Blockchain: Travel Industry Enabler & Disruptor

By Colleen Black, Partner

Blockchain has certainly been a hot topic recently, with numerous discussions and sessions on how and when it will enable or disrupt the travel industry from distribution to payment.  But what is the reality?

First, what is blockchain?
Simply, blockchain is a distributed database that cannot be altered plus historic data cannot be corrupted or lost.  Millions of computers host each blockchain, whether private or public, partially or fully.

  • A public blockchain is an open network that allows anyone to join and participate in the innovation.
  • A private blockchain is a closed system that requires an invitation.

The best analogy I’ve read describing the difference comes from this recent Eyefortravel article in which Winding Tree founder Max Izmaylov describes the difference:

“A private blockchain is like an intranet. Yes, you can build this for your company, and yes it does have value in that you can share resources and so on. But a public blockchain is what many very clever people are calling the new Internet. The Internet changed the world. Does an intranet change the world? No absolutely not. An intranet is not ground-breaking technology… The value of Bitcoin, as well Ethereum (the most popular platform for smart contracts), lies in the fact that no single person or organization owns the network. That is revolutionary.”

What is Bitcoin? Ethereum?
The cryptocurrency Bitcoin was introduced in 2009 and is one of the largest public blockchains.  Blockchain is the technology behind Bitcoin. Ethereum, another cryptocurrency, is the most popular platform for smart contracts. It wasn’t long after this release that big names like IBM, Microsoft and Mastercard started looking at blockchain and how it could apply to travel.  The motivation is not only in remaining cutting edge, but to lower costs through by decentralizing and speeding up processes, and improving security and reliability through a decentralized solution.

How it all comes together
How do all of the pieces of the system mentioned above work together to complete a transaction? Check out this simple graphic from BlockGeeks:

As you can see, traditional financial institutions are conspicuously absent in the graphic above. With a peer-to-peer or company-to-company direct system, the “hub and spoke” model we have become accustomed to is disrupted. And, like the financial sector has its big banks, so the travel industry has the GDSs; with blockchain, it’s possible to work around this existing structure and therefore avoid associated fees, etc. In fact, the promise of this type of decentralized B2B system was the impetus for Lufthansa Group’s recent partnership announcement with Winding Tree.

What’s currently in development?
So where do we stand today? Here are some advances within the travel space that are in currently in development:

  • Winding Tree is a public blockchain distribution platform in the travel industry. It is a not-for-profit foundation that has created its own cryptocurrency called Lif that will enable added functionality within transactions.
  • Blockskye is a real-time inventory management system built on the Ethereum blockchain. It is private today and working with airlines and looking to change the distribution model.
  • Webjet is working with Microsoft and using a private version of Ethereum. It has built a system to track global hotel inventory and a solution in payment that may change the way hotels process and manage online payments.
  • IATA has developed IATA Coin, a digital currency built on blockchain technology. How it will be used is still unannounced. IATA is also developing ‘single passenger tokens’ as a means of storing biometric information for identification in travel.
  • Mastercard is using a blockchain to simplify and speed up cross border payments. It is not for the consumer.
  • Blockchain ID is all about security and simplifying the travel process.

With so much money being invested in blockchain innovation by some very large companies we expect to see some new and exciting changes very shortly.  No doubt it will disrupt current processes and enable new ones and, like the early days of the Internet, will lead to very exciting innovations that will inherently change our world as we know it.

Back to all news