Fortifying Iceland’s Tourism Industry with Blockchain

Northwestern University’s Blockchain Group

33 min readMay 29, 2021

Authors: Sung Lee, Gilberto Guadiana, Hanhee Yang, Alex Betts, Amogh Bharadwaj, Josh Lee, Lauren Huttner, Ajay Dave

Introduction

Prerequisites

For this article, basic familiarity with blockchain concepts is required. See the terms sheet in the Appendix for reference. It may also be useful to have a high level understanding of the Ethereum blockchain protocol.

Acknowledgements

This paper would not have been possible without the contributions of the following individuals. Our foremost gratitude goes to Mark Allen Schumacher, CEO of FearBoxSolutions, LLC, and Co-founder of BusinessBlock for approaching NU Blockchain Research Group with this project idea. Special thanks to Rósbjörg Jónsdóttir, Business Administrator, MBA, at Cognitio/University of Iceland, whom Mark introduced to us with the design challenges. Another round of thanks to Gunnar Haraldsson, Economist at Intellecon, for his insight on the economics of our sustainability blockchain, as well as Stacy Benjamin, Clinical Professor at Northwestern University as Director of the Segal Design Certificate program, who provided significant editorial support during our many draft reviews. All four of these individuals are founding partners of the Global Blockchain Creative.

We also would like to thank Anthony Day, Blockchain Partner at IBM UK&I, for his interviews regarding the IBM Digital Health Pass and commentary. Special thanks to Ásta Kristín Sigurjónsdóttir, CEO of Icelandic Tourism Cluster, for her fact-checks and group discussions. Lastly, many thanks to our three Icelandic friends Arni Magnússon, Project Manager at the Iceland Tourism, Cluster Initiative; Oliwia Julia Tómasdóttir S. Student at the University of Iceland, Candidate B.S., Tourism; and Lilja Karen Student at the University of Iceland, Candidate B.S., Natural Resource Recreation and Tourism for their peer review and contributions to the paper.

Disclaimer:
NU Blockchain Group did not receive any funding or compensation from IBM and its affiliates. Due to the proprietary nature of the system, NU Blockchain Group did not have access to the codebase and the system’s technical implementation.

Purpose

This whitepaper is intended to address the ongoing problems in Icelandic tourism due to the disruptions by the COVID-19 pandemic. Through our research in collaboration with the University of Iceland, our team has produced detailed descriptions of our design solutions. We hypothesize that blockchain can be applied in tandem with other technologies and principles to tackle the issues of (i) frictional travel, (ii) informing tourists, and (iii) sustainability in the tourism ecosystem.

Icelandic Tourism Background

Impact of COVID-19 on Icelandic Tourism

Over the past few years, Iceland has seen a boom in tourism. People were drawn to the country’s nature such as its geothermal pools and lagoons. This has led to Iceland having a high percentage of revenue come from tourism, contributing up to 22.8% of the nation’s VAT.¹ To keep up with the large numbers of tourists, Iceland has spent large amounts of money into maintaining and developing new attractions.² In 2020, the Icelandic government increased its tourism spending by 40%, to $1.73B ISK.³

The increase in numbers of tourists was observed starting in 2008, when the Icelandic currency, the Krona, dropped in value due to economic recession, making Iceland more affordable to foreigners. Tourism became one of the main parts of the economy after the 2010–11 eruption in Eyjafjallajökull. But this sudden spike in visitors led to concerns of over-tourism and its potentially damaging effects on Iceland’s natural landscapes and delicate ecosystems.⁴

The arrival of the coronavirus brought about significant economic loss. Since tourism is highly seasonal, the flatlining of the influx in international visitors during the peak months such as May and June was staggering. According to our expert interview with Ásta of the Iceland Tourism Cluster, during the onset of the pandemic in March 2020, the government tightened its guidelines before loosening them June 2020 after a false sense of zero COVID-19 outbreaks, before shortly reinstating restrictions in August 2020. Current COVID-19 provisions maintain that arriving passengers are screened for COVID-19 upon arrival and self-quarantined for at least five days and up to 14 days,⁵ depending on what option the passengers chose.

The sharp drop in visitors took a major toll on the economy, resulting in the cumulative growth of the industry to drop by 27.2% in 2020 alone.⁶ But the pause in high volume activity allowed Iceland’s nature to recover with less litter reported on trails.⁷ It also gave the opportunity for the Icelandic government to change their tourism approach. In 2020, the government has reportedly spent over $13 million in improving tourism infrastructure and conservation efforts.⁸ This will allow for more traffic at popular locations while also conserving the wildlife.

Additionally, Iceland created a program to incentivize nomadic workers to stay in their country. The proposed plan involved a visa for foreign nationals to enter the country. This Visa will only be allowed if the person has a proven income greater than $88,000 a year.⁹ This program will encourage high-earning individuals to contribute to the Icelandic economy.¹⁰

To ensure the safety of Iceland’s relatively small population, there are several ways the government minimizes the risk of COVID-19 being brought in from abroad, with vaccinated foreigners being able to enter the country immediately to others being required to test for the coronavirus again after a 5–6 day quarantine period.¹¹ These efforts are to start letting more tourists enter and prepare for a comeback as a global destination for tourists.

Vulnerabilities of pre-COVID-19 Icelandic Healthcare System

Before the COVID-19 pandemic, Iceland operated with a publicly funded universal health care system. This health care system was paid for primarily through taxes levied by the government (80–85%) and is managed by Iceland’s Ministry of Welfare. The system is generally favored by the population with a general satisfaction rate of 7.5 out of 10.¹² Despite this, Iceland has many vulnerabilities in its health care approach that have serious implications.

One of the primary concerns in the Iceland health care system is the difficulty of access for certain populations. The best clinical care centers are in Reykjavik, making it harder for non-urban areas to access quality care.¹³ 70% of healthcare spending is allocated to the capital city.¹⁴ Despite operating under a universal system, many citizens have complained about the unmet medical needs, difficulty in travel, and excessive waiting time.¹⁵ These issues make it extremely difficult for citizens to acquire and pay for the appropriate medical treatment they need. Furthermore, over 50% of adults are considered overweight or obese.¹⁶ Individuals suffering from these conditions are disproportionately affected by COVID-19.¹⁷

Another vulnerability in the Icelandic Healthcare System is the budget cuts to welfare following the 2008 financial crisis in Iceland. Due to the government’s need to reallocate funds following the financial crisis, the Ministry of Welfare was forced to cut funds to health care by 5% for a 5 year period of time. This resulted in physicians increasing user charges for patients and ambulance usage by 5–10%.¹⁸ Given the 15% increase in hospital trips in Iceland, this meant households were forced to pay a larger sum of money than they initially intended to spend.

Potential Blockchain Solutions to Icelandic Tourism

From 2010 to 2019, visitation to Iceland increased 264% following the 2010 eruption of the volcano Eyjafjallajökull. Little policy changes have been made by the Icelandic government since 2010 to protect sites of cultural and historical importance, which are too-often explored by tourists. There are no taxes or toll roads to collect tourist funds that could be allocated towards infrastructure and environmental preservation. The only policy adjustments have been the 90-day Airbnb cap and the prevention of tour buses on central streets in Reykjavik.¹⁹ The most prominent way to secure sustainable tourism may rest in the policy governing ecological care of Iceland’s enthralling nature.

The question, therefore, is how to restore the tourism industry in Iceland without compromising on the healthcare system of the country. In response, we hypothesize that blockchain can be used in tandem with other technologies and techniques to provide the greatest utility in addressing these challenges. We propose the following three blockchain-based systems.

IBM Digital Health Pass

The IBM Digital Health Pass could be used to demonstrate proof of vaccination, encompassing/replacing the vaccine certificate, allowing for individual access to vaccine-dependent areas of interest, such as restaurants or formal events. Regarding the IBM Digital Health Pass, Maeve Marimon and Ann Hindley established the correlation and causation between health and wellness and tourism. Marimon and Hindley find value in “[breaking] down barriers including those related to mental and physical health disability through ‘accessible’ tourism experiences.” ²⁰

If you show your health is high-end and pass the tests by the Icelandic governing health authorities, Iceland may increase your access to certain areas. “The fact that Abu Dhabi and Dubai are among the most important business centres of today increases the role of business tourism and its share in the country’s tour production. Numerous conferences, business congresses, and diplomatic visits constitute the major drivers of business tourism.” ²¹

Heat Map and Symptom Tracker

Privacy and security are oftentimes conflated as mutually-exclusive, but the implementation of a blockchain symptom tracker can provide both value-adds without also sacrificing the convenience of enabling tourists to determine their own cost-benefit analysis on the risks of visiting a COVID-19-prone region in Iceland. Many countries have implemented mandatory mobile applications that track the locations and symptoms of users. We propose a similar application for tourists that uses blockchain to maintain privacy while aggregating meta COVID-19 data to indicate ‘hotspots’ of COVID-19 diagnoses. This data would be presented as a heatmap, allowing tourists to plan travel around COVID-19 hotspots and alerting users when they are approaching a high-risk location. While COVID-19 is immediately relevant, this application can be easily re-tooled to address future outbreaks of local, seasonal diseases or pandemics.

Sustainability Blockchain

Blockchain technologies can be used to incentivize patronage of Icelandic small businesses by serving as the foundation of a customer rewards program in which individual transactions are logged and tokens are awarded at the point-of-sale (PoS). These tokens would not be business-specific; rather, rewards tokens could then be used at any other participating business. Businesses that wish to participate in this program would pay a small annual fee, which would go towards a rainy day fund that could reconcile the cost of opting into the service. However, we anticipate that the rewards program will increase cash flow through discount prices and increased visibility, leading to net benefits for participating businesses. These transactions would occur through an app, which would list participating businesses and serve as a digital wallet for rewards tokens. Thus, both consumers and small businesses would benefit from reliable transaction histories, increased visibility and information about available goods and services, and reduced risk of participation in either buying or selling those goods and services.

Design Proposal 1 (Frictional Travel)

Problem

Before the coronavirus pandemic, tourist numbers were steadily increasing, leading to overcrowding in some areas and damage to natural habitats. At this time, the pandemic is not over, but the Icelandic government wants to let tourists in, albeit on a smaller scale. As restrictions relax, tourist numbers are bound to increase, leading to a health crisis in Iceland due to the number of tourists in proximity.

IBM Digital Health Pass

One solution is the IBM Digital Health Pass. This system uses blockchain technology to reduce frictional travel by verifying tourists’ healthcare credentials, including vaccination, testing, and proof of recovery to visitors without violating healthcare confidentiality or user privacy. The IBM Digital Health Pass is used at travel checkpoints, like airports, through a mobile phone application.

Disclaimer:
NU Blockchain Group did not receive any funding or compensation from IBM and its affiliates. Due to the proprietary nature of the system, NU Blockchain Group did not have access to the codebase and the system’s technical implementation.

System Design

The three stakeholders are issuers (healthcare providers), holders (tourists), and verifiers (airport security). A flow chart illustrating the interactions between these stakeholders is shown in Figure 1. Issuers would upload vaccination records and COVID-19 test results of holders. Holders would use an app to get their medical records verified. Verifiers would check the records of holders. Figure 2 shows a more in-depth visualization of how the IBM Digital Health Pass’ infrastructure will be set up.

*Figure 2. The infrastructure behind the IBM Digital Health Pass.²²*

Flow

Onboarding: Holders would consent to issuers putting healthcare data into blockchain

Sample Scenario:

The tourist wants to fly in a plane to Iceland
The airport (verifier) want to ensure/verify whether the holder has the proper healthcare credentials (vaccination records or negative PCR COVID-19 test results from the past 72 hours)
The tourist would open up the IBM Digital Health Pass, log in, and generate a unique, scannable code (Figure 3). Credentials can be printed as well.
The verifier would scan the code and wait for the system to provide verification
The blockchain system would run its consensus mechanism (managed by IBM nodes) to log the verification attempt by the verifier and also determine whether the transaction goes through
The blockchain system sends the verification results to the verifier
Consequence:

(i) If yes, the verifier gets the transaction through and the tourist can board the plane

(ii) If not, the transaction does not go through and service is denied

In both scenarios, the verifier would not be able to view the traveler’s medical history.

(iii) If the holder thinks the verifier is asking for TOO much information, the holder can withhold the scannable code

*Figure 3. IBM Digital Health Pass User Interface (UI).²³*

Value-Adds for current Iceland Healthcare Policy

Disclaimer:
The following value-adds come from information sourced from interviews with Anthony Day and the publicly available IBM Digital Health Pass marketing materials. Due to the proprietary nature of the system, NU Blockchain Group did not have access to the codebase and the system’s technical implementation.

Safety

The IBM Digital Health Pass is able to verify whether an individual is vaccinated or has tested negative for COVID-19, which is crucial in minimizing the risk of COVID-19 during the pandemic.

Standardization

By using this system, we move away from physical records that can be easily tampered and move to a digital model that gives power to the individual (where the user keeps their information).

Authenticity

The forging of medical records is a high risk. Already, individuals in the United States attempted to create fake vaccination cards.²⁴ However, because of the tamperproof nature of blockchain, vaccine records and COVID-19 test results would be almost impossible to fake. This would keep people with no COVID-19 results and no vaccination records from entering the country, keeping citizens and tourists safe.

Privacy

The IBM Digital Health Pass maintains user privacy while ensuring that the user is safe for travel. The IBM Digital Health Pass does not reveal user credentials nor the medical records of the user during the verification process.

Infrastructure

The app sets up infrastructure that can be used for future healthcare crises for quick, immediate response. It could also be a central app used as health passports in multiple countries.

Current Iceland Healthcare Policy

Currently, the Iceland Healthcare Policy requires the traveler to show proof of a negative PCR test taken within 72 hours of the departure time. Rapid antigen tests are not permitted. All travelers must take two more PCR tests after arriving in Iceland with a separation of 5–6 days of quarantine between the tests. The only exceptions for the quarantine are for previously infected travelers or fully vaccinated travelers.

Proposed change in PCR testing policy

Travelers would conduct their two PCR tests before the time of departure (with the second test being within 72 hours of the departure time)
A final PCR test would be taken 2 days after time of arrival (on the 3rd day)

Rationale

One concern with having 2 PCR tests before the time of departure is that there is no way to ensure that the traveler will actually quarantine themselves during the period of time between the two tests. In order to combat this, the final COVID-19 test will be taken on the 3rd day of arrival in Iceland. Since the amount of time that would pass between the second test and final test would be between 4–6 days, it would cover the incubation period.

Value-Adds for possible change in Iceland Healthcare Policy

Time Efficiency

Using this model enables travelers to minimize time spent quarantining as they would complete the required testing and quarantining before the time of departure.

Accommodation

By creating a system where the testing period for COVID-19 is more flexible, more travelers should be able to accommodate visiting Iceland into their schedules.

Comparison to Alternative Solutions

As of right now, there are not many effective alternatives for safe travel during the pandemic. Some of the notable alternatives include:

Airlines are allowing passengers onto their planes on the condition that they do not remove masks. They also are allowing passengers to board if they are able to show proof of a negative COVID-19 test before the flight.

Another competing solution is electronic health records or electronic medical records. Electronic health records (EHRs) store up-to-date patient information in network-restricted, centralized digital files meant to ensure care providers can easily access a patient’s health history.

While EHRs serve as ‘snapshots’ of patients’ health profiles, they suffer from variability in implementation, lack of interoperability, and cumbersome sharing processes.²⁵ Because there are a multitude of EHR programs across individual health systems, in addition to higher-level segmentation of health information across national borders, those seeking access to the EHRs of a specific individual must be authorized to review patient information subject to the domestic and international privacy laws.

A frequent complaint with EHRs is that the onus of updating the information is on the provider, who must also interpret existing information about a patient and facilitate the sharing of that information. Blockchain technologies represent a significant improvement because of the implicit accountability created by the logging of each authorized addition to a patient’s medical record. This precludes the possibility of a single provider’s ability to knowingly or unknowingly misrepresent a patient’s medical history. Additionally, access to stored medical information can be easily scaled, allowing for straightforward but secure updating of a patient’s medical history without having to create complex data exchange infrastructures.²⁶

Cost Case for Quarantine

Table 1. Cost Case Scenario for Proposed Change in Policy.

Core Takeaways

We have gathered the core takeaways from the IBM Digital Health Pass that will improve Iceland’s tourism industry. The groundwork of the IBM Digital Health Pass will build infrastructure for future global health crises and will leave Iceland more prepared, allowing a faster and more effective response as well as cutting losses that happened in the 2020 fiscal year.

Increased Public Confidence

There will also be increased public and tourist confidence. Having the government with an effective plan that puts its citizens as a priority and inspects travelers’ health records without compromising patient privacy will show the government’s commitment in ensuring safety while also boosting the economy.

Reduced Frictional Travel

The proposed introduction of the IBM Digital Health Pass will also be able to reduce frictional travel if quarantine requirements are reduced through the implementation of the system described above in the Cost Case for Quarantine.

Standardized Response Protocol

This will also allow Iceland to work and fix some of the unexpected occurrences that arise from implementing the IBM Digital Health Pass. The reason for this is that Iceland would be a great ground zero to test the IBM Digital Health Pass. It is a small, isolated country with a vulnerable healthcare system that will be put under pressure due to smaller capacity. This will let us observe and analyze disruptions and respond accordingly.

This system, if successful, offers a model for an international standardization that other countries could adopt — such as Greenland, which is also an island isolated from continents — for reducing the disruption of economies due to global health crises.

Design Proposal 2 (Informing Tourists)

Problem

As coronavirus has become increasingly dangerous and important to track, tourists in Iceland have had increasing demand in wanting to know the whereabouts of the disease. Entering areas with a hotspot in coronavirus is a problem to incoming tourists and also natives who want to avoid the virus at all costs. These issues are in line with the motives of tourist firms, who want to maximize their ability to keep tourists safe. Thus, the main stakeholders in this problem are natives, tourists, and tourist firms.

System Design

Our proposed solution to this problem is for tourists firms to issue a blockchain based solution that uses Proof of Authority (PoA) among tourists to generate a database of COVID-19 symptoms among Iceland tourists and display that data online as a heat map (Figure 4). The system would be run by the tourist firms who confirm the new data added onto the blockchain. The application would be mandatory to complete every day while a tourist is visiting Iceland. The heat map would give users warnings about being in a COVID-19 hotspot by giving users a notification when a user’s location is at or adjacent to a region with a dangerous amount of COVID-19 symptoms. Tourists would be required to fill out the survey once a day to ensure the currency of the heat map.

*Figure 3. Conceptual UI interface of the Symptom Tracker*

The heat map would also be overlaid with a different color heat map provided by Google’s map of COVID-19 symptoms in the Iceland area. This addition would allow for a user to be able to recognize both the symptoms of COVID-19 and actual cases of COVID-19 on the same map.

To check the heat map, one would click on the heat map button on the home page. This will generate a real time COVID-19 symptom heat map of Iceland that is redder at the more concentrated areas of COVID-19 symptoms. The zones that have darker blue areas would correspond to the data provided by Google’s heat map which are gained from the data repository by the Center of Systems Science and Engineering (CSSE) at Johns Hopkins University.

The FAQ section will list a set of common questions and answers that individuals may have about tourism in Iceland with relation to COVID-19 restrictions. The profile section will be a place where the name, location, and symptom of the individual will be laid out.

Methodology/Flow of System

Figure 4. Flow diagram of the symptom tracker.

The general flow of the system is as follows (Figure 4):

The user would open the proposed symptom tracker app
The location of the individual is accessed through the phone and stored on the blockchain. The profile of the individual is stored locally on the phone.
The symptom tracker application will check the Icelandic region of the individual.
If there are a significant amount of symptoms near X kilometers of the location, whether the app is on or not, a notification will be sent to the phone to alert the user of the potential danger
After the location check, the user will be directed to the home page (Figure 3). There will be four main buttons that are available to click on: Symptom Check, Heat Map, FAQ, and Profile.
The user would fill out the COVID-19 Symptom Check, clicking yes or no to 2 questions. The questions will be along the lines of “Have you had fever, coughing, or shortness of breath in the last 3 days?” or “Have you been in close contact with anyone with a confirmed COVID-19 diagnosis within the last 3 days ” will be asked with a yes or no answer button.

(a) If the answer is “yes” to any of the above questions

(i) COVID-19 symptom status and location will be added to blockchain.
(ii) The user’s symptom status and location provided will be pinned every 30 minutes onto a heatmap that is available for everyone using the app.
(iii) The app will return back to the home page automatically and the survey will not be available until the next day.

The following is pseudo code on the workings of the heat map.

Pseudo code
for each coord
cell = coord projected to grid
increment cell value
end
for 0 to # of passes
for each row
for each col
if grid[row,col] > 0 then
grid[row,col] += 1
increment_adjacent_cells(row, col)
end
end
end
end²⁷

The idea behind the code is as follows: the higher the integer value, the cell and adjacent cells would be intensified in their color (whether that be red or blue based on our current system). Increment in this case intensifies the color of a specific cell. Increment_adjacent_cells intensifies the color of the 8 adjacent cells adjacent to the target cell.

Value-Adds

Based on the proposed implementation of the symptom tracker, the following potential value-add was identified.

Anonymity
The blockchain-based symptom tracker allows users to input symptoms into the system without their identity being disclosed. The profile of the user would be off-chain, while the location and symptom status of the individual would be on-chain, meaning that the disconnect between a user’s identity and wallet address of the app would essentially make the user’s information on the heat map anonymous. In turn, the anonymity of the app may potentially allow users to be more open to being genuine about the input of their symptom status. Thus, blockchain ensures that the government or other central authorities will not be able to continually track users’ locations or symptom statuses.

Authenticity

The symptom tracker allows for an immutable audit trailing detailing the location and symptom status of an individual. This information cannot be modified or destroyed by any individual due to the blockchain system it is designed upon.

Visual representation

The heat map contained inside the symptom tracker allows users to see visually which areas are congested with individuals with symptoms in real time. The darker red areas would represent regions where there are more symptoms. The heat map is also overlaid with a heat map of actual COVID-19 cases that occurred in a certain area in blue.

Personal Alerts

Users will be notified from the app when they are in X kilometer proximity of a significant amount of COVID-19 symptoms. This would allow users to avoid potentially dangerous areas and reduce the amount of symptoms in Iceland.

Flexibility

The proposed system is applicable not only for the COVID-19 system but could easily be modified to adapt into applying to future diseases or pandemics that may appear. The only change that would need to be made is to change the database for existing cases to account for a different disease.

Comparison to Alternative Solutions

Google COVID-19 Heat Map

A possible alternative solution to the symptom tracker app is Google heat map of COVID-19.²⁸ Google has an enormous hold on COVID-19 case data which is overlaid onto Google maps. This representation gives a clear visual representation of the cases of COVID-19 around Iceland. Most of this data is derived from the data repository by the Center of Systems Science and Engineering (CSSE) at Johns Hopkins University²⁹ and also various sources of different data.³⁰

However, there are many problems associated with this heat map. As can be seen in Figure 5, there is no data on new cases (14 days), deaths, doses given, new doses given (14 days), and the people fully vaccinated. This can probably be due to Google lacking the resources to gain local Icelandic statistics on COVID-19 data. Thus, this source is not a viable alternative for a visual representation of the COVID-19 cases in Iceland. Also, there is no data or way for tourist firms to track the conditions of their tourists without a personalized system like the symptom tracker.

*Figure 5. Google’s “heat map” of current COVID-19 cases.*

Rakning C-19

Another strong alternative to this solution is Rakning C-19 (Figure 6). This app is the official app from the Icelandic Government designed to help mitigate the COVID-19 pandemic in Iceland. The app collects the GPS location of the phone. COVID-19 test results are linked to this app, and if the phone owner is diagnosed with COVID-19, then that individual is asked by the Directorate of Health to share the location data for contract trading in order to identify individuals that may need to go into quarantine.

A big drawback of the Rakning C-19 is however, that it is a platform that is centralized, meaning it is controlled by the government that can collect information about personal identity, symptoms, and location all through an app. There is no anonymity within the system, meaning the government can always see all of the information presented to them. This type of system could potentially lead to the government using the data to harass or take action on those with positive COVID-19 symptoms. There could be breach of rights implemented through this centralized system.

In addition, the app does not share the locations of COVID-19 cases or symptoms throughout the area. The app is only used by the government to attempt to quarantine individuals with positive COVID-19 cases and is not of much use to tourists or natives who want a feedback system to be informed of cases in a specific location. The direct flow of individual health information to the government would likely disincentivize users to truthfully fill out the symptom application. Also, the app is voluntary for people to input their own symptom information and possible COVID-19 symptoms may go unnoticed if the app is a mandatory daily symptom tracker that is not employed.

Figure 6d. COVID-19 Test Results UI of Rakning C-19.

Final comparison

Both of these proposed solutions differ from our solution in the fact that there is no real time deployment of mandatory “symptom” information being displayed or inputted by users. Google has a lack of data to accurately display COVID-19 case results and data, while Rakning C-19 is only designed to display COVID-19 test results to the Icelandic government and gain voluntary symptom information from individuals.

Thus, the symptom tracker system proposed is advantageous to other both of these applications due to a system that allows for anonymity within the system, a real-time heat map and notification system about the symptoms near Iceland, and a mandatory symptom check to promote currency of the COVID-19 symptom heat map.

Core Takeaways

Is blockchain really needed?

Blockchain is not necessary if the Rakning C-19 app can be modified to generate the heat map assuming that the app encourages tourists to track their symptoms on a daily basis. Assuming that the Icelandic government is trustworthy, there would be no need to implement blockchain technology because there would be a central authority who could verify symptoms and identity of individuals.

How can a blockchain based system be better than a centralized system?

However, if the Rakning C-19 app cannot be modified and tourist firms are running the system, the blockchain system is still valid because it allows for anonymity. With the PoA consensus mechanism, we expect lower prices due to lower energy consumption compared to different blockchain consensus mechanisms such as proof of work or proof of stake, which may be comparable to costs of the Rakning C-19 app.³¹ A system that implements mandatory daily symptom checks and with anonymity in relation to the symptom heat map information would be very useful for third parties such as tourist firms to use for business.

How can the symptom tracker be applied in future scenarios?

In addition, the Symptom Tracker could possibly be applied to future pandemics or diseases that are not necessarily related to COVID-19. Because the system infrastructure can easily be modified to adapt to new viral outbreaks, stakeholders can more quickly respond by implementing their own policies. This system only applies to tourists and foreigners as of now, but there could be future applications where natives of Iceland could be included to create more comprehensive solutions to informing stakeholders alike.

Design Proposal 3 (Promoting Sustainable Tourism)

Problem

Tourism accounts for 8.6 percent of Iceland’s Gross Domestic Product and 15.7 percent of the workforce.³² As a result, Icelandic policymakers became concerned when the total number of tourists in Iceland fell by 14 percent in 2019 and an additional 76 percent in 2020.³³

According to research and discussions with citizens and professors in Iceland, some citizens are frustrated because (i) tourists are not spending money at local businesses and (ii) tourists do not engage in courteous behavior at geocultural sites and in major cities.³⁴ This is evident through increased vandalism, presence of hotels/nightlife, and venturing into places that natives believe should be left alone.³¹

System Design

Our system promotes sustainable tourism in Iceland by incentivizing tourists to spend money at small Icelandic businesses. These incentives exist through a customer loyalty system based on blockchain tokens³⁵ — similar to existing processes at major airlines with miles and hotels with points. The main stakeholders in our system are the small business owners, tourists, and Icelandic policymakers, who hope to sustainably bolster foreign tourism.

Our design includes an association of Icelandic small businesses, where the businesses pay a monthly membership fee to a tokens hub. In return, Icelandic small businesses would be included on the app. The app includes the information of all of these small businesses, their locations, products/prices, descriptions, and history. The app would serve as the site for transactions.

Upon arriving in Iceland, tourists download the app, which has a map of the small businesses. The tourists make purchases on their app and earn tokens for the amount of money they spend at the small business. These tokens serve as a discount for their next purchase at a small business.

For example, a tourist receives tokens for each purchase, and can redeem those tokens at the next small business for a discount. For example, say the traveler uses their tokens to pay $95 dollars to the second small business instead of $100. The small business receives a check from the manager of the tokens hub for the difference of $5.

*Figure 7. Design and Flow of Tokens-Based Blockchain System.*

Note: The Rule of 100 claims a dollar discount will be more effective for products priced over $100, and a percentage discount will be more effective for products priced under $100.³⁶ We are under the assumption that many tourist experiences include products and/or services with greater price tags, which provides the reasoning for our dollar spend model as opposed to a percentage model.

Methodology/Flow of System

Our hypothesis is that the tokens-based loyalty program will bring in more people and sales to those small businesses to offset the discounts and membership fees.

Onboarding for tourists and local businesses

Tourists download and sign into the app containing a map of the businesses.
Businesses download and sign into the app.

Businesses add descriptions of their location, history/operations, products/services and associated prices.
These elements would be stored off the blockchain, since on-chain storing would waste unnecessary energy.

3. To join the association, businesses need to be accessible to tourists. Businesses should:

Have a sign alongside the streets.
They need to be of close access to a bathroom or gas station (<2 miles).
These qualifications should be compliant with the Ministry of Industry, Energy, and Tourism.
Qualifications will be checked every six months by the Ministry of Industry, Energy, and Tourism

4. Businesses will pay monthly membership fees to stay in the association.

Fees are determined by a weighted average of total cash flows and of cash flows from our token-based system
Cash flows from token-based system are tracked by the transaction ledger of the blockchain system
This weighted average analysis would occur on a monthly basis

Flow‌ ‌of‌ ‌Transaction‌ ‌for‌ ‌Local‌ ‌Business:‌

1. Similar to a club or company card, the local‌ ‌business‌ would have their unique ‌QR‌ ‌code‌, which would be printed ‌on‌ the ‌receipt‌
2. At transaction, business cashier taps “My Profile” → “Add Purchase”
3. Business scans QR code on receipt to earn token
4. These earned tokens are used to determine membership fees for the following month/quarter, as discussed in the section below titled ‘Example Scenarios.’

Flow‌ ‌of‌ ‌Transaction‌ ‌for‌ ‌the‌ ‌Tourist:‌ ‌

1.Tourist‌ ‌enters‌ ‌Iceland and ‌downloads‌ ‌app ‌
2.Tourist‌ ‌goes‌ ‌into‌ ‌local‌ ‌business‌ ‌and‌ ‌buys‌ ‌something
3. Tourist clicks on ‘Business Icon’ on the map in app, then on ‘Add Purchase’
4. Tourist‌ ‌upload‌ ‌a‌ ‌receipt(s‌) to app by ‌scann‌ing the QR‌ ‌code ‌unique to the business receipt
5. App registers transaction on the blockchain and adds the tokens to that account for the amount spend
6. Tourist‌ ‌can use ‌token‌s ‌through‌ ‌app/website‌ ‌to‌ ‌get‌ ‌reward‌ ‌from‌ ‌any‌ ‌local‌ ‌business‌ ‌on the app ‌ ‌

Example Scenarios

This section serves to illustrate how the system and its stakeholders would operate in the real world under different circumstances. When a transaction occurs, the discount token to be provided to customers will be known as ‘Discount Token’ and the token to be provided to businesses will be known as ‘Seller Token.’

For these example scenarios, the ‘Discount Token’ is worth $0.05 in discounts. THe ‘Seller Token,’ as discussed in the onboarding section above, does not have monetary value and is used to track the total value of the purchases, which is used in determining membership fees.

Monthly membership fees dynamic and ever-changing — cash flows of different businesses will not be equal. Tokens received cannot be exchanged for currencies/cryptocurrencies; the flow of capital will be localized within local businesses.

As a side note, assume the costs of operating the blockchain intermediary system is negligible for Proof of Authority.*

Assumptions/Parameters

For the scenarios below, we will have Firm A, Firm B, and Firm C entering the association.

Suppose Firm A generated $15,000, Firm B generated $22,000, and Firm C generated $27,000 in transactions last month. Each firm will have to pay 5% of those cash flows to the system for the membership fees in the onboarding process. The blockchain system therefore compiles $3,200 in fees from the businesses at the start.

Scenario Y

Customer A buys $50 from Firm A and Customer A receives 100 Discount Tokens. Each token is worth $0.05 for a total value of $5. Customer A now redeems 100 Discount Tokens ($5’s worth) at Firm B. Firm B fronts the discount. At the end of the month, Firm B is paid $5 by the blockchain system.

*Figure 8. Flow of capital after customer makes initial purchase and employs discount.*

Scenario Z

In this scenario, it is understood that the likelihood of a customer spending thousands at one store is low. However, the aggregation of spending at a business is probably in the thousands. For sake of simplicity, one customer will make a transaction worth thousands of dollars.

In the real-world implementation, the membership fees will be based on total spending, so this scenario is somewhat representative of how the system’s membership fees will operate and how individual discounts will be spent.

Customer A purchases $5,000 in goods from Firm A and receives $500 in Discount Tokens.

Customer B purchases $12,000 in goods from Firm B and receives $1200 in Discount Tokens.

Customer C purchases $7,000 in goods from Firm B and receives $700 in Discount Tokens.

*Figure 9. Flow of capital within the example scenario at the time of purchase.*

The customers redeem their discounts at different firms, as depicted below in Figure 10.

In this scenario, Firm C initially fronts a disproportionate amount of discount tokens relative to the other firms.

*Figure 10. Flow of discount tokens within the example Scenario Z.*

At the end of the month, the manager will pay the firms with the amount of the discount.

Fund has $800 remaining after fronting $2400 in discounts.

After the first month of participating in the association, the membership fees are readjusted based on the cash flows tallied by the seller tokens. Specifically, the blockchain system of the association takes 10% of the cash flows from the system. The most equitable way to determine changes in membership fees stems from the beneficiaries of the system.

Membership fees for the following month:

Firm A: $5000*0.10 = $500

Firm B: $12000 *0.10 = $1200

Firm C: $7000*0.10 = $700

System: $2400

Fund now has $3200 including new membership fees and the remnants from the previous membership fees.

Next month in Scenario Z:

The system is working, and tourists spend more money at local businesses.

Customer A purchases $9,000 in goods from Firm A and receives $900 in Discount Tokens.

Customer B purchases $17,000 in goods from Firm B and receives $1700 in Discount Tokens.

Customer C purchases $13,000 in goods from Firm B and receives $1300 in Discount Tokens.

*Figure 11. Flow of capital within the example scenario at the time of purchase, in the second month.*

The customers redeem their discounts at different firms, as depicted below in Figure 10.

In this scenario, Firm C initially fronts a disproportionate amount of discount tokens relative to the other firms.

*Figure 12. Flow of discount tokens within the example scenario, in the second month.*

At the end of the month, the manager will pay the firms with the amount of the discount ($3900).

Fund has $0 remaining after fronting $3200 in discounts.

We will wait until new membership fees come in to pay off the remaining $700 in discounts.

Membership fees for the following month:

Firm A: $9000*0.10 = $ 900

Firm B: $17000 *0.10 = $1700

Firm C: $13000*0.10 = $1300

System: $3900

Discounts from Previous Period: $700

Fund has $3200 after paying off discounts from past months.

Value-Adds

Increases in Tourist Sales

Through the discount system, tourists are incentivized to spend money at local businesses. Presumably, the discount system will result in increased tourism cash flows for small businesses.

Increases in Icelander Satisfaction with Tourism

Our hypothesis is that the growth of the local economy through increased sales for local businesses would improve Icelanders’ perception of tourism.

Reduced Costs

Loyalty programs tailored to businesses can be costly³⁷ (tens to hundreds of thousands of dollars) to develop and integrate, but a system widely utilized across a number of businesses would distribute costs and create ease of use and maintenance. In addition, because of the blockchain’s native ledger, there is already a loyalty record as to what customer or store may be at fault for reimbursing transactions or maintaining the system.³⁸

Reduced Risk

With this decentralized loyalty management system and association of businesses and their funds, there is reduced risk for these small businesses. The companies, when fronting a discount, will have a pool of funds to keep them afloat and mitigate financial exposure.

Trust/Security

Once provided to customers or businesses, blockchain tokens cannot be taken away. Their provision is public on the blockchain. Blockchain serves as a ledger where data can only be added but cannot be modified, providing an immutable record of transactions that is trustworthy and secure.

Flexibility

Since they are a common discount intermediary, blockchain tokens can be switched and employed at different stores with this discount scheme. There would also be one wallet for the tokens for purchases, so consumers would not have to search for each company’s methods and discount rules.

If the model is changed so that the blockchain tokens are implemented as a cryptocurrency, they can be switched for different digital currencies, as well as physical currencies such as USD.

Comparison to Alternative Solutions

There are a number of existing mechanisms in Iceland and other countries, such as the City Card and the Copenhagen Card, that serve to simplify travel and centralize tourist information.³⁹ However, with Iceland’s City Card, the attractions are limited with respect to amount and geography (nine attractions, 12 restaurants, nine shops, and two thermal pools).⁴⁰

Additionally, the City Card operates on a percentage basis, which is easier for companies to implement.⁴¹ By the Rule of 100, spending discounts are more attractive than percentage discounts to prospective customers when the cost is greater than $100. Since tourism experiences generally cost large amounts of money, our conclusion would be that there is a greater monetary benefit to Iceland and to Icelandic small businesses to use a discount based on spending rather than percentages.⁴²

Potential System Add-ons

Another node for increasing appreciation for tourist experiences lies in increasing engagement and education with Iceland’s history through a centralized method. 80% of visitors stated that Icelandic nature had a major impact on their decision to visit, and 42% said so for Icelandic history.⁴³ Making information about Icelandic history and nature more accessible might be a beneficial addition to the economic incentives by increasing tourist respect for Iceland’s beauty.

The mobile application could include a small lesson or quiz detailing Iceland’s history, nature, and geography to best inform arriving tourists on how to make best use of their visit.

Core Takeaways

Benefits/Concerns for Consumers

The value of blockchain is in the flexibility to gain and apply the tokens at any store and the security and ease in tracking transactions and onboarding individuals. However, if our consumers do not deem the tokens-based system to be beneficial compared to a percentage-based method, then we will need to reconsider whether blockchain is useful.

Benefits/Concerns for Businesses

The social sustainability blockchain will reduce risk for small businesses by creating an association of enterprises that can provide financial backing across enterprises. This financial support is funded by monthly membership payments. This information, in conjunction with our discount model detailed below, will attract tourists to the small businesses in the short-term. In the long term, we hope that fostering this business-to-consumer connection will create more return visits to Iceland. The businesses may find the implementation of our model as unnecessarily costly and time-extensive compared to percentage discounts.

Considering the costs associated with joining the association, the local government could subsidize these expenses, like road signs.

Legal Considerations

Iceland’s capitalist economy⁴⁴ centers around promoting “fair and effective competition [to] increase the efficiency of the factors of production of society,” according to the statute governing competition.⁴⁵ We do not anticipate our system inhibiting competition, unless the qualifications to join the community of businesses are discriminatory. An additional pitfall could be the difference in prices at businesses. Some businesses offer higher priced items and will provide larger discounts. If these large discounts are used at businesses with less costly items, these small businesses could endure a temporary loss. This may prevent effective short-term competition. However, this pitfall is mitigated through monthly membership fees, which are tailored to reconcile accounts and ensure companies are financially viable in the long-term.

Appendix A: Terms

Blockchain

These new blocks and transactions are validated by connecting to the older blocks, forming a long chain that could only be supplanted by an even longer chain of blocks. This forms a secure and verifiable record of transactions, without intermediaries, with a primary disturbance coming in the form of a 51% attack, which is extremely expensive and unlikely.⁴⁶

Consensus Mechanism

A fault-tolerant mechanism⁴⁷ used in blockchain systems to achieve necessary agreement of the accepted data value among multi-agent systems.

COVID-19

Abbreviated as COVID-19, the coronavirus is a global pandemic that has caused much of the world to shutdown and reevaluate traditional technologies.

Cryptocurrency

A digital currency built with blockchain technology⁴⁸

Decentralized

The transfer of control from a centralized authority (usually government related entities) to a distributed network of users.

On-chain

Type of transaction that modifies the public ledger of the blockchain network

Off-chain

Type of transaction that does not modify the public ledge and stores values outside of the blockchain

Proof of Authority

Reputation-based consensus mechanism that uses a small number of block validators to approve of transactions. This phenomenon allows for proof of authority to be very scalable.

Tokens

A unit of value issued by the blockchain system to provide incentives for all participants.