Sabre explains blockchain – somebody has to

In its 2018 Emerging Tech in Travel report, Sabre unravels the mysteries of blockchain and puts together the bits that not only explain how it works and what it means for society, but also whether and how it may be relevant to travel.

The whole report is worth reading, consider this only the crib notes to it.

Blockchain in brief

Sabre explains blockchain in a nutshell:

“At its core, a blockchain is a concept for a particular kind of database. Going back a step further, a database is just a means for storing a collection of digital information, usually in a way it can be easily be updated and searched. Information within a database can be any kind of value—birthdates, property records, biometric information, taxes, healthcare records, etc.—anything.

“There are many different ways to set up a database, each optimized for different use cases. Some databases are set up for search efficiency, some for extreme data privacy, some for redundancy, and on and on. Functionally, a database is a kind of tool, and not every tool is right for every job.

A blockchain is a new kind of database—effectively a whole new kind of tool to put in the toolbox of information storage solutions. In a world that previously held just hammers and screwdrivers, a blockchain is a wrench. It has functionality that no other database tool can offer, making new kinds of jobs possible.”

“Just because blockchain is a new and buzzworthy technology doesn’t mean its utility is universal. For certain kinds of information storage, blockchain may be superior to traditional databases, but in many cases, blockchain may not be the best tool for the job.”

Cryptocurrency

Blockchain is not cryptocurrency. It enables cryptocurrency transactions. But the rise and fall and rise and fall of cryptocurrencies, like Bitcoin, Ripple and others, has been a big headline grabber in 2018. This new currency is still confounding many and attracting scrutiny from regulators.

Here are some highlights from Sabre on the state of cryptocurrency (with a caveat from Sabre that they are only highlights and not a complete picture of this changing landscape):

  • Most—but not all—countries will require registration to use cryptocurrencies (no anonymity allowed).
  • Cryptocurrency exchanges will become increasingly regulated and will likely require insurance and backing of funds held by investors, becoming more similar to traditional banks.
  • Most countries will forbid using credit cards to purchase cryptocurrencies as a way of protecting consumers who might go into severe debt if cryptocurrencies crashed in value.
  • Most countries will tax cryptocurrency gains in ways similar to other investments.
  • Virtually all countries will allow participation in blockchain networks and the resultant cryptocurrency mining assets that may accrue (even if those assets can’t be spent for now).

Scarcity is good

In an effort to explain why blockchain matters and avoid the hype and buzziness surrounding it, Sabre picks on the concept of scarcity versus ubiquity of data. While most data management systems offer no valuation on the data stored in various fields—until it all becomes a muddy tangle of increasingly dense information—blockchain helps select the relevance of data and marks the datapoint that have the greatest credibility, distributing these reliable data points to fill and strengthen gaps and weak points in the chain of information. It identifies a single source of truth, and disperses that.

“Over the last several decades, we’ve increasingly come to think of digital information as cheap and infinitely replicable. Once something is digitized into 1s and 0s the cost to copy it has come close to zero: documents, songs, images. It costs a user nothing to send an email or to CC: an email to a hundred people. If a million people want a copy of the same song or image, the asset never runs out. This replicability places digital objects in contrast to physical objects, as each physical object takes up space and has a cost.

“The most exciting feature of blockchain is the true scarcity it brings to the digital world. Values stored on a blockchain cannot be copied, they can only be transferred from one owner to another. A value on the blockchain can be any asset that can be represented digitally: a monetary unit, a deed, a vote, an image, an airline ticket, a hotel room, a biometric identity, etc.”

Building trust

Along with scarcity, blockchain offers shared oversight and permanence of data transactions, which supports the creditability of the information distributed between systems. Some key excerpts from the Sabre report explain why this matters:

“The fact that anyone can see the full record of transactions helps provide oversight and transparency around data use. Even in private applications of blockchain, where participation is limited, the fact that a group of peers have full access to the data means fraud is reduced. The shared oversight provided by blockchain is usually referred to as a distributed ledger or distributed database. Regardless of the term, it means many different parties in difference places have copies of the entire blockchain record.

“Anytime a value is transferred, there is a permanent record made of the transaction. It is very difficult to undo a transaction.

“In tech parlance, the permanence of blockchain is referred to as “immutability.” Immutability simply means that a transaction cannot be reversed, an edit cannot happen unless it is recorded officially in the blockchain. Blockchain achieves this immutability by using previous blocks as the mathematical basis for creating each successive block—a process called hashing.”

The scarcity, oversight and permanence of record make blockchain useful for sensitive travel transactions of information which could benefit from a reliably encrypted form of information exchange. It’s trust. That’s why we’re all talking about it.

“Biometric identity is one of the most powerful proposed use cases for blockchain. Using a blockchain to store encrypted records of a person’s various biometric identifiers—their voice, fingerprints, hand geometry, iris pattern, facial model, gait, etc. Having an unforgeable, permanent source for matching biometric data would be incredibly powerful. It could eliminate the need for passports, driver’s licenses and other forms of identification, finally giving rise to true trusted presence—that someone is who they say they are and can prove it.”

Pants on fire

It’s exciting stuff, but as SITA also determined following its trial of blockchain exchange for flight data (another useful application in travel) there are risks involved which still need to be addressed. For one, manipulation of the base data feeding the chain—not entirely impossible—could lead to the dispersal of fraudulent information. If a trusted server which supplies information is compromised, then the single source of truth could quickly become the genesis of a lie.

There are other risks, as Sabre points out:

“A comprehensive biometric record would need to be completely secure—completely trusted—to gain broad adoption. The liability issues around protecting that much personal data are significant, and gaining consumer trust to opt-in to a central source for biometric data could be challenging because of fears over privacy.”

And here’s one to pin to the corkboard:

“Blockchains don’t eliminate the need for trust. Instead, they shift where the trust is placed and how it’s distributed.”

The benefits of the possible applications for blockchain make studying ways to minimize the risks worthwhile. The key point is that blockchain is not something to be adopted blindly, and requires a firm strategy for implementation. Also, enlist expert help when doing so.

“Sabre Labs is one of many groups at Sabre experimenting with and considering the broader impacts blockchain may have on every aspect of the travel ecosystem. Today’s keyword is ‘experiment.’ The functionality supported by platforms like Sabre’s Global Distribution System (GDS) is essential to global travel; its efficacy, reliability and security are the result of decades of work and development. Looking at ways to augment GDS content with blockchain solutions is an area of current exploration.

“Blockchain has the potential to change existing business models, but it’s too early to say how much maturity and exploration is necessary in the blockchain ecosystem to assure an effective, reliable and—most importantly—secure system for sensitive information.”

Let’s face it, Blockchain is complicated. It’s a big concept to wrap your head around. It can support new and more secure transactions. It can lead to a massive strain on the world’s electrical grid as too many people speculate in a new form of money. It can ensure a single source of truth on data. It can be manipulated into a mass dissemination of lies. It’s a technology to watch. It will change the future, but we should not trust the future blindly or rush into it.

Related reading:

SITA partners with airlines and airports to explore blockchain

Amadeus offers its take on blockchain

The what, why and how of blockchain in travel

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Marisa Garcia

About the Writer :: Marisa Garcia

Marisa Garcia is the tnooz aviation analyst. She has covered travel technology, design, branding, and strategy for leading publications, including Aircraft Interiors International Magazine, APEX Magazine, AirlineTrends, and Travel+Leisure. She also shares industry insights on her site Flight Chic. Fly with her on Twitter.

 

Comments

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  1. Mike S

    For an in depth look at how Bitcoin implements blockchain I recommend a very well researched book, “The Age of Cryptocurrency”.

     
  2. MIke S

    Well done, best article I’ve seen on blockchain.

     
  3. John Warner

    Has Sabre explained “why” blockchain is needed? Business travelers generally book at the last-minute; do they have issues refunding air segments or hotels? Are 1% (or more) of their reservations ever “lost”? No. Of course some aircraft are ‘swapped’ and seat assignments change, but adding complexity (and cost) should have a clear benefit. For leisure travelers (which might be 80% of travelers), bookings can be direct, through an agent, through another airline, an OTA, etc. Are these customers going to log-in and use blockchain to pay? Why? What’s the benefit? Are they experiencing fraud or “lost” bookings today? Some customers purchase ancillaries at the time of booking/ticketing; others add items post-ticketing. How does blockchain help? Sabre needs to explain the benefit(s) IF airlines are going to add expensive new payment, MMB and refund options. Do these new payments options auto-feed my work expense report? If not, is it really going to gain traction?

     
    • Basil

      We see blockchain solving a couple of issues in the travel space, namely: fraud and rewards. If a blockchain has an associated token (crypto) to it, this will eliminate the credit card payment processor charges and the risk of stolen credit card usage. Rewards to travelers will see a significant increase due to the cost savings associated with payment gateway elimination and elimination of fraud (no credit card will be used). This is the opportunity we see in blockchain and the driver of decentralizing the Triphop rewards and payments component of our business.

       
      • Greg

        @Basil,
        loyalty points i can see, however blockchain doesnt solve fraud without ensuring the KYC related components are intact 100%, this means people will be coughing up a much larger dataset to (at times) people unknown, just to ensure that the process works, how many travellers are going to do that happily? you may be willing to cough up your passport number today, but if you need to scan and send a copy….are they still ok with that?

        Also, payment gateways inplement charges to cover the costs of the networks that service them, so how is this goign to change? Lightning networks will help, but i think proof is still outstanding as to if this will translate into actual savings or whether the networks will monetize these premium swimlanes, i know where i would put my money on that particular bet…

        personally i think blockchain will be useful as a backend driver, but it needs a use, and saying that i can put everything in “just another database” is a bit of a stretch, databases need tuning also, but are relatively painless to deal with, imaging doing an optimisation activity across 100k+ nodes….

         
    • MIke S

      Blockchain is a database, you can do anything you want with the data in a database, e.g. a blockchain transaction might include flags indicating whether cekrtain modifications can be made in future in ‘new’ transactions related to that original transaction. It’s all how you set it up, it will do whatever you program it to do.

       
 
 

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