Streamline interstate Department of Motor Vehicles collaboration with Private Blockchain

According to the United States Census Bureau, over 7.9 million Americans moved from one state to another in 2021 alone. One of the tasks an individual must complete when moving from state to state is trading in their driver’s license from their former state of residence for a license in their new state of residence. Each state’s Department of Motor Vehicles (DMV) is responsible for the issuance and management of driver’s licenses within the state, and this requires collaboration with other state DMVs to gather important data such as traffic offenses occurring out of state.

In this post, we discuss how blockchain can streamline driver’s license issuance and foster deeper collaboration between DMVs in all 50 states and why blockchain is a compelling technology choice.

Improving the Driver’s License Compact

Currently, there are mechanisms in place to facilitate collaboration and data sharing between state Department of Motor Vehicles (DMV) organizations, such as the Driver’s License Compact (DLC) and the Driver’s License Agreement (DLA). These programs provide a framework for the DMVs of participating states to collaborate together and share data related to driver’s license issuance and reciprocity, traffic conviction information, and more. These programs, however, do not have adoption or membership commitment from all 50 states.

Utilizing blockchain technology, the existing model for driver’s license reciprocity, driving record sharing and license issuance across states could be further improved, and address challenges in garnering adoption from state DMVs. Blockchain enables deeper collaboration between states directly without requiring one-to-one integrations or a central orchestrator to build a solution that unifies each state’s DMV. Building a common shared network between state DMVs would become a platform on which additional features and utilities could be built, such as a digital driver’s license that offers reciprocity across all 50 states.

Why blockchain?

Let’s begin by giving a brief overview to what blockchain is. Blockchain is an immutable ledger that is shared amongst a distributed group of participants where updates to the ledger—recorded as transactions—must be agreed upon via a network consensus.

A ledger is the underlying storage mechanism or database in blockchain. When you think of a ledger, the first type of ledger that comes to mind might be an accounting ledger. In a typical accounting ledger, you would keep adding debit and credit entries. In a blockchain, this is very similar in the sense that you store any change in the network as a record. In blockchain, these records are called transactions. The other term to understand is network consensus. Network consensus refers to the protocol that dictates how the node(s) owned by members in the blockchain network sync with each other and agree to sets of transactions that write data to the shared ledger. The last component you need to understand are smart contracts. Smart contracts are the mechanism by which you can express business logic in form of code to interact with your blockchain network – smart contracts enable blockchain technology to be applied to a variety of use cases with custom logic related to how data is written to and read from the ledger.

Now that we addressed what exactly blockchain is, let’s talk about why you would want to use blockchain for streamlining the processes of updating your license when moving state to state. Blockchain technology fosters collaboration between entities in a decentralized network, in which every participant keeps a copy of the ledger that is updated by way of transactions that all of the participants agree upon via network consensus. This ensures that every member or node is on the same page when it comes to what data is being stored on the network, and it eliminates the need for paper processes or 1:1 integration to facilitate business logic between different members just like centralized databases. However, it eliminates the need for an intermediary or central authority, which can reduce costs and increase efficiency by enabling direct peer-to-peer interaction between the states during driver’s license issuance and verification processes. Moreover, the smart contract aspect of these blockchain networks natively allow states to expand the functionality of this shared network over time without having to build entirely new solutions from the ground up. This programmability on top of a common shared ledger then sets the stage for more advanced applications like a digital driver’s license that offers reciprocity across all 50 states in the future.

Choosing between public and private blockchains

Now that we have discussed why you should choose blockchain, let’s discuss the different kind of blockchains, how they are different, and what one suits our needs the best. There are two types of blockchain protocols: public and private blockchains.

Public blockchains are open, permissionless networks, meaning that anyone can join and interact with the blockchain network. Public blockchains are often utilized when public verifiability of data or global accessibility of an application is important, such as public marketplaces for digital assets. Although technologies such as zero-knowledge proofs and decentralized identities show much promise in enabling privacy on public blockchains, they are still new. On the other hand, private blockchains are closed, permissioned networks where participating organizations are known to one another in advance. These networks tend to offer more advanced privacy features and can support higher transaction throughput than public blockchain at the expense of broad decentralization. Private blockchains can be a good option for enterprises that need achieve the practical benefits of decentralization but don’t want to expose sensitive data to the general public. More specifically, with private blockchains, organizations can achieve higher visibility and deeper collaboration between all of the entities within their network without exposing that data to the public.

In figure 1 below we illustrate how the DMVs of different states can interact directly with one another on a common, shared system of record without requiring numerous 1:1 integrations with one another.

Figure 1

When it comes to streamlining the process of exchanging a driver’s license when moving state to state, you need close collaboration between all the DMVs to establish reciprocity. The destination state’s DMV must be able to verify the license holder’s driver’s license status with the issuing state and verify the driving record of the license holder before issuing a license in their state. Each state should also have equal footing in this network, creating an environment without a central authority. Further, because you don’t want all of this information to be in the public domain, a private blockchain becomes the ideal choice to connect each state DMV with one another. This means that all the members in the network—in this case all 50 states—are able to share data on the blockchain and it is only accessible to the DMVs from all 50 states and no other entity without the explicit permission from the network members. There are a variety of private blockchain frameworks such as Hyperledger Fabric and Hyperledger Besu which allow permissioned access to the network amongst a set of defined participants.

Conclusion

In this post, we discussed the existing framework for interstate DMV collaboration and how blockchain could build upon that foundation to create a more efficient mechanism for state DMVs to facilitate key processes with one another. Furthermore, we discussed the fundamental characteristics and optionality associated with blockchain, and a diagram of how the different states within the US can closely collaborate with each other.

If you are interested in learning about public blockchains and new capabilities on Amazon Managed Blockchain to support public blockchain workloads, check out our new blog about AMB Query and AMB Access.

About the authors

Varsha Narmat is a Blockchain/Web3 Specialist Solutions Architect at AWS. Prior to AWS, Varsha has obtained a BS in Computer Science from Michigan State University and has always been passionate about technology and innovation. Outside of work Varsha enjoys reading, traveling and staying active.

Kranthi Manchikanti is a Cloud Solutions Architect at AWS with experience in designing and implementing scalable cloud solutions for enterprise customers. Kranthi is a trusted advisor to organizations looking to migrate and modernize their applications to the cloud. He has also made significant contributions to the open source community, including The Linux and Hyperledger Foundations.