With increasing adoption and adoption, blockchain can affect the way we book, market and manage vacation rentals.
Blockchain is a technology that allows digital information to be distributed securely and transparently.
The size of the blockchain technology industry has grown significantly in recent years and is expected to see massive growth with a projected value of over $ 39 billion by 2025.
Blockchain enables the existence of cryptocurrencies such as Bitcoin and Ethereum and offers many other advantages. Blockchain is inherently decentralized as it doesn’t rely on a single server. It consists of a global network of computers that store copies of the same database in blocks. This ensures that a single entity cannot control the blockchain.
Much of the conversation about blockchain is focused on how this new technology can alleviate the challenges facing our industry. The main problem that the proponents of the blockchain point out is that in today’s internet all data is stored centrally.
Therefore, it is not controlled by individual users, but rather by those who manage the servers on which the data is stored. Not only is our data out of our control, it’s also vulnerable to cyberattacks.
Blockchain has the potential to trigger a paradigm shift as it enables us to build fully decentralized organizations and applications that are open, transparent, secure, fast and inexpensive to use.
Winding Tree, a B2B travel marketplace, offers a blockchain platform where buyers and sellers of travel inventory can find trusted partners. You believe in open source technology. The computer, the Internet, Firefox, WordPress, Wikipedia are examples. Anyone can freely use this technology so that you have full control over, access and use your data. And overall security is established.
Maksim Izmaylov, Managing Director of Winding Tree, says: “A truly decentralized system cannot be built on proprietary technologies. For this reason, Winding Tree is not only based on the Ethereum mainnet (as opposed to nonsensical private blockchains), but is also 100% open source. Opening up access to the source code of our systems is an unprecedented step for the travel industry that has never been taken before, and the benefits to the travel community are hard to exaggerate. “
He goes on to say that one of the advantages of open source technology is that it creates a vibrant community, everyone working creatively to improve the industry as a whole.
Value of the blockchain in the vacation rental industry
The introduction of blockchain in vacation rentals can transform the industry by empowering users to own their data and digital assets.
Development of decentralized booking platforms
All of the digital information on the Internet today (known as Web2) is stored on servers. These servers are controlled by large companies – in the vacation rental industry, they are OTAs like Airbnb and Booking.com.
With the help of blockchain technology, data no longer has to be stored on servers by large companies. Instead, your data can be stored locally online. This is how Web3 works.
Trips Community, for example, has a vision of creating a “decentralized OTA” on the blockchain made up of a set of open protocols that support bookings, messages, payments, reviews, and everything else OTAs do today.
“Your entries, ratings and bookings are no longer stored on the OTA’s servers. You are in the blockchain and in IPFS (The InterPlanetary File System) and you are in control of them, not the OTAs, ”says Luca De Giglio, founder of the Trips Community.
The most obvious benefit of this is that it’s cheaper and a decentralized peer-to-peer rental platform isn’t governed by OTA commissions. According to Luca, the real benefit is that “companies own their digital assets”.
Of course, this doesn’t mean that Web2 will go away and everyone will store data on Web3. The two can coexist. “Every single company in this area decides whether to conduct its business over the old or the new Internet,” explains Luca.
Use of cryptocurrencies as a means of payment
Another way blockchain is transforming vacation rentals is through the use of cryptocurrencies as a means of payment. Cryptocurrencies are now a widespread digital asset around the world. They have lower processing fees than traditional currencies and enable fast, secure and traceable payments.
According to Vipin Mahasayan, CIO at EzyStayz, cryptocurrencies represent the core principles of blockchain – power for people, trust and transparency – by rewarding various peers in the blockchain ecosystem.
“The global market capitalization for crypto is $ 373.34 billion. This can lead to a huge market share in the use and purchase of travel services where crypto can be accepted as a form of payment,” says Vipin.
Improving loyalty programs through tokenization
Tokens serve as a means of payment and also provide the opportunity to improve and expand loyalty and reward programs.
“By tokenizing rewards programs and converting them into a decentralized value-added network, loyalty programs could become what customers really expect from them. First, they could showcase a range of products and services from different providers. Second, rewards could easily be exchanged when points are converted into digital assets, ”says Vipin.
This would allow customers to compare the relative value of programs and the rewards they offer and make their choices accordingly.
Increase in data protection and security
Blockchain technology enables a level of data protection and security that is not possible on conventional platforms.
“Blockchain technology provides the ability to protect data from malicious attackers, prevent potential fraud, and reduce the likelihood that data will be stolen or compromised,” says Vipin.
By accepting cryptocurrencies such as Bitcoin or Ethereum, booking sites based on blockchain can offer secure and transparent payment options.
For example, the EzyStayz blockchain system uses a highly secure, multi-signature digital wallet that can store a wide variety of cryptocurrencies. This means that EzyStayz users can make secure crypto payments without the need for debit cards or bank accounts.
Blockchain-enabled rental companies
There are several vacation rental booking sites that use blockchain technology to provide an alternative way to book and pay for travel accommodation, as mentioned above (Trips Community, EzyStayz and Winding Tree).
Other examples from companies like LockTrip and Travala have developed blockchain-based booking platforms that allow guests to book rooms directly with accommodation providers. In this way, OTAs do not dominate and the costs for providers and guests are reduced.
Companies like KeyoCoin also use cryptocurrency rewards as an incentive to encourage customers to book through their mobile app instead of an OTA. There are a variety of other rental companies that are early adopting blockchain technology.
Blockchain and cryptocurrency enable simple transactions (transferring funds) and create transparency in transactions. Blockchain self-sufficiency eliminates the middleman and further lowers costs. The tokenization system enables a reward system that powers the ecosystem.
The current limitations of the blockchain are the accessibility of the cryptocurrency, including the ability to easily go to exchanges, the question of where to store your own currency, and the market instability of the currency itself.
The significant volume of cryptocurrencies held by the largest publicly traded companies such as Square Inc. (mobile payment) and MicroStrategy Inc. (business intelligence, mobile software, cloud-based services) in the world indicates a tremendous movement by companies towards alternative payments / investments . This trend cannot be ignored.
As Maksim says, “As with any new technology, there is a learning curve with blockchain. It’s not rocket science, the technology is pretty easy to understand, but it could be difficult to change the technologies you work with. “
As accessibility and knowledge become more prevalent, the role of the blockchain is expanding to become a more trustworthy and general way of doing business in the future.
* James Burrows is the CEO and co-founder of Rentals United, a global enterprise channel manager for the vacation rental world. He currently lives in Barcelona.