A Brief Overview of How Blockchain is Streamlining the Travel Industry

Byline: Ethan M. Stone

Following the end of the COVID-19 pandemic, travel and tourism businesses have been searching for ways to attract clients again and return to pre-pandemic participation levels. One of the most promising developments is the use of blockchain technology. With blockchain, the travel industry can access information like the Bitcoin price today and other cryptocurrency market data to make cross-border payments easier. It can also improve identity verification and cut down on fraud.

With digital travel experiences on the rise, consumers’ expectations for improved efficiency, convenience, and security are also growing, meaning providers will need to adopt advanced solutions quickly if they are to remain competitive in an increasingly competitive industry.

Defining Blockchain

As a brief reminder for the sake of clarity, blockchain, according to Finance Strategists, can be defined as “a decentralized ledger that records all transactions across a network of computers.” 

Blockchain has become synonymous with cryptocurrency, and while it is true that blockchain networks provide the structure cryptocurrencies use to enable transactions, the technology has a myriad of applications that extend far beyond financial uses.

An important concept to bear in mind going forward is that, because blockchain networks are distributed evenly across multiple computers, there is no one central entity controlling the flow or storage of information on a network at any given time. This decentralization also means blockchain networks essentially exist everywhere all at once, allowing users with an internet connection to access their services at any time from anywhere, provided it is legal to do so in their country of residence.

Blockchain is also highly secure and transparent by nature due to the way it stores information and enables its subsequent retrieval. To put it simply, each block on the chain contains transaction information and a time stamp that can be viewed, but not altered, by users with permission to do so. These blocks are permanent and cannot be changed without consensus from all other computers on the network.

Improving Identity Verification Across Borders

Redundancy is a regular part of identity verification. Travelers often go through identity checks at airlines, immigration, hotels, car rentals, and more. Although redundancy is necessary, it can slow down travel time and sometimes lead to mistakes due to manual processing.

Blockchain enables travel agencies and providers to issue secure, decentralized digital IDs that can be verified immediately across different parts of the world. This keeps safety standards high without ruining the traveler’s experience. In real life, blockchain enables digital identity verification, secure document management, automated check-in, and traveler profiles for loyalty programs.

Loyalty Programs on the Blockchain

Points and rewards programs are commonplace in the travel industry, but these are often fragmented across airlines, hotels, and rental services, making it difficult to keep track of them. This fragmentation also makes these points less useful because they do not always work with other services. Blockchain is in a good position to solve this problem because it has been used in the past for things like cryptocurrency.

Many blockchain applications already use tokenization, and because blockchain networks are decentralized, they can more easily consolidate rewards and points from multiple sources. 

This practice makes it easier for travelers to redeem rewards flexibly while simultaneously helping businesses reduce the administrative costs associated with managing large loyalty databases. As a bonus, these programs may also improve customer engagement by offering real-time rewards based on travel behavior.

Circumventing Centralized Institutions

International travel payments are notorious for their long settlement times and occasionally exorbitant fees. These issues tend to stem from the administrative costs that come from making payments through middlemen like banks.

As a decentralized system, a blockchain network can circumvent these middleman services by directly connecting consumers with exchange services. Transactions made through blockchain are typically near-instantaneous and low-cost, two benefits of which are particularly valuable in regions with limited financial infrastructure or for digital nomads navigating multiple currencies.

Travel Demand and the Bitcoin Price Today

As crypto market sentiment slowly improves due to greater institutional adoption and favorable regulations, the use of crypto in travel services has also increased in recent years. 

On average, when Bitcoin prices rise, travelers who know about crypto tend to spend more with digital wallets. This encourages more travel companies to accept payments via blockchain technology, which may lead to even more customers using crypto to book flights and hotels with digital assets.

It is worth noting that blockchain applications built around cryptocurrency may be subject to regular and heightened volatility since crypto lacks inherent monetary value. While this volatility may not affect every blockchain use-case, it will certainly affect some, making it important to get an idea of overall market sentiment within the crypto industry prior to using digital assets for travel.

Making Travel Cost-Effective, Transparent, and Secure

Blockchain networks are a novel technology and will therefore encounter novel issues. Aside from volatility, one of blockchain’s most pressing challenges is currently a lack of regulatory clarity. At present, there are few regulations in place for blockchain, and the places that do regulate it tend to differ in how they do so, adding complexity to an already complicated set of circumstances.

If blockchain’s current success is anything to go by, however, it will likely overcome these hurdles given enough time and public support. As blockchain becomes more commonplace in day-to-day life for more people, its prominence in the travel industry and beyond will likely grow. While blockchain is by no means foolproof, its innate transparency, security, and cost-effectiveness make it an attractive option for customers and providers alike going forward.