Most people know blockchain from cryptocurrencies like Bitcoin. But did you know that this technology also has a lot in store for the event industry?
Hi Thomas, welcome to our studio.
We're going to talk about blockchain. Most people know blockchain, I think, from the Bitcoins and the other cryptocurrencies. But what is blockchain, exactly?
Well, to put it very simply and very briefly, without going too technical: it's actually a way of storing data, in a transactional manner, in a history of all the actions that have happened, which is distributed, means saved, at multiple locations.
To put it very simply, like, if you now, for example, sell a house, it's stored at the notary and it's stored at the government.
But imagine that you have an entire blockchain network of ten thousand parties. Then that transaction of selling a house, which is one step in the history, is saved at ten thousand locations.
Or like you say with the cryptocurrencies: a token, the transaction of the token, is saved at multiple parties. In a manner that is cryptographically secured. Meaning the history can't be changed afterwards anymore.
And why would you want to do that? Because, in traditional systems you have one big central database. Very secured. But here you will do exactly the opposite.
Yes, so, two things about that. First of all, there has been a shift in thinking about blockchain. We don't store real data anymore on the blockchain network itself. What we store are links and proofs, fingerprints, a hash it's called, of that data itself. So, if you want to go and fetch information, you look on the blockchain where the link is to a database, you get the information from the database and then you check the validity. Whether this data hasn't been changed.
So, in terms of privacy: you can snap that link, but nobody can access the data anymore.
That's one thing. The second thing is: why wouldn't you use a very big, large, central system? Like we do today. That's also what Microsoft, Google, Amazon, Facebook and all the other parties are doing.
Well, it's: you don't need a blockchain. You can create every solution in a centralized system.
But the question there mostly is: why would you want to do that? It's efficient. It's user friendly.
If you see how the different brand names, what the value of them have changed for the past ten years, the top of them are all IT companies, like Google and Facebook. They're very powerful. But perhaps they are too powerful. Perhaps you are not only using a service, which is better than organizing it yourself, but you become dependent on those companies. And that's why you see a shift these days. It's not only about privacy. But perhaps these companies are getting too big.
Perhaps we need to make a way, that we are organizing a market, without all being dependent to the same party.
So, it's mainly, also, about trust. Do we trust the central system, or do we trust each other in the network?
Yes, correct. So, the idea of blockchain is that you can manifest trust in a decentralized manner.
But, of course, if you trust a central party, a third party, completely, well, then you don't need a decentralized structure.
If you trust, completely, in the government, well, then you won't keep receipts for your tax deduction, and so on. Because you trust that they will do the right thing, always.
Now, it's a little bit of a hard way to put it. But you might say the same on how we organize our society. Do we want to have a decentralized, democratic system? Or a centralized dictatorship.
Of course, it's... How do you say it? It's a difficult comparison to make. But it's similar. How are we going to create our society in the digital sector? Those big parties or the decentral platform?
And in the event industry? What could we do with blockchain?
Well, the same things like any other parties, but specifically for the event sector, you think immediately about tickets, right? If you see how tickets are sold today, it's very simple, it's a centralized system that works the primary market. They sell the tickets. And that works.
The difficulty and the problems occur when the secondary market and people who bought a ticket, are reselling it or resending around. And the difficulty there is mostly: you have no control over that market.
So, in Belgium you have legislation, that you can't resell a ticket with profit. But the law stops at the border with the Netherlands. And the internet doesn't, so, you still have a lot of these parties, these websites, that resell tickets at a higher margin.
Yes, and as an event organizer, you don't want to have abuse of your tickets.
Indeed, because what will happen is, the customer, they will come and complain to the primary market, saying: look, I bought a ticket and it's not valid or it's sold too much, I paid too much.
One thing is that you paid too much, the other thing is that it gets sold multiple times. The same object, the same ticket. And only the first one, who gets it consumed, can enter.
Because it's a pdf and the pdf gets sent to multiple people.
Yes, indeed. You can resell a pdf as much as you want.
So, how can a blockchain help for that? Well, the same way as you think about: you can only create one token. You can only create one digital asset, like the Bitcoin. But please forget about Bitcoin. If you sell it, you transact it. And this transaction is stored at all the different parties and players in that network.
So, if afterwards you would want to go and consume the same ticket, token, that you already sold: well you can't, because you no longer have that access. And that, at least, solves the double spending problem.
The other ways, what you can now do, if you have such a network, you can create rules around it.
For example: you can't sell it, or resell it, with a profit. Or, if you resell it with a profit, you need to pay certain parties. For example, like the producers, or the artists themselves.
There is by the way, and I think the people who are listening at home, there is a, how do you say that, a trend going on, where artists are selling tickets, immediately in the secondary market. Because they can get a higher margin of it. Which makes it almost a primary market.
But, those things you can try to solve with that.
Okay, besides tickets. What else could we do with it?
Well, very simple, in organizations, or at least at festivals and concerts, you still have these ticket coupons, that you use to buy drinks at the bar.
For example, Tomorrowland has digitalized that completely. They have their pearls, their digital pearls. Well, you might think of a way, that's a central system, by the way, you might think of a way, that you would use your own token for that. That could be used at multiple parties, like, for example, in a marketplace. Where not everything is centralized, centrally organized.
That's another use case. Which is a point you can make.
But the big one, and I think that is not exclusively for the event sector, or the concert and festival sector, is: the majority of parties that you work with, well, there are many of those, you have all individual contracts and rules with all of those.
Which is a lot of time, completely. First bargaining about it and...
Not bargaining, but...
Negotiating, yes, thank you. Negotiating about that and then enforcing it.
Now, apart from storing data on a blockchain, that can't be altered anymore, you can also store, what they call, so called smart contracts.
Now, what it actually means, is agreements that we have, that, now, we have to interpret ourselves, and if we make a mistake, we have to go and ask a third party, a court, who's right. We can make computer code for that.
For example, if it's the first of the month, I have to pay you for your rent. I'm paying my rent to you. And if I don't pay by the end of the month, you would have to contact your lawyer.
Well, imagine if you put that in code, if it's the first of the month, I pay. If there's not enough money in my account, a mail is sent to a lawyer. For example. Well, we don't have to take care of that anymore.
And since this code is running at multiple parties in the network, exactly the same thing: the first of the month is a new transaction.
That's how it works technically. We don't need to look at it anymore.
And that's a way how you can automate agreements, which is quite powerful.
And in the example of the ticketing. Who should be the one to take the initiative of that? Because, if you look at the current market, it's mainly in the hands of the ticket providers.But they don't gain from investing in blockchain.
Well, they could gain from it, but that's mostly the case. You see...
And they have invested in it already, by the way.
So, there are good cases to be made for that.
But the problem that you have, with a lot of these projects, because we've been talking about blockchain for the past four years, is mostly: okay, we've done a lot of prototypes, a lot of proof of concepts, where are all these production applications?
And, they're being developed, and we'll get there. So, people are very impatient, and they want to have it developed immediately. And it needs to be active now, already. But the problem isn't the technology side, it's the business side. It's: who gains the most and who'll invest in it
And you see, indeed, like you already mentioned, that the ticket providers, well, they have their own system and that works.
The organizers would have an incentive to do this platform or build this platform. And we'll get there, but it's also: they can't build such a system on their own.
They will need multiple parties. And the difficulty there is building a consortium. And that's something we still see today. But give it time and it will happen.
And if there are people with good ideas, we can definitely help them.
Okay Thomas, something to think about. Thank you for coming over and explaining to us what blockchain is.
Thank you for having me.
And you at home, thank you for watching our show. I hope to see you next week.