Bitcoin and Cryptocurrency Technologies

and the engine to start based on the proximity of the fob to the car and potentially a user action such
as pushing a button.
To prevent an adversary from spoofing the car key, such unlocking mechanisms should use
cryptography. While security researchers have found problems with many recently deployed locking
protocols, it’s possible to get it right. Typically these algorithms employ symmetric key cryptography,
but for the purposes of our example, consider one that uses a digital signature scheme, such as
ECDSA, based on asymmetric cryptography.
In this example, the car might store a copy of the public key(s) of the fob(s) authorized to open the
doors and start the engine. When a fob requests access, the car sends a random challenge and asks
the fob to sign it with the private key that it stores. If and only if the fob can respond with a proper
signature on this challenge, the car authorizes access. So far this is not much of a departure from how
locking mechanisms actually work, except that it uses heavier‐weight crypto that would be slightly
more costly to deploy.
Get Smart.​The next iteration of designing a smart car is to assume that the public key that verifies the
key fob is not hardcoded by the manufacturer directly. Instead, the car has the technical capability to
constantly, wirelessly receive new blocks from a block chain such as Bitcoin’s. When the car is
manufactured, the public key in the key fob of its first user (say a manager on the assembly plant) is
added to the block chain in a special transaction, and the car is programmed with its transaction ID.
The core idea is that as the car changes possession — it might go from an assembly line to quality
control to a delivery person to a car dealership to its first owner — updates to the block chain will
authorize each transfer. It is important to note that in this model, the authorized key fob does not
travel with the car. Each person or entity has a pre‐existing key fob (or carries/wears technology
suitable for implementing the functions of a key fob) with a unique signing key which is activated or
deactivated based on transactions that occur on the block chain. Such a transaction would take the
car’s most recent transaction ID as an input and designate a new public key as the output. It would be
signed with the private key corresponding to the current owner.
This is similar to the idea of smart property that we discussed in Chapter 9, but with a key difference.
The block chain transaction doesn’t merely ​represent​a change in ​ownership​of the car: it additionally
transfers actual physical control or ​possession​of the car. When a car is transferred this way the earlier
owner’s key fob stops working and the new owner’s key fob gains the ability to open the locks and
start the engine. Equating ownership with possession in this way has profound implications. It enables
a powerful kind of decentralization, but it is not obvious if this is a good idea. We’ll return to this
question in the final section of this chapter.
Secure exchange.​Let’s consider the situation where Alice owns a smart car and wants to sell it to Bob.
The ability to transfer control digitally opens up interesting possibilities. For example, Alice might be
traveling overseas and to fund further travel expenses might want to sell her car, which is physically
parked in her driveway back home. With an internet connection, Bob could pay Alice for the car with
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