of titles between states. Smith said he’s seen a lot of appetite from governments at the municipal level, with mayors like Miami’s Francis Suarez advocating for crypto, and that generating interest from states will come next.
Smith added that blockchain serves as an ideal tool for cooperation between states because projects can gradually add participants.
“This certainly shows that there is real benefit to real people,” he said.
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