Ah, bitcoin – the first decentralized cryptocurrency. Nine years have passed since its inception, yet the perceptions of it could not be more clouded. Bitcoin has been on the receiving end of mixed feedback from its investors, financial institutions, regulators, banks and – more recently – the general public. Comments on the digital asset range from it being forward thinking and innovative to being a ‘bubble’, or even a pyramid scheme.
While bitcoin is known as the staple ‘coin’ in the world of cryptocurrency, it is no secret that the travel sector is more interested in its underlying technology: blockchain. Though the question remains – why does the travel industry herald blockchain as a transformative and disruptive technology?
Don’t worry – the Blue Swan Daily has taken the time to outline a few potential applications of blockchain in the travel industry.
Tokenising loyalty schemes and making payments:
Perhaps the most ready platform to be adopted as of right now is the ability for a business or airline to tokenise its loyalty scheme. It’s probably the most natural fit, and represents the most likely widespread take-up of blockchain in the travel industry.
Anyone can create a cryptocurrency token. The Ethereum blockchain and ecosystem provides an easy and already proven approach, making it popular with the launch of new coins (you can make one too – click here!).
A token on the Ethereum blockchain includes what’s known as “smart contracts”, which make up a pre-programmed transaction protocol that executes the terms of a regular financial contract.
Because decentralised blockchains like Ethereum are public ledgers, all transactions are recorded, independently verified by the computerised protocol, are conducted in real time, and can be viewed by anyone.
Now imagine – because these contracts are programmable, token developers can get creative with code to automate and manage transactions in this way. The largest tourism company globally, TUI, recently announced plans to relocate mass amounts of data on a blockchain platform, which would enable real time records of hotel inventories. This could allow the company to move its hotel inventory to different points of sale, depending on the demand or seasonality, and enabling the company to adjust selling margins and strategies as required.
AirAsia is another example of cryptocurrency utilisation in travel. The company is aiming to position itself as digitally driven first, as an airline second, and has confirmed plans to introduce a cryptocurrency for loyalty programme points. It would make sense for the company to integrate this proposal with the recently launched ‘BigPay’ electronic wallet, which uses AirAsia’s database of 63 million names, and exploit the capabilities of the system as an advanced way to learn more about the customer via recorded transactions.
Supply chain management:
Globally, supply chains could stand to benefit emphatically from blockchain technology. Supply chains, especially in aviation, are consistently playing technological catch-up, and are still largely reliant on mass paperwork. This produces the potential for errors and even fraud, not to mention waste from paper.
A decentralised ledger to record transactions is a perfect fit for many logistical operations. Consider a standard bitcoin transfer – the transaction involves all entities in the chain agreeing that it is valid. For a supply chain, it could mean entities agreeing on payment, warehousing, transport or delivery.
Forming other databases:
Theoretically, a blockchain environment could be the way forward for databases requiring highly secure and verifiable transactions. SITA imagines passengers could hold a token on their mobile phones when travelling, which would include biometric and other personal data. Paired with facial recognition technology, such a token has the potential to identify travellers as a single entity across multiple platforms.
Overall, while the technology is generally understood to be useful, the long term key to its adoption ultimately is for blockchain to be better than what is already out there. Are the promised benefits of blockchain really worth the amount of new investment and research required?
The answer relies on the level of uptake and adoption, which remains to be seen.