As a consequence of recent developments within the crypto space, people are more interested in decentralization than they are in spending their time debating the price movement of Bitcoin.
Moreover, growing market trends towards stablecoins are also changing market sentiment. So far, the year 2021 has shown to be an interesting one for stablecoins. During Bitcoin’s downturn in May of 2021, stablecoin performance increased, with net deposits increasing by 155.5 percent.
To be sure, stablecoins do not always follow the Bitcoin pattern, which distinguishes them from other cryptocurrencies. This is one of the many ways in which stablecoins differ from other cryptocurrencies in this respect. Furthermore, it seems that during times of crisis, people turn to stablecoins as safe havens from the volatility of the financial markets, according to the data.
Recently, stablecoins have been the topic of heated discussion, not just among regulators and traditional investors, but also among members of the cryptocurrency community. Stablecoins are being used in different industries. From E-commerce to cross border transactions, to gaming and finance there are plenty of use cases for stablecoins. In this article we will discuss the impact of stablecoins on the travel and tourism industry and how the price stability of stablecoins are revolutionizing air travel and the leisure industry.
Why are Stablecoins better suited to the travel and hospitality industries?
The tokens and currencies presently in use in the cryptocurrency sector lack definition, and their value is susceptible to enormous market speculation. As a result, prices vary everyday by 5% to 50%, rendering them useless for daily transactions. To function as a trustworthy means of exchange in today’s markets, cryptocurrencies must exhibit the following characteristics:
- Price stability or the property of constant prices in an economy
- Scalability, or the capacity to manage a large number of transactions
- The property of keeping transactional data with a level of privacy that protects secret and sensitive transactions is known as privacy.
- Decentralization, or the ability of a currency to operate independently of a central decision-making institution in an uncorrupted and value-preserving way.
Existing digital currencies have accomplished all four of these characteristics, but none of them at the same time. The price stability of a coin is, arguably, the single most essential feature that will lead to widespread acceptance of a digital currency by the general public. Since this discovery occurred in recent years, a slew of stablecoin initiatives have sprung up, each with a unique operating concept that distinguishes it from the others. Stable coins have the unique ability to revolutionize a variety of sectors, particularly the travel and hotel industries, as a result of their unique characteristic.
Stablecoin use on the rise
A stablecoin is a kind of cryptocurrency whose price doesn’t fluctuate. The traditional virtual currency bitcoin has differences with the stablecoins that are substantial when compared to other virtual currencies. The latter lacks a stabilization system.
At the end of May 2020, there were 11 billion stablecoins available on the market, accounting for 4% of the entire value of crypto-assets at the time. On March 12th, often known as “Black Thursday,” when cryptocurrencies and the stock markets both crashed at the same time, their market supply surpassed 40%. Stablecoins have been listed on at least 50 major cryptocurrency exchanges. In the current state of the digital asset ecosystem, there can be no question that their current function is critical: they assist to promote the adoption of crypto-assets by early adopters in the IT sector, as well as by ordinary users of the internet.
Stablecoins Revolutionizing Travel & Hospitality Industry
Over the last decade, internet bookings and reservations for travel and hospitality have become more commonplace. The internet has completely transformed the way people travel, thanks to quick price comparison websites, low-cost airlines on the internet, and travel applications such as Airbnb. Stablecoins are the next natural step in a steady transition away from centralization and toward self-managed, autonomous tourist ecosystems, which is now underway.
In order to understand how stablecoins might assist in the travel and hotel sectors, let’s take a look at some of the major problems they are now experiencing. All of these industries are made up of a diverse range of companies, ranging from luxury travel to volunteering, from cheap travel to environmentally conscious travel.
The stability of stablecoins made possible by blockchain technology is flexible in that it can help any of these sub-sectors, regardless of their variations in terms of their operations.
Consider how it may aid in the reduction of some of the most pressing issues facing the tourism and travel industry as a whole in the following paragraphs.
Travel & Hospitality Challenges
Following are a few of the challenges that these industries face:
Issue with Payments – To accept payments from financial institutions such and to handle payments on their behalf, these sectors now depend on middlemen. Because of the costs charged by these intermediaries, there are often delays when sending or receiving money via the internet.
Exchanging various currencies – Because of the need to convert currencies while traveling overseas, it may be a headache. Frequently, this is accompanied with hefty costs. Travelers who use their credit or debit cards in other countries are often subjected to hefty transaction fees.
Individual’s Verification Problem – Travel and hospitality businesses must also overcome the difficulty of authenticating travelers’ identification without jeopardizing their security or privacy. At airports, passport checks may take a significant amount of time.
Issues with Luggage Handling -Baggage misplacement or damage is a frequent occurrence for travelers. A large part of this is due to a lack of interoperability between various airlines, transportation firms, and baggage handlers. In this case, baggage may go lost, get misplaced, or be handed to the incorrect individual as a consequence of the situation.
Problem with Hotels – Bookings and transactions in hotels, as well as transactions in a wide range of other sectors, are handled by third parties. Bookings for accommodations are often accepted from tourists via centralized middlemen, such as third-party booking services. In most cases, there is a charge connected with using these third-party services. An additional cost is usually charged, in addition to the standard hotel prices.
Stablecoins can solve these problems/challenges, but how?
Tourism and hospitality companies depend on antiquated systems and networks, which create a slew of difficulties.
Therefore, the most feasible alternative for resolving some of these key obstacles is to replace current systems with ones that are better, more accurate, immutable, and secure.
We can show stablecoins’ capacity to address these issues by revisiting the preceding difficulties; however, this time, we will demonstrate how stablecoins enabled by blockchain technology can address these issues.
Stablecoins May Be Used For Instant Payments – Stablecoins can be used for instant payments. Payments made through the blockchain may be verified instantly, and there are less costs associated with them than with traditional payments handled by intermediaries.
No need for currency exchange – When traveling abroad, currency exchange may be substituted with Stablecoins. This may be used to conduct overseas transactions without incurring fees or suffering delays in processing.
Easier ID Process – By using IDs, tourist operators may simplify their everyday operations and centralize all accessible information about a person. As a consequence, visitors would be able to identify themselves more simply and swiftly, with less paperwork and delays.
Convenience Through Luggage – Through the use of luggage, a product line or service may be readily traced from its origin to its destination. Meanwhile, since records cannot be changed and tampering is impossible, it is simpler to trace lost baggage or at the very least determine where it was last seen. This allows for a clearer picture of which airport processed the luggage and who handled it. Your baggage is already securely in your possession!
Hotel reservations – Wouldn’t it be wonderful if internet hotel reservations were no longer charged? Additionally, blockchain technology enables you to verify the accuracy of online evaluations and the reviewer’s real stay at the hotel. With stablecoins’ dependability and security, we may be able to do away with the check-in desk altogether.
While stablecoins are not without their difficulties, at its most fundamental level, a stablecoin built on blockchain technology offers certain advantages over the antiquated and costly methods on which companies now depend.