Summary Blockchain technology has the potential to bring transparency and trust to a multitude of use cases. Our research demonstrates that the technology can reduce asymmetric information in markets by bridging trust gaps. The combination of blockchain and Internet of Things technology that automatically collects sensor data, provides a feasible, decentralized technological solution for such an inefficient “Market of Lemons” coined by nobel laureate Georg Akerlof. In this paper, we develop a system prototype to reduce mileage fraud on the used car markets. Our work demonstrates the feasibility of a trusted system of records for (vehicle) data such as mileage data using a distributed database based on the public Ethereum network and smart contracts. We have identified eight requirements that are fulfilled by the prototype and the functional logic and design of thesolution can be reproduced to any other application area characterized by a lack of trust between actors or by the absence of a trusted central authority. However, the developed prototype suffers from similar limitations and challenges as the technology itself. Low throughput causes limitations in scalability and transaction costs are unpredictable. Further development of the blockchain technology and considering more cost‐efficient consensus mechanisms will address these issues.