This blog explores the rise of cryptocurrency and blockchain and their prevalence in the hospitality industry.
Technology has evolved over the years. We change how we record, receive, send messages, and now pay for things. With new technologies, we worry about missing out or making wrong choices regarding what to focus on and invest in next. While it captured the imagination for some, it struck fear and confusion in others. The awareness of cryptocurrency and other blockchains is on the rise and prevalent in the economy. Cryptocurrencies and other blockchains have continued to become a contributing factor to the hospitality industry. But why are some hesitant in this digital way? Before we see where and how this trend is emerging in hospitality, let's understand the concept of cryptocurrency and blockchain.
Bitcoin, Ethereum, Ripple are forms of digital currency called cryptocurrency. This exchangeable asset uses encryption techniques to regulate monetary units' creation and verify the transfer of funds.
Cryptocurrency is created and exchanged electronically at a smooth speed by eliminating fees and expenses from banks and other payment gateways. The government does not control it. Cryptocurrencies are independent of government controls like banks or any governmental authorities holding money supplies. So you can't pay your taxes or settle your debts with cryptocurrencies.
A cryptocurrency cannot exist without a blockchain. Blockchain, also referred to as digital ledger, is a technology that stores transactional records of the public, called block, that links to in the form of a chain with other blocks of similar information. The owner's digital signature authenticates the transaction and safeguards from cyberattacks authorized by the digital ledger. Blockchain avoids long data processes being handled within the company or by a third party like bankers, lawyers, and brokers, costly and time-consuming for both businesses. Blockchain saves both time and money to facilitate the faster movement of the transaction process. Its highly secure, decentralized system and automation capability are advantages of blockchains. There are a couple of benefits for merchants accepting cryptocurrencies like bitcoin over typical transactions. One, they don't have transaction fees. Two, there are no chargebacks or decline of transactions. Payment made and settled in the cryptocurrency system is irreversible. To summarize, cryptocurrency is a digital currency that uses block technology to verify and secure asset transactions.
We see a migration of paper to digital in the hospitality industry. Some applications of
cryptocurrencies and blockchains have emerged and are having a transformative effect helping hotels, customers, and the hospitality industry as a whole. From the front office to restaurants, blockchain is gaining prevalence in various aspects within the hospitality industry. We know direct bookings are blockchain transactions involving only the hotel and customers. A
cryptocurrency called Lock-Chain is where guests can book rooms without any additional charges to the customer or the hotel. It's a zero commission, and transactions are secure, trackable, and irreversible. Cryptocurrencies can identify a guest with a fingerprint. Great to use during check-in to reduce wait times. Elements are a blockchain universal currency created for hotel guests' loyalty programs where points can be issued to reward guests. Trippki also launched a loyalty reward system where customers are rewarded with "TRIP" tokens for staying at a hotel and other hotel amenities. What's great about the TRIP tokens is that they are recorded and do not expire, allowing guests to use tokens for booking future visits or exchange for cash. Another blockchain is smart contracts, a legal contract that includes contractual provisions predetermined by the transacting parties. Blockchain in supply chain management to hotels and restaurants improves quality control and track and monitors food safety.
Similarly, Smart Menus can provide the history of specific ingredients used in the kitchen on a particular day. TUI launched 'Bed-Swap,' a blockchain technology to assess demand and move inventories between points of sale. Winding Tree is a demand and supply marketplace for inventory tracking. Air New Zealand and Lufthansa have already partnered up with the platform. Froom blockchain booking procedures and baggage tracking make Winding Tree's technology seamless and transparent. Blockchain can change the core performance of HR processes from payroll, recruitment, learning, and development management. To outweigh dramatic costs and potential growth, automated validation of resume credentials and beyond, the transfer to international payroll are solutions and smart contacts. Expedia is also accepting bitcoin for hotel reservations made through websites. It will use Coinbase, an app that allows you to buy and sell all sorts of cryptocurrencies, as its wallet. Bitcoin kiosk machines are becoming standard worldwide, where people can convert their bitcoin into dollars or purchase bitcoin. In Las Vegas, Robocoin ATMs at D and Golden Gate properties allow visitors to redeem their gaming tickets for cash. The Kessler Collection hotel group is to accept cryptocurrency as payment. The Orlando-based hotel group partnered up with Bitpay to become the first US luxury hotel group to accept cryptocurrency. It will make international guests pay for the accommodation, not worry about the exchange rates, and worry about swiping credit cards internationally.
Yes, having companies accepting cryptocurrencies and blockchain is beneficial. It's decentralized, transparent, and flexible. But can also lead to lead to complications. Cryptocurrency is usually considered a property than a currency. Hence, tax reporting in hotels can become hectic when cryptocurrency is in the mix as cryptocurrency tends to be volatile. The value of cryptocurrency can fluctuate, making it challenging to manage cash flows. This technology will be subject to cybersecurity breaches and fall into the hands of hackers. Plus, cryptocurrency is not regulated and not under the supervision of the government or central bank.
Digital technology is continuously evolving along with the hospitality industry. In the hospitality industry blockchain and cryptocurrency is a relatively new technology. It offers excellent potential from reducing third-party involvement, enhancing security, smooth speed and ease of transactions, and allowing information to be access at own convince. We can understand why companies are fearful of this technology. It will take time for industries and these platforms to develop, understand, implement standards to impact the industry. But it's one of the most exciting digital technology innovations we have seen in the past decade.
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