Report on World Tourism Economy Trends (2018) Excerpt -9 Blockchain reshapes the payment system, credit system and service system of tourism industry

1. Characteristics

(1) Blockchain will reshape the global financial infrastructure architecture

A blockchain is a permanent record that allows no reverse modification by superimposing encrypted data (block) based on time sequence (chain). Such decentralized data warehouse contains a list called block with records that feature continuous growth and neat arrangement. Every block contain one time stamp and one chain with the previous block: The blockchain makes it impossible to tamper data, and once recorded, data in one block will be irreversible. This makes the blockchain a core component of the electronic currency Bitcoin and is suitable for recording events, titles, medical records, and other activities that involve data collection, identity management, transaction flow management and original certificate management. Financial service is the first area that has applied the blockchain technology. Moreover, the technology is potential to reshape the financial infrastructure architecture due to its characteristics such as high reliability, simplification of flow, traceability of transaction, cost saving, reduction of errors and improvement of data quality. In other words, blockchain embodies a vast potential for financial disintermediation and delivers a huge influence on global trade.

(2) Blockchain data are transparent, autonomous, safe and reliable

Blockchain features decentralization, openness, autonomy, publicity, non-modification and anonym. Blockchain adopts distributed computing and storage and involve no centralized hardware or management entity, all nodes are equal in authority and obligation, and data blocks in the system are jointly maintained by nodes with the maintenance function in the entire system. The system is open, and only private information of different parties to the transaction is encrypted. Data in the blockchain are open to all people and the entire system is highly transparent in information. The use of specifications and protocols agreed upon allows all nodes in the entire system to exchange data freely and safely in a de-confidence environment. After authenticated and added to the blockchain, information will be permanently stored, which confers very high stability and reliability of data in the blockchain.

(3) Blockchain companies become hotspots for venture capital

The Global Blockchain + Venture Capital Report published by Blockchain Research points out that, by the end of April 2017, 455 blockchain companies worldwide have cumulatively raised USD 1,947 million, according to the disclosed data. The venture capital has injected a mighty drive into the industry and promoted the expansion of “blockchain +". To date, blockchain has experienced the digital currency 1.0 time represented by Bitcoin and stepped into the 2.0 time featuring smart contract, public chain, private chain and alliance chain. Next, blockchain will embrace the 3.0 time and evolve towards broader fusion, thereby triggering a new round of technical investment surge.

Figure 3.4 Development Stages of Blockchain

Data Source: Wuzhen Think Tank, 2017

Figure 3.5 Growth Trend of Blockchain-related Patents

Data Source: Wuzhen Think Tank, 2017

(4) The global hotspots of blockchain investment are distributed in US

In recent years, the blockchain technology has rapidly grown worldwide. Since 2012, the number of blockchain-related inventions and patents has maintained an explosive growth in China. In 2016, there were up to 205 applications for patents in the blockchain area. However, US is the heartland of blockchain development from a global perspective. In 2016, Bitcoin and blockchain technology startups in US received the total investment of USD 1,252 million, representing a global share of 64.30%, from venture capital firms as disclosed. In China, the disclosed total investment has added up to USD 114 million, representing a global share of 5.86%.

Based on data from Blockchain Database, The Top 10 countries are US, China, UK, Singapore, Canada, Netherlands, Germany, South Korea, France and Australia in terms of number of Bitcoin and blockchain technology companies.

Figure 3.6 Country Distribution of Bitcoin and Blockchain Startups Receiving Venture Capital

Data Source: Blockchain Database, 2016

2. Application to tourism industry

In the tourism industry, blockchain has become a heated area, and many enterprises are attempting business innovation with the new technology.

(1) Blockchain connects different links of the payment system for tourism industry chain

In the tourism payment area, blockchain can be used to solve the payment problem of the industrial chain at different steps. For example, Webjet is now trying inventory management at hotels with the blockchain, and collects a large quantity of data from every reservation record to ensure timely payment in full amount to all parties.

(2) Blockchain realizes all-new identification modes

Blockchain realizes all-new identification modes. Many airline companies are now paying close attention to digital identity management with blockchain. Combined with the biological identification technology, the blockchain can realize safer digital identification than traditional methods (such as passport).

(3) Blockchain provides precise data for tourism reservation and marketing

Data records of the blockchain can provide precise data for tourism reservation and marketing. Hotels and airline companies may evolve their loyalty plans to the blockchain to simplify the track of loyalty score and streamline the process of score conversion and payment with all partners. Besides, the technology can also be used to monitor customer data of the entire industry and analyze the overall market and consumer behaviors.

3. Influence on global tourism industry

The blockchain technology will trigger a revolution for the Internet credit system, subvert the financial system always established with elites and authority as the center and forge a new confidence system composed of equal individuals on the Internet and digital technology. The digital asset revolution derived from the blockchain technology will “tokenize" various assets and reshape resource forms of the human society. Moreover, the application of the technology to the industrial chain flow will also redefine transaction modes and settlement methods at different steps of the industrial chain.

(1) Blockchain will reshape the customer loyalty plan of the global tourism industry

Blockchain will reshape the customer loyalty plan of the global tourism industry. Consumption credits generated during the tourism can be obtained and used through blockchain, and consumption at different tourism links can be integrated into the electronic wallet of tourists easily and in a real-time fashion, and new customer loyalty and award plans will greatly change the tourism industry and tourism consumption mode. Various fragmented industries will be integrated, which will trigger an extensive multi-brand alliance, promote the debt management of advanced projects and the construction of the options management system featuring customized dynamic issuance/redemption.

(2) Blockchain will build a new confidence system in the tourism industry chain

Blockchain will build a new confidence system in the tourism industry chain. Autonomy, openness and other attributes make blockchain an independent confidence system. The blockchain-based distributed recording will make the entire industrial chain open and transparent, facilitate payment and settlement at different links, and establish the confidence system among different participants in the tourism industry chain, particularly tourists and service providers. This confidence system will be of vital importance to the development of the tourism industry in the context of sharing economy. Airbnb and other companies have started introducing blockchain to simplify transactions and enhance the consumer experience and efficiency of the industrial chain.

(3) Blockchain can effectively improve the payment efficiency and settlement mode of tourism industry

Blockchain can effectively improve the payment efficiency and settlement mode of the tourism industry. Digital assets derived from blockchain will terminate traditional modes of information transition and fund settlement and effectively avoid settlement delay, payment fraud, triangle debt, sinking of quality warranty and other problems, thereby greatly improving the quality and efficiency of fund settlement throughout the transaction flow.