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California’s DMV to test NFT car titles on Tezos

California's DMV to test NFT car titles on Tezos

The Department of Motor Vehicles has never been known for being a very innovative agency. The agency is known more for its bureaucracy and long lines than for changing how technology works. But this might change now that the California DMV, an open-source blockchain called Tezos, and a crypto-focused software development company called Oxhead Alpha are working together.

Together, the three partners are building a blockchain that will be run by the DMV. This blockchain will not only digitize car titles for California drivers, but it will also try to make it easier for owners to switch titles.

Ajay Gupta, the chief digital officer at the California DMV, said that the agency hopes to finish its “shadow ledger,” or a full replicate of the state’s title database on the blockchain, within the next three months. This will be done before building applications for consumers, such as digital wallets that hold car title NFTs.

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

The path towards blockchain

During a time when crypto is still searching for mainstream use cases, car titles have frequently been brought up as a possible killer application. In 2020, a startup from Cleveland raised $5 million to digitize titles, and in the same year, California published a report identifying potential blockchain pilots, with the DMV as one of the options.

Gupta stated that work on the project began at the beginning of 2020, although his team had to pause due to the pandemic. Nonetheless, the agency recognized an opportunity to utilize 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, was pleasantly surprised by how quickly the Gupta-led DMV desired to move forward with the initiative, he stated. He described the current system as employing 18th-century paper-based technology to combat 21st-century transaction fraud, highlighting the common sense solutions presented by digitizing car titles and tracking their movement.

“As far as the benefit for having a persistent digital title, this is a very obvious use case,” Smith said.

The DMV collaborated with Oxhead Alpha and Tezos to develop a private instance of the Tezos blockchain, which would provide greater security than a public blockchain. According to Smith, the DMV chain is currently operational and utilizing DMV validator nodes.

The blockchain will operate in the background for the time being, but Gupta hopes to develop consumer-facing applications in the near future. People could transfer car ownership between digital wallets using an NFT version of their title, with the DMV acting as a middleman to ensure all sale obligations are met.

Title transfers between states are another possible use. Smith said that he has seen a lot of interest from city governments, with mayors like Francis Suarez of Miami pushing for crypto, and that the next step would be to get states interested.

Smith also said that blockchain is a great way for states to work together because projects can slowly add more people.

“This certainly demonstrates there is real benefit to real people,” he said.

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