In this summer of oppressive heat, I believe many of you plan to travel inside or outside the country to escape the swelter. And if you travel long distances, especially overseas, planes are a practical way to do it. For those of you who love to travel, you're probably already member of your regular airline company's frequent flyer program and are planning to fly using the miles you've saved. Air miles are convenient because they can buy you air tickets; on the other hand, however, they cannot pay for meals at restaurants or souvenirs during a trip. You may have wished air miles were more useful.
If that's your experience, I have good news for you. Blockchain has made it possible to pay with miles. It was Singapore Airlines that introduced this payment system to various stores and restaurants. The company launched KrisPay, the world's first blockchain-enabled miles-based digital wallet on July 24, 2018. Mileage members can now shop and pay with KrisPay miles instead of cash at partner merchants. Taking advantage of the ability of blockchain to settle small payments at a low cost, the minimum payment is only 15 KrisPay miles (approximately 0.1 Singaporean dollars, or 8.16 yen).
Users can pay for purchases with KrisPay at 18 partners including beauty shops, restaurants, retailers, and gas stations. Restaurants in the Shangri-La Hotel Singapore and the famous tea brand TWG Tea are some examples. KrisPay can be used only in Singapore now, but the availability may expand internationally as more partners join.
The airline industry is a very competitive one, so other airline companies are likely to be watching closely how KrisPay goes. If it proves useful, there will be airlines clambering to offer a digital wallet as a part of their mileage services in future.
KrisPay benefits from the unique feature of blockchain where it can create a small-payment settlement system at a low price. In this article, we will take a look at what various industries are trying to accomplish with blockchain while examining how it is being used.
Financial Institutions Trialing Blockchain in Search of Business Fields and Operational Know-How
Blockchain was originally designed for cryptocurrency transactions. Naturally, the financial industry is actively exploring how to use it effectively. As represented by the Japanese Bankers Association's experiment introduced in the previous article, a number of financial institutions and emerging companies specialized in blockchain technology began testing financial operations on a blockchain platform. They are now identifying problems in practical use and discovering ways to operate and manage it effectively.
Blockchain is attractive to financial institutions because they can easily and inexpensively implement features that are difficult or expensive for current financial systems built around a host computer. Proof of falsification, excellent failure resistance, secured anonymity, no intermediaries, and sharing of transaction records by relevant parties are some of the examples. It's particularly noteworthy that a blockchain is created with a large number of computers that can retain all transaction records simultaneously, achieving extremely high failure resistance. A conventional financial system, on the other hand, is created in a completely different way: a few large computer centers backup each other's records. In the case of Bitcoin, for example, a blockchain has over 10,000 computers called full nodes that can refer to all transaction records.
Needless to say, blockchain has its own limitations and issues. Real-time payment settlement is not easy, the number of payment settlements per unit time is limited, and there are security risks. Financial institutions, consequently, are experimenting to discover business fields where they can take advantage of blockchain features to gain operational know-how ahead of others and boost their competitiveness.
Energy Industry Accelerates Practical Application of Blockchain Technology to Realize Easy Small-Payment Settlement
Some industries recognize blockchain as a breakthrough technology for business expansion. The energy industry is one of them. Blockchain is attracting attention as a technology that may be able to connect ordinary households with solar panels to allow them to directly trade excess electricity according to their consumption needs. In Japan, the feed-in-tariff (FIT) program for general ordinary (a ten-year program where the government purchases excess electricity generated using solar panels at high prices) ends in 2019. After that, over a million households that are selling electricity under this program must look for new electricity buyers. For these households to sell electricity easily, a small-payment settlement system with a low charge is needed. The energy industry is therefore raising expectations for blockchain as a solution for the 2019 Problem by providing an inexpensive way to settle small payments without intermediaries.