New technology facilitates cash transactions
Blockchain offers the exciting opportunity to manage electronic cash without a central administrator. Based on the cryptocurrency Bitcoin, it uses a distributed database, so no central entity, government or bank manages the transaction. Instead, it is handled by thousands of volunteer-run computers (nodes).
The blockchain is a chain of information that includes the transaction information with a timestamp that cannot be altered once it is recorded. The blockchain process consists of the following steps.
- Someone requests a transaction (e.g., buys a ticket to an event).
- The requested transaction is represented online as a “block,” which is broadcast to thousands of independent computer nodes, each with a copy of the entire blockchain database.
- This network of nodes validates and approves the block by using an advanced series of algorithms.
- This verified information, the new block, is added to the existing chain in a way that is time-stamped, permanent and unalterable.
- The transaction is then complete, and the money moves from person A to person B. Often, this is in the form of a barcode/QR code on a mobile app.
An additional open-source technology, Ethereum, adds to blockchain capabilities to create smart contracts, which allows specifying conditions under which a person will be paid, such as management of issuing tickets, recording transactions, verifying authenticity and enabling resale/exchange of tickets—and under what conditions. It can limit the number of sales made to each customer.
There are even capabilities of hiding ticket barcodes before the event or while the user is away from the event venue. The smart contracts can allow for reward-based event promotions and event community building. For example, a reward system can be built in to reward users who invite friends.
Benefits for Meetings and Events
In the near-term, the major use for meetings will be for large sporting and music events, where scalping and ticket fraud is common. Some of the direct benefits are outlined below.
- Elimination of ticket duplication and counterfeit tickets: Blockchain and Ethereum are counterfeit-proof, highly secure methods of money transaction. Once an amount of Bitcoin is transferred from one address to another, it cannot be replicated.
- Elimination of scalpers: Ticket-bots and touts can often buy up large blocks of tickets as soon as they go on sale and resell them at exorbitant prices. Under systems using blockchain and Ethereum, organizers can set clear rules for ticket reselling, including setting limits on secondary sales commissions.
- Completely centralized ticket sales: Although the verification nodes are completely decentralized, the blockchain/Ethereum ticketing system manages the complete process in a uniform and transparent manner. Blockchain technology can create uniform standards of communication among the parties and make the ticket-booking process more transparent.
- Uniform resale and refund system: Every event can be governed by a smart contract, such as ticket issuing, payment processing, refunds and resale.
- Potential lower costs: Although this technology will likely be resisted by the 800-pound-gorilla ticketing companies, such as Ticketmaster, the process is more secure and efficient. As society moves to accept cryptocurrencies (despite the seemingly explosive bubble Bitcoin currently is experiencing), the process can disintermediate ticket sales, eventually leading to lower costs.
Promising, but Still Evolving, Technologies
As mentioned, these technologies are in their infancy. Companies developing Blockchain/Ethereum-based ticketing include BlockTix, Citizen Ticket, Lava, CryptoTickets and HelloSugoi.
Bitcoin and other cryptocurrencies also are very new. There will be hacks, winners, losers and technology developments in these highly volatile and unregulated asset classes. Although this technology will transform the financial world, investments in this area are risky. Buyers should proceed cautiously.
These technologies are developing for large, ticketed events. With their enhanced security, greater control and inherently more efficient processes, it is possible that—eventually—e-currencies will be the standard for events and society in general.
Corbin Ball, CMP, CSP, DES, is a speaker and independent third-party consultant focusing on meetings technology. With 20 years of experience running international citywide technology meetings, he helps clients worldwide use technology to save time and improve productivity.