The Vampire Attacking Ticketmaster

Editor’s Note: We turn again today to Brownstone’s resident crypto expert – senior crypto analyst Ben Lilly.

It’s an inside scoop on a technology that’s sinking its fangs into the largest ticket marketplace on the internet – Ticketmaster…

The shadowy figures wearing tailcoats are circling… closing in on the incumbents. And they’re getting ready to suck the juiciest of margins in entertainment.

But these disruptors won’t stop there.

To satisfy their insatiable appetites, they will soon attack one of the largest online marketplaces across the internet.

And it all starts with a handshake.

The script practically writes itself. But this isn’t fiction. These vampires are emerging from the shadows and operating in broad daylight.

To showcase just what we’re talking about here, today we’re going to take a look at something called zkTLS.

It’s likely foreign to all of us, but today, I’d like to take a moment to discuss what this technology is and how it’s plotting what we refer to as a “vampire attack” on some of the most well-known monopolies in business.

The Handshake

The early days of the internet were ripe for crime.

In the 1990’s it was bad practice to put your credit card information on a website. Information wasn’t encrypted. It was sent as plain text. Meaning if any hacker was able to intercept the data being sent, they could view it.

This wasn’t difficult for any low-level hacker who could locate a website’s location or IP address. There was a lack of security measures in place to prevent such a thing.

It would be like dropping a piece of mail at our local post office without an envelope. The document could easily be read by any postal worker processing the mail.

So if the document held any sensitive information – say, like banking information – it could be used for malicious activity.

The early internet lacked any protection around our information – something as simple as “an envelope” for sending data from a computer to the server the website sat on.

That was until something known as Transport Layer Security (TLS) became a standard in 1999.

The arrival of TLS was instrumental in helping pave the way for the online businesses we use each day.  TLS enabled data to be secured while being “transported” across the internet.

We no longer think twice when inputting credit card information on a webpage. It’s the “S” in HTTPS you now see when browsing the internet each day, which many view the “S” as security in a web address.

That’s because TLS facilitates private and secure communication between two parties on the internet.

The way it works is the user and the website conduct a “handshake” that creates a set of keys. These keys are used to encrypt messages sent between the two parties, like credit card information.

Without these keys, the data cannot be read.

When TLS came to market, only 0.6% of retail sales happened online. And for nearly the next decade, e-commerce retail sales grew by double digits each year. What started as just a few billion in sales swelled to more than $40 billion before the end of the decade.

TLS was a catalyst for internet adoption.

And what we see happening today is TLS is coming to public and permissionless blockchains through something called zkTLS.

Let’s showcase an example of a solution using zkTLS to disrupt the monopoly of entertainment ticket sales behemoth Ticketmaster.

The Vampire Attack

Ticketmaster commands a 70% share of the overall ticketing market and over 80% for live concerts.

And that monopoly has not gone unnoticed.

Through its merger with Live Nation in 2010, the entity now owns or controls more than 265 concert venues in North America, including more than 60 of the top 100 amphitheaters.

This dominance sparked a group of Taylor Swift fans in 2022 to file a lawsuit accusing Ticketmaster of price gouging – this included price fixing and excessive fees – and demanding it rein in its monopolistic behavior.

Ticketmaster fees are immense.

Thanks to Ticketmaster’s dynamic pricing, its fees run at an average of 28% of the ticket’s face value but can swell to as much as 75%.

Its dominance continues to prevail despite a U.S. Department of Justice lawsuit in 2024.

But this era of egregious fee capture looks to be coming to an end through something called a “vampire attack.”

The attack gets its name by “sucking” the value from a company that is dominant in a specific industry.

For Ticketmaster, the value the vampire is targeting lies in the excessive fees impacting both sellers and buyers.

And it’s where zkTLS offers an opportunity for this attack to materialize.

Now, Ticketmaster is a ticket exchange. A user can list a ticket for purchase, and when the ticket gets exchanged – a buyer makes that purchase – a string of data gets created so the ticket remains unique.

This prevents the seller from being able to take a snapshot of their barcode or QR code and enter the same event they sold their ticket to.

What zkTLS does is allow a seller to list their ticket on a third-party exchange. To list the ticket, they first must prove they have the ticket to begin with. This is where the “zk” comes into play.

ZK is known as zero-knowledge. It’s a way to prove that the seller, in this instance, holds the ticket without jeopardizing the unique code.

Once this proof of ownership is created, the proof gets submitted to a transparent and verifiable database – aka a public blockchain – so anybody can trust that the seller’s ticket is valid.

And since zkTLS brings data from an existing platform like Ticketmaster to a public and permissionless blockchain, a world of innovation opens up.

One of those companies taking advantage of this tech is zkp2p, which stands for zero-knowledge peer-to-peer.  I know, the name is anything but catchy, but most tech on the bleeding edge tends to lack that appeal.

What makes zkp2p so interesting is that their solution lets any seller or buyer list their ticket for sale. And the protocol facilitates the transaction.

Source: zkp2p.xyz

The best part is the outrageous fees get bypassed. Meaning zkp2p is sucking the margin away from Ticketmaster directly.

It’s impressive.

For those familiar with blockchain technology, implementing something like this would require quite a bit of extra effort.  A user will need to set up a blockchain-based wallet, fund the account, create an account on zk2p, and then make the purchase.

Massive friction. Meaning the tech would be cool but widespread adoption is unlikely.

But that’s not the case.

Users can purchase tickets using existing solutions like Venmo or Revolut because zkTLS can also be used to bridge the major friction point of requiring a user to hold cryptocurrencies in a blockchain-based wallet.

The “handshake” that takes place with zkTLS means the user can prove they have funds in their existing Venmo or Revolut (and now, others as well) account similar to how they are proving they have the ticket listed in the marketplace.

We can almost view this like how an escrow-like transaction happens. The seller or potential buyer prove they have what they say they have, and once terms are agreed upon, the protocol processes the sale.

This is incredible tech with a lot of flexibility. And while it’s currently just in alpha testing, it shows massive potential since the use of high-friction solutions such as blockchain wallets or cryptocurrency learning curves get abstracted away from the user.

There’s More

The important part here is public, permissionless blockchains make this a reality. That’s because protocols can make use of these proofs and verifiable data to come up with unique solutions.

The innovation that’s coming is almost hard to anticipate.

zkTLS is doing to this online marketplace what Uber did to the taxicab market. Ticket sales can benefit both the buyer and the seller equally since the fees are bypassed. Meaning both parties have an incentive to shift their behavior.

What’s even more exciting here is that the example here with zkTLS is just one example of how public and permissionless blockchain solutions can “vampire attack” existing internet companies.

This tech can be useful for bringing credit scores, credentials, and virtually any online marketplace that already exists.

This won’t be the last time we touch on a solution preparing to take over existing tech. So be sure to follow along as we track the permissionless revolution happening before our very eyes.

Your Pulse on Crypto,

Ben Lilly
Senior Crypto Analyst, Brownstone Research

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