TECH TALK
Around the block
As blockchain’s potential becomes apparent, the travel industry is beginning to pay attention
may be improving, with blockchain now being more widely debated by banks and its benefits starting to make their mark in other sectors. Many start-ups and case studies are emerging; but the fast pace of change means the technology is not without its challenges. Although most of the innovation has
F
come out of the finance sector, travel is proving to be a fertile ground, with compa- nies such as Winding Tree, VChain, Loyyal and Currency Alliance setting their sights on airlines, hotels and agents. According to
blockchain.com, blockchain
is a “publicly accessible ledger that allows people to securely transfer the ownership of units of value using public key encryption and proof of work methods”. In 2009, the Bitcoin network was the first successful
ROM ITS ‘DARK WEB’ ASSOCIATIONS to its erratic price valuations, Bitcoin has been a troublesome poster child for blockchain. Yet things
implementation of the technology. Custom- built platforms, such as Corda, Hyperledger and Ethereum, offer varying degrees of privacy attractive to larger corporations. Ethereum is a decentralised platform that runs “smart contracts” – applications that, according to the Ethereum Foundation, “run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference”. Swiss-based Winding Tree is one of the
travel-focused start-ups that uses Ethereum, and is working with airlines to explore how blockchain can streamline distribution. Notable areas for development could include identity, baggage tracking, payments and loyalty schemes. Winding Tree hopes its focus on distribution will help airlines with booking, rebooking and travel itinerary information. It announced its partnership with Lufthansa in October, and co-founder Pedro Anderson told BBT: “We met Lufthansa at an event in the summer. They had hired a blockchain lawyer, which showed they wanted to do it right. We published a proof of concept, and did a short crowd sale [to raise funds].” A month later, it teamed up with Air New
Blockchain lingo: Impress your colleagues with this mini-guide
BITCOIN: First decentralised digital cash system (cryptocurrency), established 2009 CRYPTOCURRENCY: A digital asset designed to work as a medium of exchange ETHEREUM: An open-source, public, blockchain-based distributed computing platform featuring smart contract functionality. It’s also a cryptocurrency ICO: Initial coin offering, also known as a token sale – a means for a blockchain-based platform to raise funds SATOSHI NAKAMOTO: Name of the person or group who developed Bitcoin. They were also responsible for devising the first blockchain database SOFTWARE FORK: A process when one or more blockchain developers creates a new codebase separately from other developers STATE CHANNEL: A method of moving interactions off a blockchain into a faster and cheaper ‘dedicated highway’, before returning to the blockchain. Also known as a side chain
34 BBT January/February 2018
Zealand and the airline’s chief digital officer, Avi Golan, said at the time that blockchain “may offer a streamlined way to retail airfares and ancillary products alongside our current channels”. The technology is here to stay, Anderson
says. “Blockchain allows us for the first time in history to build the ideal platform without the risk of monopolisation – it radically reduces cost.” He affirms that Winding Tree’s mission is “not necessarily to cut out the middleman; it’s to help start- ups and facilitate long overdue innovation. Existing businesses don’t have to go, but archaic models do.”
HIGH ENERGY DEMAND Blockchain technology may be evolving quickly, but so, too, can its problems – technical or otherwise. Energy use is one. Digiconomist reports that the estimated power use for a single Bitcoin transaction is almost 300kWh of electricity – enough to boil 36,000 kettles full of water. Can this energy usage harm blockchain’s
image? Jon Har-Ewen, domain architect at CWT, says there is “no question this is a critical issue to resolve”, but he is confident it will not hinder blockchain’s prospects in the medium to long term. “Proof of work uses a lot of computing power and is inefficient,” he says. “There are other algorithms that have been created, such as proof of stake, that are not dependent on computing power. Proof of work effectively stops false Bitcoin transactions. It will be a while before other algorithms can be proved to be as effective.” However, at least two major Bitcoin exchanges suffered cyberattacks last year. “Security is always a concern, especially when sensitive information such as PII data or PCI data are involved and this is one major reason why it will take quite a long time for the industry to accept a blockchain solution to replace long-standing systems such as the GDSs,” Har-Ewen argues.
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