A 2017 buzzword came under the microscope at World Travel Market London earlier this month in a session entitled ‘Blockchain Versus Blockchain’, as experts shed light on the technology. By Matthew Parsons.
Amadeus sought to reassure travel agents at World Travel Market London, allaying fears that the meteoric rise of all things blockchain will put them out of a job.
In a session that highlighted many of the technologies’ shortcomings, as well as its future uses, Clare de Bono, director of product and innovation, Amadeus UK & Ireland, insisted: “I don’t see the travel agent going away, but the technology they use will change”.
Blockchain is a decentralised and distributed digital ledger – or database – maintained by a community of users, rather than a central authority. It’s called a blockchain as new transactions are placed into “blocks” of data and written on the end of a “chain” of existing blocks describing all prior transactions. It is regarded as a type of technology that effectively removes the need for a “central broker”, explained fellow panelist Kevin O’Sullivan, lead engineer at SITA lab.
When asked if blockchain was perhaps just another way of replacing another database, O’Sullivan replied: “It’s a completely different way of thinking about this. What’s new about this is that it removes the central broker. We can all trust that data.”
De Bono said Amadeus Ventures had identified six areas of innovation, including blockchain, and was subsequently now looking at how it can be applied to payments, identity, baggage and loyalty. “The number of opportunities has exploded recently. We’ll focus on four themes, and where we think the opportunity is to make the travel industry better.”
In fact, Amadeus has been at the forefront of blockchain technology – most notably through its Amadeus Ventures division, while last month it published a report entitled Blockchain: harnessing its potential in travel.
However, both WTM London panelists warned over embracing a technology that was still in its infancy. Delegates heard that blockchain was five years away from maturity, according to research firm Gartner – and O’Sullivan added: “From the work we are doing in the lab, I’d agree with this.”
Yet O’Sullivan also pointed out: “It’s like the early 1990s, when the internet came along. ‘WWW – what was that all about?’, But over 20 years, it’s evolved. That’s where we are now. While WWW changed B2C, blockchain will change B2B.”
For now, concerns remain around the computational efforts of blockchain. The process of writing new blocks, called mining, consumes a lot of energy. Recent reports state the amount of energy now required to create a single bitcoin (the largest “cryptocurrency” based on blockchain technology), is the same amount of energy the average American household consumes in one week. As more people mine blocks, so too does the effort required – owing to the bitcoin algorithm, which ensures that blocks are added at a constant rate.
“It’s like the early 1990s, when the internet came along. ‘WWW – what was that all about?’, But over 20 years, it’s evolved. That’s where we are now. While WWW changed B2C, blockchain will change B2B.”
Meanwhile, de Bono said any type of blockchain-based system was also far from replacing the GDS, pointing out Amadeus can process 50,000 searches per second, compared with 7 for blockchain.
Security is also a worry; bitcoin already has associations with the “dark web” while there are increasing reports of hacks, with millions of pounds worth of users’ cryptocurrency able to be stolen in a flash. “[Blockchain] doesn’t solve the security problem the way people naively think. Fraud won’t go away entirely,” O’Sullivan said.
Lufthansa is testing the Ethereum platform for distribution
The panel also outlined newer blockchain technologies that are more suitable to the travel industry. O’Sullivan said: “You have public blockchain, like bitcoin. Bitcoin is truly distributed, it shares value around. Also there’s Ethereum, which can operate in private mode, and it has smart contracts. That’s generating a lot of excitement.”
Lufthansa is one company that has opted to trial Ethereum, and last month announced a partnership with Switzerland-based start-up Winding Tree, which provides a “decentralised B2B marketplace system powering blockchain-based travel booking transactions”. And Tui has developed its own smart contract-enabled blockchain, called BedSwap.
O’Sullivan said he believed that most innovation would come from the financial industry. “Enterprises need a pit of privacy, as well as being accessible, so there are also r3 and Hyperledger [operating systems] – that’s where most investment will be,” he added. “And don’t think ‘how can I fit blockchain into my business?’ Think instead about your business processes: how do I reengineer my processes?”
De Bono added: “We are in such early days, but we are focusing on intelligent uses, for example baggage, when people need to share information. We’re looking at limited-use cases, to get it right.”
With global distribution a key aspect of the travel industry, companies cannot afford to ignore the new wave of blockchain platforms. Despite being several years away from maturity, there’s little doubt blockchain will return as another hot topic at next year’s WTM London.