Blog article - October 26, 2023

Smart contracts: The key to trust and efficiency in travel

As the travel industry enters the new digital era, the need for understanding smart contracts and their legal implications is growing. This article provides a clear overview and highlights the potential of smart contracts in travel.

testimonial-photo By Cristina Pardo Requena

Today, the travel industry faces a lot of challenges. From secure and seamless cross-border transactions, transparency and security of data, and connectivity to easy settlements for multiple players. With the growing data volume, the number of agreements, and regulations, there is a pressing need to automate manual processes around confirmations and agreements between companies and travelers. Many developers believe these smart contracts will enable the new, efficient future of the travel industry. Let’s have a closer look at the technology from the legal POV.

Understanding the nature of smart contracts

Traditionally, when we think of contracts, we envision legally binding documents signed by two or more parties. However, the digital age has introduced us to smart contracts. These aren't your typical paper contracts but are self-executing contracts with the terms of the agreement directly written into lines of code. They were first conceptualized in 1996 by Nick Szabo but only became feasible with the advent of blockchain technology.

Smart contracts are simply software programs developed to execute agreements between parties automatically. On some blockchains, parties can remain anonymous while deploying and using smart contracts; on others, like Camino Network, a company or individual is obliged to go through a KYC procedure before deploying a smart contract. This is done to provide another level of security and trust.

The contract itself consists of code that sets specific criteria. Once these criteria are met, programmed actions are triggered. This "if this, then that" logic minimizes human errors and ensures higher accuracy and transparency.

The term "smart" in smart contracts denotes their self-executing nature. As mentioned above, they operate when specific conditions are met, eliminating many costs traditionally associated with drafting and executing contracts. Consequently, smart contracts have become the base of open source and decentralized applications (dApps), enabling individuals with enough expertise to access the code and dive deep into the mechanics of the programs before engaging.

The use of smart contracts has been growing since 2020. According to the data analysis, the number of smart contracts on the Ethereum blockchain has more than doubled, generating over a billion transactions.

The legal landscape of smart contracts

To have a 360-degree overview of the subject, let’s understand the legal aspects of smart contracts. While they can stand alone as the primary representation of an agreement between parties, they can also complement traditional arrangements, executing specific clauses like fund transfers between entities. However, it is crucial to note that smart contracts haven't yet replaced traditional legally binding agreements. It is quite challenging to fit them smoothly into the legal frameworks overseeing contracts across various jurisdictions.

For a smart contract to either complement or replace traditional ones, it must be legally enforceable. Parties must comprehend how these digital contracts align with contract formation standards across jurisdictions. They should also be aware of how courts or arbitrators might interpret them during disputes. Like their traditional counterparts, smart contracts must fulfill specific criteria to be legally binding:

The legal enforceability of a smart contract depends on a jurisdiction's definition of asset ownership, property rights, licensing regimes, existing laws, regulatory authority, and past legal precedents.

Smart contracts in the travel industry

The travel industry stands at the forefront of sectors ready to adopt smart contracts, primarily because it heavily relies on digital assets.


Let’s take as an example buying an airplane ticket. When issued via a smart contract, the process becomes streamlined: a traveler selects a flight, makes a payment, and upon successful transaction verification, the e-ticket is automatically sent to the buyer. Smart contracts can make transactions reversible and even open new opportunities for the e-ticket owner, who can now resell the asset on the secondary market or gift it to a friend. However, all these conditions and possible scenarios should be aligned with a particular company's regulations and business goals.

Loyalty programs

Similarly, loyalty programs, playing an important role in travel, can be improved with smart contracts. For instance, when a traveler accumulates a certain number of miles or points, the smart contract automatically upgrades their membership status or issues rewards, reducing manual processes.


Consider partnership agreements between airlines or hotel chains. Instead of lengthy paper contracts, terms of partnerships, such as revenue sharing or co-marketing initiatives, could be encoded into smart contracts. These contracts would automatically execute the pre-programmed scenarios to ensure timely payments to all the parties involved and adherence to agreements.

Smart contract implementation checklist for travel companies

As the blockchain landscape evolves, smart contracts are steadily maturing. It is a pivotal moment in their integration into mainstream business models, possible only as a collaborative effort, with developers, technology providers and architects, legal counsels, and business executives working together to inject smart contracts into existing frameworks. While the benefits of this technology are fascinating, it's equally crucial to recognize the potential challenges that may arise. We have created a checklist for travel companies willing to innovate to provide a comprehensive overview.

Ensure the smart contract meets legal requirements concerning essential elements, which can vary by jurisdiction.
Review the current legal relationship or traditional contract to determine its suitability for blockchain adaptation.
Assess the specific transaction intended for the smart contract to ensure it aligns with blockchain capabilities.
Recognize that smart contracts have restricted access to blockchain data.
Be aware of potential vulnerabilities and the need for robust security measures before deployment.
Understand the nuances of translating traditional contract elements like offer and acceptance into smart contracts.
Recognize the emerging industry of smart contract auditing to ensure contracts are free from vulnerabilities and logic issues.
Be aware of the potential of AI to streamline processes and reduce costs.

Benefits of smart contracts

Smart contracts bring a transformative edge to traditional contracting processes. Their deterministic "if this, then that" structure ensures precision with minimized chances of errors. Every participant has an identical, encrypted, and indisputable copy, fostering transparency and trust. By automating the execution of contract terms within the network, they reduce the need for intermediaries, leading to substantial time and cost savings. Moreover, robust encryption practices can guarantee data security to avoid sensitive data leaks.

Where to start

At Chain4Travel, we are constantly hunting for emerging applications of this technology within the travel realm while refining the solutions we already have in the pipeline. Moreover, together with the Camino Network Foundation, we are working on the legal aspect of smart contracts to provide fully compliant and trusted solutions to travel brands willing to innovate and grow in the emerging digital era. We also believe in a collaborative and community-driven ecosystem being the future of the travel industry.

Therefore, you can start by joining the web3 travel ecosystem, where a lot of expertise about blockchain solutions for the travel industry has been accumulated. Feel free to reach out. From a technical standpoint, you can already start with comprehensive smart contract documentation.

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