Solutions in event ticketing according to HelloSugoi
In this article, I propose the HelloSugoi solution thesis, as it relates to my last article, “Problems in event ticketing according to HelloSugoi.”
This article assumes a basic understanding of blockchain technology. If you’re new or in need of a refresher, here’s a beginner-friendly blockchain article.
The HelloSugoi solution thesis:
A blockchain powered event ticketing platform would enable event stakeholders to minimize risk and maximize revenue by collecting additional value in a currently inefficient market
HelloSugoi enables a decentralized, secure, and transparent means to create events and allocate tickets. Our technology reduces fees for consumers, enables event organizers to maximize secondary market revenue, and mitigate ticket fraud.
Tickets on the Blockchain
Tickets are represented as a digital asset on a blockchain. Each ticket is assigned a blockchain address. When a consumer buys the ticket, the ticket’s address is linked to the consumer’s address. These actions are facilitated by smart contracts.
Smart contracts enable the ability to program the rules that govern how the ticket can be used. For example, blockchain tickets can be programmed enable profit sharing on resale back to an event organizer (secondary market revenue maximization).
- Blockchains reduce fees. With access to accurate price discovery data, event organizers can confidently allocate more tickets at true market value.
- Blockchains increase revenue. By recapturing revenue typically lost to brokers and scalpers, blockchains reduce the financial risks associated with an event’s operational costs.
- Blockchains mitigate ticket fraud. Ticket transactions are easily validated and ownership can be verified, mitigating fraud and double-selling.
Thoughts on the secondary market “problem”
Opponents mistakenly conclude that inflated secondary market prices are the fault of resellers, when in fact inflated prices are the result of large demand and a limited supply.
As discussed in my last article, these faults are due to current market inefficiencies, which can be improved by blockchains.
Secondary Market Benefits:
- Risk mitigation for event organizers
- Ticket price discovery for consumers
- Connect buyers to sellers
However, there are inefficient side effects of the secondary market.
Secondary Market Drawbacks:
- Missed revenue opportunities for event organizers
- Ticket fraud
- Ticket price alienation
From a rational macroeconomic perspective, eliminating the secondary market is a bad idea, if not impossible (clever people will always find a way). I would argue that many event organizers agree.
A friend of mine (who works for one of the largest event promoters in the world) told me that her agents disliked the secondary market not because of the aforementioned drawbacks, but because of all the potential revenue they were losing to resellers!!
When managed by smart contracts, the secondary market can benefit event stakeholders by incentivizing market participants to act in an economically rational manor.
Event organizers should have the ability to choose how they manage the secondary market to their events. We’re creating the tools and leaving it up to the architects to choose what and how to build with them.
Although cryptographic assets are nearly impossible to replicate or double-sell, a nefarious reseller may attempt to sell event tickets off-chain (outside of the blockchain). To reduce the occurrence of off-chain collusion, HelloSugoi will implement the following preventative features.
- Identity Management: Integration with self-sovereign identity platforms (like uPort) will help to mitigate off-chain collusion. For example, a reseller and buyer may meet in person and agree on an off-chain cash settlement. By linking a ticket’s address to a self-sovereign identity platform, the buyer would have to sell both their ticket and their blockchain identity (private key), which may contain access to other kinds of important personal data (passwords, login credentials, social security numbers) that the buyer may not want to forfeit. Additionally, if a ticket is programed to be explicitly non-transferable, there’s always the option to buy the ticket into a holding contract and sell ownership of that contract. Decentralized identity platforms would help to prevent this from happening.
- Secondary Market Auction: Ticket resale in HelloSugoi’s secondary market is anonymous, as in a consumer does not know the person to whom they are selling. The resale is conducted as an “Adjusted Vickery Auction,” where the highest bidder wins, but pays the second highest price. The “Adjusted” part means that the bid selection is algorithmically randomized, so as to mitigate arranged peer-2-peer transactions.
- Ticket Scanning: Tickets appear as a QR code on a consumer’s mobile device. To prevent fraudulent duplication, the QR code is locked until the consumer scans the ticket. To prove ownership of the ticket, a consumer enters in to a “two-part digital handshake” with the ticket scanner at the event. The ticket scanner and consumer exchange signatures, which provide a way to ensure that all transactions are only made by the rightful owners, which validate and verify ownership of the ticket. State Channels can be leveraged to increase validation times.
Although work-arounds are possible, event tickets on blockchains greatly mitigates the occurrence of fraud by comparison to printed tickets, PDFs, and centralized barcodes.
Blockchain technology will have a major impact on event ticketing in the coming years. Integration will be slow and take time, but ultimately the benefits of distributed ledger technology will render current systems obsolete, and in turn solve many of the problems currently plaguing the industry.