Founder Ralf Usbeck says the world is poised for a second technology revolution with blockchain at its heart and the travel sector should ensure its future is in its own hands
Company Profile: Chain4Travel bids to be the travel operating system for the Web 3.0 revolution
Is scepticism about whether blockchain is about to usher in a digital revolution as profound as the internet the equivalent to doubting the potential of the web in the late nineties?
According to Chain4Travel founder Ralph Usbeck, there’s no question the world is at a similar point today as it was prior to the first dot.com revolution at the turn of the century.
Last year, Usbeck stepped aside from Peakwork to put a team together to develop what he describes as the operating system for the coming Web 3.0 age built by travel for travel.
“Web 1.0 was log in with your username and password, Web 2.0 is log in with your Google or Facebook account, Web 3.0 is connecting with your digital wallet.
“When we started this, we knew only 5% of people have a real idea about this technology, but feedback about what we are doing has been better than expected.
“We compare it to what it was like in 1997 before the internet really took off. I remember speaking to a regional travel industry group and asked who is online. Only 5% were.
“This is the same. Back then, we knew the internet was coming, but only a few people knew what to do with it.
“In 1997, a lot of people said you will never sell travel on the internet. We have the same potential to completely change the way we do business today with blockchain.”
There are common misperceptions about blockchain, due to the crypto currency Bitcoin, that it is slow, hugely energy inefficient, and for get-rich-quick speculators or criminals.
But Usbeck said Chain4Travel was develop specifically to so the sort of issues inherent with public blockchains like Bitcoin and Ethereum don’t hold it back.
It is a consortium blockchain, a de-centralised private network that restricts access to members all of whom go through a KYC process to validate identity and authenticity.
Members are voted in on a democratic basis by the network that act as ‘nodes’ validating all transactions on the blockchain so no one member can gain monopoly control.
In public blockchains anyone with a computer and a modem can be a validator, so that requires a complex proof of work mathematical problem to be solved for every validation.
This consumes an enormous amount of computing power, and therefore energy, and also takes time - every Bitcoin validation takes up to 10 minutes.
While Bitcoin can handle just seven transactions per second and Ethereum 15, Chain4Travel has capacity for up to 5,0000, depending on the complexity of transactions.
Bitcoin’s 90 million transactions per year consumes 125 terawatt hours, the same as the annual energy consumption of Argentina.
Because public blockchains reward validators in the native crypto-currency of that blockchain the more validations, the more the value of that currency inflates.
In contrast, Chain4Travel is an owned network which although not as transparent as public variants, do offer better security, scalability and the ability have minimal or no costs.
There’s no incentive for members to raise validation costs and every two weeks they will vote to reduce fees so that a single validation will never cost more than 1p.
Usbeck said: “If you have a network where validation never costs more than 1p then the ideas can start.
“You can sell microservices because the aim of the validator is not making money from the validation it is to have a network where they can do secure transactions.
“If you can’t control validation fees you never can sell anything in travel. It’s a very low margin business and the energy consumption of these algorithms is huge.
“Therefore, we said let’s create an owned main net, like Ethereum, but the validators are companies in the industry.
“Then we can use a proof of authority consensus algorithm because we know the validators so we can trust it.
“It’s not possible that 50% of all these companies conspire to commit fraud. Therefore, it’s secure, really low energy consumption and speed is much higher.”
Usbeck likens Chain4Travel to a lake. Anything that might be distributed between travel firms are turned into digital assets (Non-Fungible Tokens or NFTs), the ‘fish’.
The rise of microservices
These NFTs can be used for traditional distribution of hotel rooms or seats on flights, or any number of more inventive microservices not possible in traditional distribution.
Usbeck gave the example of an OTA offering its customers a free drink onboard flights it is selling on behalf of a lowcost airline in the network.
The traveller is given a QR code which cabin crew accept as payment and as soon as that is done the unique NFT is validated in the blockchain and the one-off transaction completed.
NFTs can be used instead of vouchers for flight delays or cancellations offering an incentive to book a new flight but with the assurance that they have a stable monetary value.
Firms might also drive loyalty by issuing them as booking incentives for customers’ next trip or hotel stay to avoid high OTA commissions or expensive Google advertising costs.
Competing hotel chains might collaborate to reduce distribution costs by issuing NFTs as a booking incentive for customers that can be redeemed in either brand.
And the low cost means they might also be used for non-commercial notifications like crisis management updates, health and safety advice or hotel and room mapping information.
Usbeck said this will do away with the need for multiple API feeds and much traditional contracting because every supplier, product and transaction is validated by the network.
“You can create a digital asset for any product whether it’s a seat on a plane, a bed in a hotel, a massage or a Segway tour. It looks the same and you can deal much, much easier.
“In the future you will eliminate hundreds of APIs because you can use the network for the validation to check if it’s a real product or it’s valid.
“And with smart contracts you deliver the product and in the same second receive the money. Or you supply a product and you can pay multiple parties in the same second.
“Compare that to the current situation where product and payment, by something like credit card or Paypal, is always separated.”
Raising funding and support
Usbeck said Chain4Travel was established in Switzerland due to its reliable crypto regulation. It raised CHF4.3 million seed funding and has launched testnet Columbus.
It opened a pre-sale of Camino coins ahead of an Initial Coin Offering (ICO) in the second half of the year in which it hopes to raise a further CHF10 million.
The full launch of the Camino main net along with the first applications on the network is planned for September.
Established travel industry companies backing Chain4travel include Lufthansa, Tui, Eurowings, DER Touristik, Hotelplan, HolidayPirates, BusyRooms, and HolidayCheck.
“We already have a wide-range of supporters within the travel industry, it’s not tour operator driven, it’s not airline driven, and therefore we can do this democratically.
“We’re not taking intermediaries out with this network. You need front end, OTAs, tour operators and suppliers. It’s the dealing between them that’s completely different.
“I believe in five years you’ll see the same phenomenon as the internet ecommerce bubble. There was a lot of ideas, and a lot of stupid ideas, but everyone invested.
“It’s a question of who has the best idea. We know the blockbuster idea is not invented today. Just like in 1997 there was no Google, no Facebook. They came later.”
Web 3.0 and the era of the metaverse
Usbeck said the shift to Web 3.0 and a metaverse future is happening with 100 million crypto wallet users today which he predicts will to rise to one billion within four years.
“Young people have grown up playing Mario Kart so are used to dealing in coins. Travel firms will allow customers to earn coins to be exchanged for real money or special deals.
“The first step is to bring the old world of Web 2.0 into the new, so you don’t need a crypto wallet, but it’s in the background behind your classic user name and password log in.
“Eventually, the end the user will take over because they will have their own wallet and everything in their account, coins and NFTs, will be moved over.
“When telecommunications companies start to link your mobile phone with crypto wallets, it will explode.”
Chain4Travel recently attended Coindesk’s Consensus 2022 event in Texas along with 18,000 crypto developers.
Usbeck said although 70% were from the fintech sector an increasing number were from more mainstream industries.
US retailer Wallmart is already using Blockchain to track the progress of every single product, something only possible with blockchain technology.
Usbeck said travel, with its need to make complex distribution networks more efficient, should be the one sector that tailors blockchain for the mutual benefit of all.
“Chain4travel is developing the network, but when it’s live and finished we will put its intellectual property rights and financial reserve into a foundation.
“It’s a decentralised autonomous organisation and so the owners of this network are the participants, the travel industry.
“No one can buy this network. There’s no chance of anyone coming along with billions of dollars to buy it out.
“We started in the DACH market to talk to airlines, tour operators, hotels and the feedback was really good, 90% was positive.
“Sixty per cent of this 90% do not have any clue about blockchain, but they know this will be a new technology platform and it will come.
“If we as an industry family don’t create our own network, we will have to accept one from a big company, maybe from the US again. Therefore, we said let’s do it.”