It’s now been over 50 years since the US dollar stopped being tied to the gold standard. But what, then, defines its value? Investopedia defines it nicely: Currency “holds value simply because people have faith that other parties will accept it.”
In the world of cryptocurrency, this has clear repercussions. For crypto tokens to be truly useful, they must generate a supply and demand – making different parties want to accept it. Today’s crypto holders are waking up to this reality, seeing that options to use cryptocurrencies to make purchases remain relatively slim. Yet, research confirms that there’s a rather surprising frontrunner when it comes to the world’s most crypto-friendly sectors: travel.
The industry players would lose a big opportunity by not jumping on the crypto bandwagon. After all, in the middle of 2021, there were already over 300 million crypto holders worldwide, and the number keeps growing exponentially. It’s predicted that there could be a billion crypto users by the end of this year – a testament to the appeal of structures centered around security, transparency, and decentralization.
In travel, all these aspects come together to offer a more seamless experience. Obviously, the appetite for more use cases goes well beyond accepting Bitcoin: From implementing alt tokens to introducing additional blockchain solutions such as non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs), there’s a whole new world to explore.
For example, GetYourGuide, a Berlin-based tour and activity booking site started accepting Dogecoin, processed via BitPay, last June. While the move was meant to attract new audiences as part of the company’s expansion to the US market, it worked wonders to capture the attention of Dogecoin holders across the globe.
“People want to put their crypto back into the system [and] travel is one of the biggest categories out there,” said the company’s CEO back then. “We take Dogecoin now into the real world; you can apply and actually get a real-world, kinetic experience.”
But what really needs to happen for crypto and travel's marriage to be a happy one? Let’s take a look.
Encrypted, shared, and distributed databases with unchangeable information… But how does this fit into travel? Well, imagine you’re going on a trip. You need to book your flights, your hotel, maybe a car, and the activities. But you might get scammed by a local tour provider, and also find yourself needing to extend the hotel stay by an extra day. Throughout that ordeal, you have to interact with numerous providers across platforms, all having different policies in place.
And on the operator’s side, it doesn’t get any easier. With poor visibility of the inventory and unstandardized data, companies often fall into the vicious cycle of overbooking, cancellations, and subsequent expensive refunds. With blockchain, however, each confirmed booking can be added as a transaction block, meaning that all participants in the travel ecosystem can have a unified, accurate overview of everything that’s going on at any given time.
Travel is a traditionally fragmented industry, and savvy entrepreneurs are entering the space to disrupt tourism through blockchain. The technology allows them to make the entire experience – and virtually every single touchpoint of travel – more flexible, more enjoyable, and faster.
We all know that travel hasn’t been the fastest to adopt tech. Even the biggest providers that were born out of innovative solutions are now married to their product and rarely branch out. But despite their conservative approach, they will not want to miss out on the new opportunities. This tendency will likely push them to partner with agile innovators rather than trying to do the heavy tech lifting by themselves.
This is music to the ears of emerging blockchain startups in the space, who can introduce middleman-independent solutions into the travel process and strike partnerships with major players to gain trust and credibility.
A great example is Dtravel, a decentralized home-sharing network (and an Airbnb competitor), which leverages smart contracts between hosts and guests. The most interesting part is that it’s built as a DAO – meaning it’s entirely driven by its community, rather than a corporate board. All registered hosts and any guest can purchase TRVL (the platform’s native token) to become voting members. At the end of 2021, the platform had over 250,000 homes within its network.
New crypto startups in travel could have an exciting path ahead – but there’s a catch. In reality, many of them fail, running out of funds even before taking off. The excitement hardly compensates for poor business planning: Founders often overpromise and agree to the demands of their investors – who tend to be particularly hungry in the blockchain space. Crypto is fast-moving and enticing; if you’re getting involved, don’t lose your head.
Moreover, many projects make the mistake of throwing way too much money at marketing to cultivate audience awareness rather than building a good product. In travel, many startups go for glamorous gamified solutions, but they often end up having a lot to say, without having a real product to back that up. The result? They will fail because they won’t bring in enough revenue.
The right way to do it instead is by pinpointing the needs of travelers, investing in development, and working towards getting the product-market fit right. Then, when you spend on marketing, it’s to generate revenue to be more profitable and sustainable, not to inflate the bubble of false growth.
When I was launching my crypto rewards travel platform, I saw that finding the balance with investors could be quite tricky. Many times, they will try to push their opinion – but it’s likely they’re just looking to fill their pockets and don’t have any substantial interest in the project. So, hold your ground and educate them that there will be times when you build and times when you promote.
In January, Airbnb’s Twitter audience voted in a poll about what feature should be launched this year. And the people have spoken indeed: Paying for bookings in crypto came on top. Data from a consulting company then confirmed this would actually be a great step, as there’s an overlap between Airbnb’s user base and the owners of Bitcoin.
Fiat continues to show its limitations, and younger generations aren’t here for it. They crave a much smoother experience, therefore, enabling crypto payments is vital to welcoming new demographics and audience segments. There are little to no risks for travelers to pay in crypto. Yet, depending on the specific blockchain, some transactions might take a longer time to be verified before the payment is completed, while for others it might be instantaneous.
Transparent payments, with all transactions recorded on the blockchain, have become so sought after that many travel companies have rushed to adopt them. Cheapair and Alternative Airlines, both flight booking platforms, accept various cryptocurrencies to allow their customers to book flights from over 600 airlines.
The fluctuating prices of tokens could be considered a challenge if the tokens end up sitting on the company books and devalue. This is one of the main barriers stopping most companies from adopting crypto as a payment method.
To drive mass adoption, players in the space need more price stability; companies that already accept crypto likely have a team that is able to plan and hedge the risk. As more crypto derivatives and tools are introduced to the market for hedging, we will see stronger tides for crypto payments. In the case of travelers, many already hold crypto as a form of investment, meaning that they have normalized the fluctuating value of their portfolios.
However, not all crypto is suitable for payment. Make sure to educate yourself about the type of tokens out there before accepting them indiscriminately. This is what to watch out for:
Low liquidity can make coins hard to sell, or the price can fluctuate so much it can be risky to put them on the books.
Special functionalities that are baked into some tokens could be a hidden trap. For example, some tokens allow their founding team to stop and halt trading or transfers, potentially leaving you with useless currency.
Undoxxed founders can make you susceptible to running into scams and rugpulls, as the team could take your funds and never be seen again – with no accountability whatsoever. Doxxed founders are always a better choice.
On top of that, before accepting crypto, follow these three rules:
Getting involved with a token without knowing how it works could result in confusing situations with your customers, as well as a higher risk of scams. You want to get guidance with the technical stuff to protect your company from bad actors. Ideally, start with the top-volume coins that have been around for years.
Every country has different crypto regulations – and not all see crypto payments as legal. So make sure to do your research. For example, if a country suddenly decided to ban or restrict crypto, you could face challenges for your company and even get banned from operating on its territory.
Considering the high volatility of crypto, it’s good to hedge to safeguard the value of your crypto assets. If you receive $100 worth of crypto for a one-night booking, in order to stay afloat, you can’t risk that $100 turns into $20 over a few days. This could kill your entire business operations.
They say, “travel is the only thing that makes you richer,” and with crypto, this could be double the truth. Travel companies are rushing to crypto-powered loyalty programs, enabling travelers to turn their purchases into an investment that can even appreciate in value over time. Startups have been exploring NFTs too, whether to categorize travelers within tiers or to tokenize hotel booking, identity, and experiences.
Repeated purchases may be a delicate subject in travel, but they don’t have to be a mere pipe dream with crypto. With loyalty and cashback programs, built on underlying blockchain structures that don’t allow the companies to temper the value, empower travelers to choose the best way to invest, trade, sell, and cash out their tokens – no matter where.
By leveraging affiliate networks, such as when a hotel chain partners with an airline, travel players could build up self-reinforcing ecosystems that drive value over long periods of time.
These dynamics work wonders for brand loyalty: Choice Hotels, for example, allows people to exchange crypto for its loyalty points – making travelers invest in their business while offering diverse benefits in exchange. Just think about it… If you can get experiences like unique access to boutique hotels, exclusive community meetups, or access to the best local guides and experts – not to mention community voting rights – doesn’t it change the game?
While this goes for accepting crypto too, implementing more sophisticated blockchain-based structures will mean handling complex processes. Travel companies may be intrigued by innovations such as NFT bookings, but without a functional tech infrastructure in place, the implementation could only exacerbate existing problems.
Be it legal and regulatory standards, tech challenges, or asset and security risks, each individual area will require a certain level of expertise that can be hard to pick up as an individual. If travel companies want to get blockchain right, they might need to leverage a network of experts along the way.
Don't underestimate the power of correct and safe implementation. For example, a hacking incident – if not detected on time – can have possible implications for future transactions. Unfortunately, it takes organizations more than two working days, on average, to respond to a cyberattack. The loss of a blockchain key (and all the customer’s loyalty points with it) will not only wipe out an entire account but can also pose a threat to all the data and transactions that had preceded the hacking. Invest in educating your employees, customers, as well as the industry at large on the norms of using blockchain-based applications.
To say that blockchain disruption is knocking on the travel industry’s door would be an understatement. In 2021, almost one in four travelers said they were planning to pay for their next trip in cryptocurrency. So, it’s time for companies in the space to get to work and adopt blockchain solutions in the safest and most effective way possible.