Blockchain technology can eliminate ticket fraud and the black market

It was a personal experience that gave Georg Müller the idea for BAM Ticketing GmbH. He was working in the open office of a bank and observed that many of his colleagues wanted to buy a Rammstein ticket – but no one got one. Shortly afterwards, people started reporting that they had now got a ticket after all, but at almost double the price. The concert wasn’t scheduled to take place for nine months, so how could anyone know they wouldn’t be able to go, Müller asked himself, and began to do some research. It turned out that there were massive problems in the ticketing market, but they could be solved with blockchain technology, the founder said. In this episode of our Start-up of the Day series, he talks about his innovation and the challenges of starting a company:

What is the problem with the ticket market?

It consists of automated trading robots that buy up tickets in a very short time. Their share is 42 per cent on average at large events, but it can be as high as 90 per cent at highly sought-after events. This is a big problem for artists because their fans get upset when they have to pay double or triple for the tickets. Counterfeit tickets are another problem, but it is easily solved with blockchain technology. At the time, I researched for several months and concluded that no regulation is needed here to change the market, as it is, for example, in the financial sector. Only the use of blockchain technology can solve the problem.

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What problem are you solving and why is it important?

I am not only familiar with blockchain technology, but also with the ticket market. As a result, I see blockchain offering opportunities for interaction between various trading participants apart from trading bots and fake tickets. A striking example is the transport market. Here, competing transport companies must cooperate so that customers can buy an end-to-end ticket from one company to a destination that is out of reach. Blockchain technology can be used to bring these companies into a contractual relationship without the need to share customer data or trade secrets. The University of Birmingham has just received an EU grant for a project of this type, and Germany’s train system, Deutsche Bahn, is also working on this problem. Both are researching the problem that we have already solved. This means that we can save them a lot of time and work. With our blockchain technology, they could start implementing their business case right away.

How can blockchain technology solve the problems in the ticketing market?

Blockchain technology is still young and the requirements for a ticketing system are enormous. For example, if you want to sell tickets to an Elton John concert at Wembley Stadium, you must perform a minimum of approx. 250 transactions per second to process the sale. The most famous blockchain network, Ethereum, currently manages an average of 20 transactions per second. This means that the technology cannot yet be used in ticket sales. Another requirement is waiting time. This is the speed at which a single transaction can be confirmed when the tickets are validated at the gate. Ethereum’s latency is eight seconds on average. It is far too long to fill the stadium in a reasonable amount of time. Latency must definitely be under one second – and no blockchain technology can currently deliver that.

That was our goal for a technical proof-of-concept, and we were able to achieve that by making our system specific to the high demands of ticketing, as opposed to a general solution. As a result, we can perform up to 2,000 transactions per second with our blockchain technology with a latency of 0.5 to 0.8 seconds, an operation we can make available on a per-event basis. This is another way we differ from Ethereum, which has these metrics for all applications running on the network.

How would you describe your business model?

In fact, we are technology providers – on the one hand for blockchain tickets, but also for the interfaces between Web2 and Web3. We integrate this technology into existing ticketing systems, but since blockchain technology is still young, all require proof of market. That’s why we also have our own software-as-a-service solution that can be used to manage events, similar to Eventbrite. Our clients include a museum, a football club, festivals and music concerts. We also offer our solution as a white-label product in America, in Asia and hopefully soon in Africa, where digitization is in full swing.

What was the biggest obstacle you had to overcome?

It was definitely the uncertainty of technical feasibility. We knew it couldn’t be a use case with existing networks, in part because of the lack of privacy for business data, and we didn’t know if we could overcome this obstacle. Only after a year of research and development were we sure. But there are other obstacles to overcome. For example, many are still distrustful of cryptocurrencies, and that can only be overcome if it is clear what blockchain technology can and cannot do. It requires awareness-raising work.

This goes hand in hand with the fact that we still need to do basic research to find out the limits of this technology and to what extent it is still possible on a large scale. It is definitely an obstacle for a startup. Most business angels do not fund R&D; they finance a growth strategy and that makes it difficult to get capital.

Have you already received funds?

In addition, we had the problem that we completed our technical proof-of-concept two weeks before the first shutdown in Vienna. From that point on, it was impossible to get a startup funded in the life events industry. The process took well over a year and a half, so we did not receive initial funding until November 2021.

Can you think of a better or ideal location for your startup?

Austria is a good place for an early start-up because there is a lot of public funding. But when it comes to technology funding, the US is far superior because there is an understanding there that it is a technology rather than an existing business that is being promoted. That is less the case in this country, which is why our next round of funding will almost certainly be in the US

What achievements have made you proud?

After we proved the technical feasibility of our concept, we received a lot of recognition for our development achievements. In 2020 and 2021 we won the German Blockchain Award and in 2021 the Austrian Blockchain Award in the Smart Tech category. There are some excellent projects in this area and it was great to see our scope and the way we use the technology being recognised.

Where do you want to be with BAM Ticketing in five years?

We want to be the primary ticketing infrastructure provider. And it’s not too high a goal, because there are already similar designs for airlines that operate the infrastructure for an entire industry. We have been encouraged by the fact that our technology is probably unique at the moment. Whether we are going to reach that goal is a matter of funding. But we heard from one of the biggest ticketing companies in the US that it had already talked to 20 blockchain ticketing startups and that we were the only ones on the right track. It is music to our ears.

What makes your blockchain technology better than or different from existing ones?

While others use off-the-shelf products that can be used for anything, our software is ideal for the ticketing industry and meets all requirements.

Want to read more posts about startups? You can find more episodes of this series here.