Many of us know something about bitcoin and other cryptocurrencies. Perhaps fewer of us are familiar with the underlying digital technology for these cryptocurrencies — known as blockchain. Likely even fewer of us recognize the role that blockchain can play in aviation.  This post will shed light on ways blockchain is being examined and even introduced in the transportation sector in general, including aviation.

First, what is blockchain? In short, it is a method for storing records and transactions. While many descriptions are overly technical and ultimately unhelpful, a particularly lucid description appeared in a May 2016 Harvard Business Journal article, The Impact of the Blockchain Goes Beyond Financial Services:

Blockchain technology is complex, but the idea is simple. At its most basic, blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value – money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes – can be moved and stored securely and privately. On the blockchain, trust is established, not by powerful intermediaries like banks, governments and technology companies, but through mass collaboration and clever code. Blockchains ensure integrity and trust between strangers. They make it difficult to cheat.

A January 2018 report issued by the USDOT’s John A. Volpe National Transportation Systems Center, What Blockchains Could Mean for Government and Transportation Operations, indicates that ambitious efforts are underway to develop the use of blockchain in transportation.  Freight logistics is a particularly promising field for the application of blockchain. In fact, in late 2017, global logistics companies formed an organization — the Blockchain in Transportation Alliance (BITA) — to develop blockchain technology standards and promoting blockchain education in the logistics injury.

The Volpe report also identifies blockchain applications that can be used in aviation, including for aircraft maintenance, passenger and crew identity management, ticketing, loyalty programs, air cargo, flight planning, flight insurance, and overall information storage security. Additional efforts in applying blockchain technology to aviation are underway. The Société Internationale de Télécommunication Aéronautique (SITA), a non-profit organization, is working on a blockchain solution for the collection, storage, and distribution of flight data now collected by flight data recorders, and in November 2017 prepared a white paper, FlightChain, describes the findings of its research conducted with British Airways, Heathrow, Geneva, and Miami Airports. Also, the International Air Transport Association is working with its Cargo Operations and Technology Board to explore new technologies and evaluate their potential impacts and use within the air cargo supply chain, including blockchain.

Despite the anticipated benefits of blockchain technology — McKinsey & Company in its recent report entitled Solving the Productivity Puzzle: the Role of Demand and the Promise of Digitalization, states “it may significantly reshape efficiency” — significant challenges remain to its widespread use. Notwithstanding BITA’s ongoing efforts to establish blockchain standards for the logistics industry, much work remains to be done. Also, as the Volpe report and others have pointed out, a vast amount of energy is needed to run computers that support a large blockchain.  (It’s been said that one bitcoin transaction consumes as many kilowatt-hours as are needed to power a house for nearly a week). Despite these, and other obstacles, economic forces will likely propel the adoption of blockchain technology in aviation and other transportation modes, as they will with other nascent technologies such as autonomous vehicles and flying taxis.