The impact of blockchain on the tourism sector
The blockchain continues to make headlines, but ? what exactly is it and how will it drive change in the travel industry? A blockchain (blockchain) is a distributed ledger of records arranged in batches of data, called blocks, that use cryptographic validation to link to one another.
In a nutshell, the blockchain means each block references and identifies the previous block forming an unbroken chain, hence the name. However, the clever thing is that the ledger is not stored in a master location nor is it managed by any particular body. Instead, it is said to be distributed, thus existing on several computers at the same time, so that anyone interested can save a copy of it.
In today's always-connected world, generating trust and ownership is critical. The blockchain allows individuals and organizations, independent of each other, to rely on the same source of shared, secure and auditable information. This is great news for travel companies and something that will begin to blossom as 2018 and beyond progresses.
In origin, it was a pioneering system in 2008 to record and legitimize the transactions with bitcoin, the best-known application of blockchain technology to date and a well-established currency accepted globally by many leading brands, including Microsoft and Expedia.
However, the potential of blockchain is not limited to cryptocurrencies or the financial industry, but is hailed as the new Web 3.0 with the potential to change many sectors, including travel companies. One area of modification will be smart contracts that will help exchange money, property, shares or anything of value in a transparent and conflict-free manner, while avoiding the services of a broker.
The collaborative economy has flourished with Uber and Airbnb. However, users have to rely on an intermediary such as Uber to arrange a ride. By enabling payments peer-to-peer blockchain opens the door to direct interaction between parties, resulting in a truly decentralized sharing economy.
If we take the example of having all the hotel properties in a city in a blockchain database, this would mean that search companies would still be needed to help users find what they are looking for and provide a list of selected hotels. However, anyone will be able to access rooms from the blockchain and, therefore, there will be more competition in the market rather than middlemen setting distribution rates.
TUI has already moved all its hotel contracts to its private blockchain. Using smart contracts that execute automatically, TUI can easily manage and automate a large portion of its hotel vacancies and hotel capacity among all the markets in which it operates.
Airlines are also starting to get in on the action, with Air New Zealand exploring this technology to improve efficiency and safety in the airline industry;a to improve the efficiency and security of services such as reservations and baggage tracking, and with Lufthansa looking at use cases for putting information about bookings, reservation changes and traveler itinerary on the blockchain.
Blockchain is a disruptive technology due to its ability to digitize, decentralize, secure and incentivize transaction validation. As with any new technology, critical mass is essential for adoption and a wide variety of industries are evaluating blockchain.
In 2018, blockchain will make new headlines as more travel companies begin accepting bitcoin and other cryptocurrencies as a form of payment. In addition, initiatives will emerge to transform the way travel companies process and manage payments and inventory online.
By using distributed architecture and encryption to authorize transactions, blockchain helps eliminate the middleman, making m mobile payments more efficient, cost-effective and accessible, even for consumers who don't have a bank account.
In the past three years, more than 2,500 patents have been filed and more than 90 corporations have joined blockchain consortia. This year alone, initiatives based on this protocol have received more than $2 billion in funding, but this is only the first stage. I expect this to increase exponentially as 2018 progresses, before this technology becomes mainstream by 2025.
I expect this to increase exponentially as 2018 progresses, before this technology becomes mainstream by 2025.