Pamela Whitby has been looking at applications for blockchain technology and hears that success is most likely in entirely new markets
With the hype around blockchain in travel reaching fever pitch, why not toss something else into an already complicated equation – an initial coin offering (ICO) for an electrically charged flying urban taxi.
At EyeforTravel’s recent digital and data summit in Amsterdam, there was plenty of buzz about the disruptive possibilities for blockchain technology in travel. But is a crypto-backed token to fund the take off of a flying car, which, the evangelists say, would change the way cities work and open new avenues for travel and tourism, a step too far?
Not according to Nikolay Bezhko, the lead community manager of Blockchain.aero, a consortium of twelve firms which operate in the “mass urban aviation market”.
He says: “One of the interesting things is that this potentially trillion-dollar industry is in its infancy, and the whole concept of blockchain could be easily integrated in the early stages”.
…this potentially trillion-dollar industry is in its infancy, and the whole concept of blockchain could be easily integrated in the early stages
Until very recently, the notion of the urban flying taxi was little more than pie in the sky. But in April last year, at the Uber Elevate Summit, vertical take off and landing aircraft were showcased as a way to “bring far-reaching changes to our cities and our lives”. Present estimates are that a 1.5 hour city journey could be cut to around 10 minutes, and cost the equivalent of an Uber cab; around $8 per minute, but this could vary by market.
“With Uber Elevate estimating the need for around a thousand cars per hundred cities, the flying urban taxi, is no longer a dream,” says Ilya Khanykov, an advisor to the Blockchain.aero consortium.
It’s an optimistic view but Blockchain.aero is hoping to see the first flights in commercial operation by the end of this year. Unsurprisingly, Dubai is leading the charge here, both in launching the first aircraft and backing the notion of a blockchain-based market.
Khanykov, a former financial industry and IT entrepreneur, believes that there are two ways for this market to evolve. “One version of the universe will see large players emerging to organise traffic control and centrally manage delivery channels by controlling the landing pads or charging stations,” he explains.
The other, Khanykov’s ideal scenario, involves a blockchain. In this environment, “all those bits and pieces of this large infrastructure will be decentralised and provided by many people who jointly build and grow the ecosystem, a bit like the way bitcoin has evolved in financial services”.
Like the miners of the cryptocurrency world, who are rewarded every time their computational power is used, entrepreneurs who own parts of the urban taxi grid – from vehicles to landing pads and chargers as well as other auxiliary services such as traffic organisation and insurance – will be rewarded too.
One challenge is to make these products work together so that the full basket of technologies and products would work in different parts of the world. “If successful, this will mean that local entrepreneurs can adopt the technology and deploy it in a decentralised manner. As entrepreneurs begin to compete on tariffs, that will help the system to grow quicker,” says Khanykov.
Because of the public nature of the blockchain’s decentralised ledger, the system will be transparent, with all participants able to see supply and demand of the current load of the system.
What the Blockchain.aero consortium proposes is different to that of firms such as Travelchain, Lockchain and Winding Tree, which are trying to disintermediate the established, not to mention complicated, marketplace of hotels and flights.
Winding Tree, which launched its ICO on February 1, is arguably the most credible of these to date, having secured Lufthansa, Air New Zealand, Eurowings and Nordic Hotels, as its partners.
But not everybody is convinced that a blockchain to address this complicated world of hotels and flights, with its entrenched and powerful incumbents, can work.
Erasmus Elsner, the co-founder of CryptoCribs, an Airbnb for people who want to pay in cryptocurrency, is one. He says:“When you start to try to sync incumbents in their various verticals you are bound to run into complications, simply because of the way that large corporations work. They have so much information tied up in silos that they aren’t going to readily give up.”
Instead Elsner, a former JP Morgan banker and corporate lawyer who returned to his teenage passion for coding while doing his PhD thesis on financial disintermediation at the Swiss Federal Institute of Technology, believes that, technically and ideologically, blockchains work better for grassroots businesses such as the one he is trying to create.
So perhaps too, for an electric urban flying taxi?
Yes, says Khanykov: “In this space there is little work to do on legacy systems because it is an entirely new industry”.
In this space there is little work to do on legacy systems because it is an entirely new industry
EyeforTravel.com put the Blockchain.aero idea to Joerg Esser, a former Thomas Cook group director and now partner at German-based management consultancy Roland Berger, who at EyeforTravel’s Amsterdam digital and data show outlined some of the possible use cases for blockchain.
He notes: “Looking at the various partnerships involved and the model, it seems more advanced than most. In the corner of a true private-private model, this one at least seems to have a clear direction.”
An ICO with a difference?
To raise the dosh needed to build this new marketplace, this April (at the time of writing) the Blockchain.aero consortium is launching yet another coin or token – McFly. But is another ICO really needed?
Elsner also isn’t convinced by the raft of largely unregulated ICOs, which he sees as just another way for start-ups to raise money. “Usage of the already established cryptocurrencies is not at the point where it makes sense to introduce yet another.”
For this reason, CryptoCribs bookers can pay in bitcoin, bitcoin cash, ethereum and litecoin – the four currencies currently supported by Coinbase.
And for the curious but uninitiated, Elsner also suggests that Paypal could be offered as a payment option, for the first few transactions at least.
Admittedly though, CryptoCribs, which is effectively an Airbnb for people who want to pay in cryptocurrency, is not trying to do something quite as ambitious as creating a marketplace for a flying taxi.
Khanykov wants to point out that there are three distinctive differentiators of this Blockchain.aero and McFly.aero token launch, which, he claims, has piqued the interest of not only advisors but also the blockchain community. Here is why:
The token is not just a reward or billing mechanism.
“In fact, it is part of the core technology used to measure the exploitation or usage of the vehicles – their amortization and depreciation, if you like.”
The token and its core value is the function of the system itself, and that is flight.
“The huge and fundamental change that blockchain enables is the ability to use things and their function, instead of owning them and paying for their presence. It is this that is the true enabler of the sharing economy.”
- A new concept of how fledgling communities can build large infrastructure. “We are used to large infrastructure being built by centralised markets and monopoly players. Blockchain can enable large infrastructure projects to be built by the many rather than the few. Guided by rules and bottom-up incentive schemes that are on the blockchain and are transparent and meritocratic, means that everybody’s contribution is more fairly rewarded.”
Undoubtedly fintech and the bitcoin bubble have helped propel blockchain into the public eye. But the next wave of blockchain is expected to be in industrial applications, easing supply chain management across many industries, removing the need for ‘trusted’ third parties and making business more efficient.
For Khanykov, the urban flying taxi concept sits at the intersection of aviation, blockchain, the Internet of Things, smart cities and supply chain disruption. It lift off happens, it could change how cities work, where people live and how they travel. It could also give rise to new tourist and leisure opportunities. Instead of expensive and exclusive hot air balloons, more people will be able to see everything from above, while hovering.
But there is likely to be headwinds and many issues still need to be ironed out, not least the regulatory environment, which could prove complicated; the noise factor too has been voiced as a concern.
So, is there any chance of urban flying taxis getting lift off in a blockchain-enabled environment? Well, stranger things have happened.
To read more from EyeforTravel’s Amsterdam Digital & Data Strategies for Travel 2017 Round Up click here.
June 2018, London