To combat increasing ticket touting, fraud, and counterfeiting, startups are utilizing leading blockchain networks including Bitcoin and Ethereum to create immutable and unalterable platforms to process the sale and distribution of tickets.
The greatest advantages of cryptocurrencies and decentralized blockchain networks are their distributed nature and immutability. Since blockchain networks are operated by nodes and consensus protocols within a distributed ecosystem, it is virtually impossible to penetrate or breach into public blockchain networks without first gaining majority hash power of the network. Even then, it is not possible to alter data stored in previous blocks and transactions.
Earlier in 2017, some of the largest concerts and events in the UK and the US reported various cases of frauds. For instance, many fans of Ed Sheeran purchased tickets in secondary marketplaces at a rate that was eight times higher than the face value of the actual ticket to attend the concert. But, thousands of fans were denied entry to the concert by the event administrators after it was discovered that they had purchased counterfeit tickets.
In the traditional ticketing and events industries, it is challenging for both consumers and event administrators to verify the origin and the legitimacy of the tickets, because counterfeiters have started to employ sophisticated technologies and advanced printing methods to create tickets that are ostensibly identical to the real tickets. It is difficult to prevent the flow of counterfeit tickets as many secondary markets allow consumers to purchase tickets from unverified distributors.
Consumer Reports highlighted in 2016 profiteers were using a type of software known as a ‘bot’ to scoop up tickets from primay sellers like Ticketmaster, faster than a human can type, and then proceed to sell them on resale platforms for a multiple of the orginal price. In the US, there are no federal laws against using bots in such a way.
According to Sandy Khaund, the CEO at Upgraded and former executive at Microsoft, Intel, Turner Broadcasting and InStadium, even large-scale marketplaces such as StubHub often fall victim to fraudulent and counterfeit tickets. Khaund stated in an interview:
“It happens a lot. Last year at game seven of the NBA Western Conference championship between the Golden State Warriors and the Oklahoma City Thunder, 86 people got rejected at the gate with tickets they’d bought from StubHub. At least StubHub has a money-back guarantee but those people didn’t get to go to the game.”
To combat ticket counterfeiting and fraud, the US-based startup Upgraded has developed a mobile application that sells and distributes tickets on the Ethereum blockchain through the implementation of smart contracts. Once a smart contract that contain the personal details the buyer and the buyer’s ticket is broadcasted to the Ethereum blockchain, it becomes unalterable and immutable. More importantly, because the Ethereum blockchain is a public protocol, using the Upgraded app and public blockchain explorers, ticket buyers can confirm the legitimacy of their tickets.
Khaund further emphasized that Upgraded is aiming to provide blockchain-based ticket verification services and disrupt the ticketing market, and is not looking to compete with existing marketplaces. He explained:
“My goal isn’t to replace Ticketmaster or StubHub. It’s to be the Intel chip inside of ticketing. When you go to Ticketmaster, you get a drop-down that says PDF, postal service or will call. In the short term, I want to be the fourth option. In the long term, I want to be the only option. The other three options should not exist.”
Another startup in the UK known as Aventus is also utilizing the Ethereum blockchain to develop a ticket distribution in which each ticket has a unique cryptographic key that can be verified through using Ethereum. Through smart contracts, Aventus also require users to upload a photograph of their credit card or ID, which is then hashed and registered on the blockchain.
Moreover, Makoto Inoue, who runs the Ethereum coding meetup in London, has developed a Dapp called BlockParty, which has already been used to manage real world parties at DevCon2, as well as some hackathons Inoue has hosted. Spaces are reserved or RSVP’s are done over the blockchain and a small fee paid in ether is deductible if you fail to show up. During April 2017, the developer presented the Dapp to the Ethereum London meetup, as well as the barriers to wider adoption.