Business Traveller (Asia-Pacific)
How blockchain and cryptocurrencies look set to change travel
How the future of currency looks set to shake up the travel industry
Most people have heard of Bitcoin by now – the mysterious electronic currency created by “Satoshi Nakamoto”, a nom de plume identifying the inventor, or inventors, of Bitcoin. Dramatic surges and wild fluctuations on the stock market have brought the cryptocurrency into mainstream consciousness, with a frenzy of investors pouring money into “mining” operations like a modern-day gold rush.
Mining in the 21st century, however, is slightly different. In very simple terms, it works like this: every ten minutes, a puzzle is formed that specially programmed mining computers race to solve. The winner receives a block of Bitcoin (currently one Bitcoin is valued at US$7,681) and the puzzle resets. Alternatively, Bitcoin can be purchased with fiat currency (legal tender that is backed by its government).
By creating Bitcoin, “Nakamoto” also invented the concept of the blockchain: a database that is immutable, secured by advanced cryptography (encryption and codes) and backed up with identical copies of information on a global network of computers – something that occurs during the mining.
By design, this network is not controlled by a single authority, and has so far proven impossible to hack. The technology is complicated, but the concept is simple: blockchain is essentially a ledger or database that is open and decentralised, and allows for the creation of censorship-proof, secure, borderless, paperless currency that can’t be tampered with or changed. Bitcoin was the first, but it’s been followed by many others, including Etherum, Litecoin, Dash and Monero.
Security has always been a concern in the world of internet payment, but experts like Leonhard Weese, founder of the Bitcoin Association of Hong Kong, feel that it’s the conventional banking system that is insecure.
“Credit cards are a bit of a mess from a security perspective,” says Weese. “All the information you need to spend on a credit card is written on the card. Anyone who observes it can use it.”
The breakthrough of blockchain comes down to “trustless-ness”, according to Clifford Choi, technical advisor at Emurgo, a blockchain venture fund and incubator. “You don’t own the data you give to Facebook,” says Choi, “you just have to trust them with it if you want to use their services. It’s the same for the money in your bank account, though most people don’t read the fine print.”
With a currency on a decentralised blockchain, such as Bitcoin, there’s no need for trust in an institution – what the ledger shows is yours and you can store and spend it without the need for a bank.