The Potentials of Blockchain in the Travel Industry
Though it was conceptualized in 1991, Blockchain technology has been creating a buzz in multiple fields and industries since 2008, after the concept of Bitcoins was introduced through a publication by Satoshi Nakamoto. As Bitcoin or cryptocurrency was the first real-life implementation of blockchain technology, it shook both the financial world and the technological world to its core.
Blockchain technology offers a new way to store and use pieces of information and improve security, transparency and transactions. Hence, it has the potential to bring significant changes in the current industrial world, and the travel and tourism industry is now a big part of it. Countless industry experts have contemplated various ways to incorporate Blockchain into performing different functions in the travel sector.
However, before we take a look at some of the potential uses of Blockchain in the travel and tourism sector, let’s first get familiar with the technology.
What is understood by Blockchain Technology?
As suggested by the name, A Blockchain is a chain of blocks containing some information or records of transactions between any parties. It was designed in such a way that each data block is time-stamped like a notary making it impossible for anyone to tamper with them.
Each block consists of three things, the Data, a Hash or unique identifier that points to the block and all of its contents, and the Hash or identifier of the previous block. This Hash is what helps in the formation of the uninterrupted chain as it links the new block with the previous one.
Once a block is created it is encrypted and given a unique identity (UID). When any alterations are made in the data stored in the block, its UID changes as well making all the following blocks invalid. But today’s computers are efficient enough to recalculate these UIDs quickly. So, Blockchains have a feature called Proof-of-work which slows down the creation process of each block, thus successfully preventing them from being tampered with. So to reinforce the security of the data stored via Blockchains, the UID and Proof-of-work play important roles.
Another interesting security feature of the Blockchain is that the contents of the blocks are decentralised and distributed across a peer-to-peer network. Any new blocks created in the network need to be verified and approved by the majority of peers in the network before adding them to the chain. Therefore, to change any data block, one will have to tamper with all the following data blocks, re-do the Proof of work for each of them and take control of more than 50% of the peer-to-peer network. The entire process is too time-consuming and almost impossible to accomplish thus strengthening its security, transparency and traceability.
How Does it Work?
As we have a better understanding of Blockchain technology, take note of the step-by-step of the entire process.
- First, a block or transaction is requested.
- The block is then sent to every node in the peer network.
- The block is validated by the majority of the peer network.
- The block is updated with Proof-of-work.
- The new transaction data block is added to the existing Blockchain.
- The peers in the Blockchain network are notified about the update.
Using decentralized data storage and encryption, Blockchain protects the data from being manipulated by anyone or a group, creating a secure and trustworthy environment. Any and all alterations will require approval from the nodes in the peer-to-peer network.
How Can Blockchain Benefit the Travel Industry?
Stability and security are at the top when speaking of the advantages of Blockchain technology in the travel industry. No data stored through Blockchain will be lost or tampered with via malicious cyber-attack by ensuring traceability.
Important pieces of information constantly get passed around between businesses in the travel industry. For instance, customer details are passed from the travel agents to airlines and hotels. This information can be easily stored and accessed through Blockchain as the entire network will receive a copy of the important information.
And how can we not talk about secure and trustworthy financial transactions which are a crucial part of doing business in the travel industry? Blockchain technology ensures secured and swift payments due to the lack of intermediaries in the process, even overseas while establishing trust among the parties involved.
Now let’s check out the potentials Blockchain can fulfil in the travel and tourism industry.
Potential Uses of Blockchain in the Travel Industry
Secured Payments
As we have discussed before, online payment is the most critical use of blockchain technology in the travel and tourism industry. Considering its popularity in finances and payments, it is a full-proof way to ensure security for all concerned parties. By allowing travel companies to accept payments through Bitcoin and other cryptocurrencies, blockchain technology guarantees simple, secured and swift payment transactions.
Luggage Tracking
Thousands of luggage are misplaced or go missing each day while travelling. To ensure secure and reliable tracking of luggage, Blockchain can be very important. The decentralised system can make tracking stored data more transparent and independent.
Transparency in Digital Inventory and Vendor Management
Making Digital inventory and vendor management more transparent and efficient is an easy task if done using Blockchain technology. Cancellations, refunds, or overbookings are a big problem when managing flight and customer details online. However, if new bookings are added to the general blockchain ledger as a transaction block which is shared among the concerned parties, then everyone will be on the same page and thus improving the rate of accuracy of current inventory status.
Similarly, by improving the visibility of the entire supply cycle, Blockchain can help vendors and suppliers keep track of their activities. A single common blockchain network that connects vendors, suppliers and other parties involved, would make the process traceable and transparent.
Identifying Services
Blockchain can securely verify customers’ identities by avoiding redundant repetitive sharing of personal information or financial data. It can significantly shorten the time required for check-in / check-out by reducing the number of document verifications while travelling.