Is it an innovation? No, it’s revolution.
We’ve all heard about Bitcoin, the cryptocurrency with an air of mystery and controversy which has seen its value multiply by 10 since the start of the year to reach its current high of €10,000.
Now that some commercial websites are starting to consider accepting payments in Bitcoin, could the business travel sector be affected? Nothing could be less certain, as cryptocurrencies like Bitcoin, Ether and their ilk still seem to remain far from the legal definition of a currency, whose primary characteristic is the power to discharge. In other words, the power to legally discharge oneself from a payment obligation. The volatility of the value of cryptocurrencies is also likely to put businesses off introducing them within their current operations.
On the other hand, Bitcoin is based on a technology that paves the way for a vast array of applications: the blockchain.
The good news is, blockchains can exist without Bitcoin!
In the view of many experts, this technology is the most important innovation since the Internet itself, with $2 billion (USD) invested in it in 2017, by start-ups and businesses, particularly in the financial sector. Blockchain is a technology that enables digital storage and transmission of data in a decentralised, secure manner. It involves a vast shared database that records every exchange made between members of a given blockchain.
Yves Caseau and Serge Soudoplatoff, authors of the French-language book “La blockchain, ou la confiance distribuée” (“The blockchain, or distributed trust”), define the mechanism in very simple terms: “Blockchain is an innovative technology that enables users to perform financial or other types of transactions that are guaranteed and can be audited by anyone, without the need for a trusted third party.”
The list of characteristics of a blockchain is bound to arouse the curiosity of anyone involved in the business travel sector:
1. transparency and the elimination of intermediaries, trusted third parties and supervisory bodies. The technology is based on peer-to-peer (P2P) exchanges.
2. Traceability – all present and past exchanges can be looked up by all participants.
3. Security – theoretically impossible to hack (although time will tell!).
Unlike a traditional database, a blockchain is ‘distributed’ or shared among various computers, referred to as the network’s ‘nodes’. Various copies of the data exist simultaneously, making any attempts to hack it considerably more difficult. Exchanges of the data are recorded in the form of blocks of transactions, which placed end to end form a chain – hence the name blockchain.
The security provided through decentralisation of the database is strengthened by an encryption system (public and private key exchange). Exchanges are validated by members of the network or by a process known as ‘mining’ carried out by individuals who are remunerated for using the computing power of their hardware.
The areas of application are numerous: finance (methods of fundraising without intermediaries already exist), banking, the sharing economy (for middleman-free costs), insurance, energy and… travel.
In October, Amadeus published its vision of blockchain applications for travel:
- simpler, more secure passenger identification,
- better luggage tracking,
- more intuitive loyalty programmes,
- simplification of payments between travel agencies and airlines.
The vision is ambitious, but the simultaneous synchronisation of information and payments is now within grasp. Furthermore, the emergence of private blockchains associated with ‘smart contracts’ enable more complex processing and concerns about governance to be taken into consideration. But what about business travel? A technology that enables synchronisation of personal data, transmission of verified information without a middleman, automated approval processes and near-perfect transparency in terms of prices is a technology that will surely be of widespread interest.
If the purpose of blockchain seems to be to return power to individuals, what is the future for platforms acting as intermediaries?
Websites offering car rides or enabling individuals to rent out their own vehicles could operate without intermediaries, as might self-booking tools, hotel platforms or online travel agents. The users could carry out peer-to-peer transactions and benefit from an optimised direct connection (direct relationship with the driver, renter, transport operator, hotel, etc.).
We are only at the beginning of what looks set to be a revolution, but we would wager that there will be a prolonged debate about this new technology and that businesses within the sector will find ways to adapt in order to provide an optimal service.
If this ‘disruptive’ subject captures your interest, we will be glad to open the topic up to some of the sector’s specialists in our upcoming issues and publish some of the comments and views you might send in.