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February 23, 2024

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Calif. DMV To Go NFT With Vehicle Titling

The California Department of Motor Vehicles is announcing its own cutting-edge NFT project to digitize vehicle titles because it does not want anyone to believe that it is behind the times.

Ajay Gupta, chief digital officer of the California DMV, claims that putting titles on a private Tezos blockchain will cut costs while also increasing efficiency and transparency. Gupta stated in an interview with Fortune that the company intended to completely replicate the DMV’s title database onto its blockchain within the next three months, with consumer-facing applications following. A database that serves as a proof-of-concept has already been tested.

According to Gupta, the DMV sees NFT car titles as a way to modernize its procedures. Once fully developed, its private Tezos chain and mobile apps designed to store NFT titles are intended to facilitate easier title transfers between individuals and jurisdictions.

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

The California Department of Motor Vehicles worked with the crypto software development company Oxhead Alpha to create its private blockchain. However, neither the press release from Oxhead Alpha announcing a successful proof-of-concept blockchain nor the article contain any crucial information about the project, with the exception of the fact that it is based on a private proof-of-stake Tezos instance.

There are numerous references to “public good,” “reduced workload,” and “institutional grade security,” but the specifics do not go much deeper. The Register has contacted Oxhead Alpha to obtain additional information, but they have not responded to our inquiries.

The California DMV did respond, but only to confirm that blockchain-based title transfers would be implemented in stages over the next few months.

“A production-ready/deployed shadow ledger of titles on a private blockchain infrastructure is delivered in Phase I/Foundational phase.” “The title transfer process for peer-to-peer transfers will be streamlined and ready for a public pilot once phase III is completed,” the California DMV told us, without describing Phase II.

“The use of blockchain will make it possible to store a vehicle title in a DMV digital wallet as a secure digital asset (a non-fungible token). This digital asset provides undeniable ownership of the asset and eliminates the requirement for a paper title.”

How the DMV’s private blockchain is hosted, the number of nodes, and who is performing the validation are additional crucial details that are missing. “The DMV chain is currently operational and running DMV validator nodes,” Oxhead Alpha president Andrew Smith stated, but this isn’t much help to those who are curious about who is in charge of the distributed database’s management.

The question of whether a blockchain system is required arises if the DMV manages it entirely internally. Using a centralized database, could titles not be tracked just as effectively and with less potential for, well, everything that happens in the crypto world?

The issue of security arises if the California DMV is not in charge of the nodes: How secure is the data validation process as a whole, and who is performing it? A vehicle title database contains a lot of valuable information, but the blockchain world is plagued by bugs.

A bad taste in the mouth Interstate title transfers are one of the use cases cited by Oxhead Alpha and the DMV. Smith mentioned that in California, defective automobiles are marked “lemons” on their titles, but they can be taken out of the state, transferred, and then brought back to California to lose that label.

This problem probably wouldn’t exist with a persistent digital title, but the blockchain wouldn’t be necessary: The National Motor Vehicle Title Information System is an existing interstate title tracking system.

“Protecting consumers from fraud and unsafe vehicles and keeping stolen vehicles from being resold,” according to the NMVTIS’s website, is what California’s blockchain version would do. Of course, because California was the first state to use blockchain title systems, there isn’t a network of other blockchain title systems to connect to. As a result, it’s not clear how interstate transfers would work, at least not yet.

It is important to note that Tezos, the project’s chosen blockchain, is also fraught with controversy. When Tezos first launched in 2017, it was marketed as a smart contract blockchain similar to Ethereum. However, the main difference between the two was that Tezos was using proof-of-stake rather than the proof-of-work model that was used by Bitcoin and, up until recently, Ethereum.

Tezos now appears to be Ethereum’s second-fiddle NFT blockchain due to the loss of that selling point. However, it does have a troubled business history, including losing a $25 million class-action lawsuit for selling unregistered securities during its initial coin offering.

Oxhead’s Smith claims that the California DMV is currently employing “paper-based technology from the 18th century to solve transaction fraud from the 21st century.” In this instance, it is unclear, at least not without significantly more information, whether a blockchain is the solution.

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