April 30, 2018
5 minute read
You’ve probably heard mention of blockchain in some way over the past couple of years, but if you’re anything like most people, you’re less than certain what it is. In a 2017 consumer survey, HSBC found that of those who had heard of blockchain technology, 80% didn’t understand what the term means.
It’s more likely that you’ve got a working knowledge of Bitcoin, the most well-known of the new ‘cryptocurrencies’ currently shaking up online payment systems. Very simply, blockchain is the infrastructure that facilitates Bitcoin and other cryptocurrency transactions, and, despite its lesser status, many in the know argue that it’s blockchain itself that’ll have a truly profound impact on the digital world.
Bitcoin was the first practical application of blockchain, but as we’re now discovering, there’s far more positive disruption the technology may be capable of. We’ve taken a speculative overview of what could eventually be done with blockchain with relation to data management and marketing.
As it stands, blockchain still isn’t well-understood. If you’re unsure, this example of how the technology works via Bitcoin should help.
Say you want to buy an item from Ebay. You choose from the vast selection of goods on the website, click through to the check out and pay, then await your delivery. It seems simple but behind the scenes, there are several third-party agents each playing a part in fulfilling your online transaction securely – Ebay itself, Paypal or your card company, your bank etc – each of whom take a transaction fee for their part in the process.
On the other hand, say you want to buy something in real life using cash. You hand over some money, receive your item and the deal is done. The way Bitcoin works is like this second type of transaction; it requires no involvement from third parties to safely move the money from A to B. Bitcoin is a currency that isn’t managed by any central bank or intermediary, and this is made possible by blockchain technology, which securely records these digital peer-to-peer transactions.
In a blockchain, each Bitcoin transaction is recorded as a ‘block’ of data, and each block is secured using cryptography and linked to the one before and after it in chronological order – hence the name ‘blockchain’. As the value of each block is directly related to the blocks on either side, it’s impossible to make changes to any block without a knock-on effect rippling through the entire chain.
At the same time, the blockchain is duplicated across a network of connected users, so that whenever a new transaction is done (and a new block is added), it appears for everyone and must be collectively validated. That’s why Bitcoin transactions can occur without any involvement from a central bank; the fact that each transaction is replicated and verified across a whole network of blockchain users means that they are naturally impervious to alteration – making them secure by design.
There’s more to blockchain than security though. Here are a few of the key benefits of blockchain technology:
As we’ve established, a block in a blockchain records and distributes data. In our example above, it was Bitcoin transactional data, but that’s just one type of data blockchain could be used for.
While the technology is still relatively new, opinion is divided as to how viable some of the other proposed applications for blockchain are, but many believe it could promise numerous benefits for data management and marketing. So, what could be possible?
In a future where retailers are selling goods online via blockchain, consumers could use the transparency of the technology to unequivocally verify where items are sourced, how and by whom they’re made. Currently, the FAIRTRADE mark acts as a certification for products produced in accordance with Fairtrade standards, but unless a business shares extra information with its consumers about how their goods come to market, that’s all they have to go on. Through blockchain though, consumers would be able to trace an entire supply chain, seeing for themselves exactly where and how an item was produced. Marketers could use this kind of visibility and accountability to add significant value for consumers, clearly demonstrating why a premium product is worth a premium price tag.
Some have taken this idea further, proposing that blockchain transparency could one day be applied to social media platforms in order to help them isolate sources of fake news. As Accenture’s Hugo Pinto says in reference to blockchain, “Imagine if Facebook, or any of the other platforms, had a way to detect, weed out
and isolate specific pieces of fake information. That would be a very powerful differentiator right now from a media offering standpoint.”
With everything kept in one place, centralised data stores can be vulnerable to attack, as proved by the growing number of high-profile organisations who have suffered customer data breaches in recent years.
Blockchain technology could potentially provide a much more secure storage proposition, as data would be distributed across an entire blockchain network rather than in a central storage hub. Having said that, scalability could potentially pose a problem; as every fully-participating user processes every new block and stores a copy of the whole blockchain, the number of new blocks will only ever be as many as a single user can handle. There could be solutions on the horizon though, in the form of data ‘shards’ and ‘swarms’, collected groups of devices within a blockchain, each still controlled by individual users, that work together to manage and distribute larger amounts of data.
Just as the major banks are centralised, so too are the biggest online platforms. Thanks to their massive reach, the vast majority of online advertising today is governed by Facebook and Google, but some believe blockchain could represent an alternative to the status quo.
Not only would online advertising run through a blockchain be decentralised, it would be based on data that’s open, verified and trackable at every stage. Blockchain could offer marketers a way to see exactly how their ads have been received by target markets, even down to whether a targeted individual saw a particular ad for the desired duration. Consumers could feel assured that advertisers are using their data only to market to them in ways that really enhance their lives, echoing the imminent introduction of GDPR, and marketers could develop targeting techniques with never-before-seen accuracy.
Of course all of this is conjecture at the moment, we’ll have to wait and see how blockchain manifests for marketing in reality. Until then though, there’s much that data could be doing for your marketing, but only if it’s being put to work. Let us help you add a data edge to your campaigns – get in touch today.