The tourism sector, the next sector to enjoy the blockchain

2017 was the year of all promises for systems using a blockchain. Originally created to serve as a base for bitcoins and to enable investment in cryptocurrencies, the application of this new technology are constantly diversifying. From the autonomous car to economic and almost instant financial transactions, to the decentralized supply of energy and services, the next step is the tourism sector.

What is the blockchain?

In 2008, the anonymous creator of Bitcoin created the first chain of blocks, whose objective was both to decentralize the control of the very first cryptographic currency, to secure transactions and to ensure the complete transparency of each link.

Quickly, users able to contribute to the computing power of the network became "minor", that is to say, that they undertook to validate, as much from the point of view of the computer protocol that the validity data, every transaction or link in the chain. In exchange for their computation power calculated on the basis of the proof of work, these "nodes" are remunerated sometimes very generously.

The chain of blocks in 2018

Despite a large number of projects inspired by block chains, 2018 has been disappointing in terms of innovation. Admittedly, miners' profits and investments in Bitcoins, Ethereum or other cryptocurrencies have almost doubled compared to the previous year, to the point that governments are now looking at their taxation. However, countless projects announced, few have the expected results and many have not even emerged. Experts explain this phenomenon by the fact that it is necessary to give time to the technology as its applications to reach maturity, which could well indicate that 2019 will be the time to invest in cryptocurrencies exchange.

The application of blockchains to the tourism sector

By definition, the blockchain is particularly well suited to manipulations involving multiple parties working for the same purpose. Who better than airlines, travel agents, accommodation providers, transport providers and other traveller services can benefit from technology that allows each link to check and benefit from the data provided by others? The unique relationship between the blockchain and international transactions, particularly through cryptographic currencies, is also an undeniable asset.

The advantages of the blockchain for tourism:

Economical - Without the intermediaries that are online agents like Airbnb or TripAdvisor, the price offered to the user is significantly reduced.

Security - The so-called "smarts" contracts make it possible to lock the funds paid by a user until confirmation that the service is at the height of the transaction, thus eliminating the risk of seeing a pseudo travel agent disappear with your money without having booked your plane ticket.

Identification - Thanks to the digital identity, the platforms using the blockchains will be able to verify the identity of the traveller even before the beginning of his journey, allowing him to save time at the airport and to simplify the task of the customs officers.

Blockchain Is Making Finance & Banking Industry Better Like Never Before

Blockchain technology is disrupting the financial services industry and offers tremendous welfares for banks. Banking sectors were analyzing different ways to share customer details across their company in a safe manner and blockchain distributed ledger technology is a strong nominee. The global finance market is appealing major financial institutions to invest millions of dollars in evaluating how to implement cutting-edge technology. Each financial institution now understands that they must go on the blockchain trend to make their banking system iterative.

As per the KPMG's Pulse of Fintech Q2 report, Blockchain companies elevated more than $240m of venture capital fund in the first 6 months of 2017 and plenty of it from banks with $107m raised by R3. There is a nearly double of venture capital investment in blockchain firms last year to $367m.

Harvard Business Review entitles that as of 2016, 60% of financial organizations are planning to utilize blockchain for international money transfers, 23% businesses for security clearing & settlement, and 20% institutions for Know Your Customer (KYC) regulations and anti-money laundering services.

How Is Blockchain Dominating Financial and Banking Industry?

Payment Processes

Central banks in each corner of the world are leveraging the potentials of blockchain and smart contracts as well as use it to launch digital currencies like bitcoin. Disruption of blockchain technology can be extremely transformative when it comes to payment procedures.

For banks, it empowers great security and faster speed along with minimal costs to make payment among any organizations and their customers and even within the banks it selves. When you make a payment, you require a central authority to approve a transaction, but blockchain is eliminating this need of any intermediaries to take part in the process.

Clearance and Settlements Systems

If we talk about an average bank transfer, it takes almost three days to be cleared and settled that is not worth in this digital era. It’s not irritating process only for the consumers, but transfer fund globally is a troublesome for the banks as well. A blockchain technology that offers a peer-to-peer system for transactions can totally disrupt these traditional methodologies.

Banks have assessed that revolution of blockchain technology can able to cut at least $20B worth of budgets from the financial segment by offering an improved organizational structure for clearance and settlements.

KYC – Know Your Customer

These principles are proposed for businesses to decrease money filtering and scam activities by authenticating their customers. Blockchain technology enables independent confirmation of a single customer by one institution to be accessed by other institutions. By doing this, you need not start KYC process all over again. Ultimately this results in administrative cost reduction.

Smart Contracts

Smart contracts are computerized programs that affect automatically on the contentment of specific pre-programmed conditions. It is replacing traditional contract systems with the smart ones to keep you away from errors during manual form fill-ups.

Smart contracts in the banking and financial verticals are applicable simply. With the help of it, customers can exchange money, property, shares, etc. Banks always fond of to this type of contracts as there is a lower risk with real-time transfers. There is no need of middle-man, so trust and transparency will be on the top.

Trade Finance

Because of ever-changing global markets, a process of financing and trading is very complex. Following traditional approaches that comprise lending, issuing credit letters, insure parties, etc. can take a long time for the completion of a single transaction. Sharing of paper documents is also very tedious procedure.

By utilizing publicly shared ledger of blockchain technology, trading can be done with trust and improved efficiency. Organizations can access funding as well as save time and cost throughout the whole trading process.

Identity

Authentication of customers is quite essential for any bank. Without it, a lender will be unable to get trust as a money protector. Controllers hold banks as a responsible authority to check customers’ character and give penalty to them if there is something wrong.

The banking sector was trying to setup a shared ledger like blockchain in which records of customer’s identity can be stored securely. Now there are plenty of startups and entrepreneurs as well who are working on structuring blockchain systems for identifications of customers.

Fraud Reduction

There are plenty of stock exchanges and money transfer services which are suffering from economical crime activities each single year. Most of the banking and financial systems globally are developed on a centralized database that is more susceptible to cyber-attacks. Hacker needs to get control over only this one centralized system, and he will get full access to hack the system.

The blockchain technology contains publicly shared leger where each block comprises a timestamp as well as batches of each transaction with a link to a prior block. This eliminates overall crime ratio worldwide. Even though blockchain is in rising phase, its possibilities to decrease scam in the banking sector is receiving a lot of consideration.

Syndicated loans

When any US firm raises fund through a syndicated loan, it takes a long like 19 days for a single transaction to be cleared and settled. Still, most of the communications are take place via fax. A blockchain can be a perfect platform to handle the whole lifecycle of loans.

With this cutting-edge technology, syndicated banks can improve spreads and margins. Launching of business can be more rapid by offering new value propositions. It’s easy for syndicated banks to decrease the complexity and efforts need to fulfil with local taxation and governing rules.

Fund Raising

Raising money through VC is a difficult procedure. Entrepreneurs need to arrange meetings, tolerate negotiations, etc. When it comes to the blockchain, there is no need for any platform, negotiations, and VCs. Anyone can invest in their interesting projects whenever they want.

In a blockchain, fundraising can be performed in the form of Initial Coin Offerings (ICO). It’s just like IPO but in a blockchain manner. Projects sell tokens/coins in exchange for cryptocurrencies such as Bitcoin and Ethereum. The token value is knotted to the success of its execution. If investors want to bet straight to usage and value, investment in tokens is all they need to do.

Summing up

The global banking industry is searching to bring the transformation with pioneering blockchain technology. No one can ignore increased transparency and proficiency along with simplified procedures and decreased costs offered by peer-to-peer decentralized system.

Want to learn more about this cutting-edge technology to expand your business ROI? Espay is having years of expertise in delivering customized blockchain applications in banking and finance. Do not hesitate to contact us.