By now most people have heard of Bitcoin – the mysterious electronic currency created by “Satoshi Nakamoto,” the nom de plume of the anonymous inventor, or inventors, of Bitcoin. The dollar value of the cryptocurrency has fluctuated wildly since its inception, as frenetic investors pouring money into “mining” operations like a modern-day gold rush.
In simple terms, it works like this: every ten minutes, a puzzle is formed that specially programmed mining computers race to solve. The winner receives a block of Bitcoin (at this writing one Bitcoin is valued at $6,395 – last year it was over $17,000) and the puzzle resets. Alternatively, Bitcoin can be purchased with fiat currency (legal tender that is backed by its government).
As perplexing as Bitcoin is, perhaps the more enduring contribution “Nakamoto” has made to the future is the larger concept that underlies all cryptocurrencies: the blockchain. Blockchain is a database that is immutable, secured by advanced cryptography (encryption and codes) and backed up with identical copies of information on a global network of computers. So it can’t be tampered with or changed.
By design, this network is not controlled by a single authority, and has so far proven impossible to hack. The technology is complicated, but the concept is simple: blockchain is essentially a ledger or database that is open and decentralized, and like a ledger, each entry is fixed and can only be adjusted by subsequent ledger entries.
The breakthrough of blockchain comes down to “trustless-ness,” according to Clifford Choi, technical advisor at Emurgo, a blockchain venture fund and incubator. “You don’t own the data you give to Facebook,” says Choi, “you just have to trust them with it if you want to use their services. It’s the same for the money in your bank account, though most people don’t read the fine print.”
With a currency on a decentralized blockchain, such as Bitcoin, there’s no need for trust in an institution – what the ledger shows is yours and you can store and spend it without the need for a bank. And the impact is already being seen in the travel industry. Roughly 260 airlines worldwide, plus hotels, online travel agents and other travel service providers, have already begun to accept Bitcoin and “altcoins” (crytpocurrencies other than Bitcoin). There are even BTMs (bitcoin ATMs) in some locations, where cryptocurrency can be withdrawn in local money.
Tip of the Iceberg However beyond the obvious benefits of cryptocurrencies, the notion of distributed ledgers has far-reaching applications in all kinds of business environments – including, and perhaps especially, travel. In fact, according to new research from PwC, blockchain developments are accelerating globally, with the possibilities of reducing costs, speeding processes and delivering more transparency and traceability.
The study, entitled Blockchain is here. What’s your next move? surveyed 600 executives in 15 countries and territories and found 84 percent of executives report blockchain initiatives underway in their organizations, and 15 percent say these initiatives have gone live.
Logically, financial services institutions have dominated early developments in blockchain with 46 percent identifying it as the leading sector currently and 41 percent in near term (3-5 years). Sectors identified by survey respondents with emerging potential within 3-5 years include energy and utilities (14 percent), healthcare (14 percent) and industrial manufacturing (12 percent).
“What business executives tell us is that no one wants to be left behind by Blockchain, even if at this early stage of its development,” comments Steve Davies, blockchain leader at PwC. “A well-designed blockchain doesn’t just cut out intermediaries, it reduces costs, increases speed, reach, transparency and traceability for many business processes. The business case can be compelling, if organizations understand what their end game is in using the technology, and match that to their design.”
Despite the technology’s potential, trust is one of the biggest blockers to blockchain’s adoption. Nearly half of the respondents (45 percent) identified it as the blocker to blockchain adoption, while 48 percent believe its regulatory uncertainty. “Blockchain by its very definition should engender trust. But n reality, companies confront trust issues at nearly every turn,” Davies continues.
Blockchain’s biggest benefits will be developed and delivered through shared industry- wide platforms, according to the PwC research. But the study notes that this won’t happen without industry-specific companies – including competitors – agreeing common standards and operating together.
As an emerging technology, blockchain has colossal potential but is still limited in practice. But as new players emerge, more options are put in front of users. In the travel industry, for example, if hotel and airline loyalty programs were to do ticketing and points on a shared blockchain, there would be no need to trust each other and the transactions would be much simpler and more efficient, says Choi.
Meanwhile, other start-up ventures are tackling specific traveler woes such as airport checkpoint queues and more efficient processing of personal data to streamline security screenings. Whether we like it or not, the blockchain way of life is coming – to travel providers, travelers, and maybe even a travel program near you.
To find out more about blockchain, along with other major technology disruptors such as artificial intelligence and chatbots, make plans now to join us for “Blockchains, Bots & AI, Oh, My!” the next in BTE’s Going Deeper webinar series, coming November 14.