Tim Berners-Lee — the English engineer and computer scientist who invented the hypertext transfer protocol, better known as HTTP (or the worldwide web as we know it) — spoke during a TEDTalk in 2009 about data sharing, the concept of “linked data,” and the next phase of the web.
It’s an enlightening talk that outlines much of what something people are calling “blockchain” conceptually addresses, namely, the issue of data ownership.
Right now, at the tail end of Web 2.0, marketers are dealing with overflowing masses of data, a large chunk of which is generated by the biggest tech companies of today: Amazon, Apple, Facebook, Google, and others. Who exactly owns or should have access to this data is one of the biggest debates in government and industry right now.
Facebook has almost 2 billion users worldwide. That scale of audience, combined with the data the company has on that audience, gives Facebook a lot of control over the course of digital marketing — too much, many marketers feel. Companies like Facebook have become walled gardens of data; data that marketers feel they should have some claim over, considering it’s their products being bought and their ad dollars being spent.
Blockchain ends this debate. But to understand why, it’s necessary to understand exactly what blockchain is.
Blockchain could change the world
A blockchain is a massive, decentralized ledger. Entries in the ledger are generated by transactions using a particular “cryptocurrency.” This digital money is an essential, but separate, element of blockchain, as no entries (and no data) can be logged to the blockchain without transactions taking place using cryptocurrency like Bitcoin.
Transactions in a blockchain are associated with “keys,” strings of numbers that correspond to a user, and that user’s digital wallet. A user’s private key can only be accessed by the user in question (securing the user’s wallet behind an impenetrable wall of cryptography), but the user’s public key is used to reference the user’s activity in the blockchain.
The last bit is crucial, because in a blockchain, every party has equal access to the same data. Everyone can see who bought what and when, and can from there develop the same targeting infrastructure we see today, only now the data isn’t governed or owned by any particular entity.
“[Blockchain] allows multiple parties to access information. And that information is in a secured, immutable, and decentrally owned data store,” says Ken Brook, founder and CEO at MetaX. “No one controls the database, [so] there is no incentive for a database owner to manipulate the data in any way. Individual parties don’t have the ability to doctor the data. This allows multiple parties to coordinate on a digital marketing campaign, and be able to reconcile the first party data that they’re tracking with third-party data that’s sourced from the blockchain.”
The security mechanisms that protect first-party data in a blockchain are complex, but the video below explains the situation thoroughly.. We highly recommend giving it a full viewing.
Blockchain is to Web 3.0 what P2P and Facebook are to Web 2.0. It is the foundation upon which a new cultural and functional iteration of the web will be built.
“Because of the technological innovation that blockchain is, we now have the ability to transact items of value between two parties where no intermediary is required, and we can do that with less costs, lower risks, and can do it faster,” says Jeremy Epstein, CEO at NeverStopMarketing, and author of the forthcoming eBook “The CMO’s Starter Guide to Marketing in a Blockchain World.” “That means any business where their value proposition is based entirely or mostly on being a trusted third-party intermediary… we’re looking at a future where none of them are required.”
Consider the existing paradigm. A marketer sets up a digital campaign and runs it across all relevant channels. The marketer wants data on the performance of the campaign, and any leads or conversions it generates. However, this requires cross-collaborating with intermediaries at almost every turn; whether they be affiliates, walled gardens, or programmatic ad networks. The quality of that data degrades as it passes from entity to entity, and it’s often not clear who ultimately owns the data, or deserves attribution for outcomes (and how much).
“This is really why a lot of gaps exist in the industry. This is why there’s a lack of transparency. There’s so much that you have to do, and because of that, fraud can exist,” Brook says. “If we can coordinate around this new database that nobody owns, [blockchain] can address this.”
Of course, if blockchain were to suddenly manifest as the status quo tomorrow, marketers would have a tough time reconciling with the idea that their data — one of the most coveted commodities in business today — no longer belongs to them. But the data wouldn’t belong to anyone else either.
“A blockchain is a distributed ledger. Everyone has a copy of the information. In a blockchain world, everyone has the data. It changes the conversation from who owns the data to who gets it the fastest,” Epstein says.
At once, blockchain addresses the data ownership debate, data privacy compliance, attribution, and data security. It fundamentally alters the way we do business, globally, in the process, but it’s nonetheless an exciting prospect for marketing. However, a blockchain has little relevance without the cryptocurrency it is tied to.
The cryptocurrency piece
The terms “cryptocurrency” and “blockchain” are not interchangeable, but they are closely related. One can’t be discussed or considered without the other.
As its name implies, cryptocurrency (also known as “cryptos”) simply refers to digital currency. It is digital money secured and “printed” by its corresponding blockchain.
“Bitcoin is the native cryptocurrency of the Bitcoin blockchain, just as Ethereum is the native currency on the Ethereum blockchain,” Brook explains.
There are no governing or regulatory bodies that control cryptocurrency, or police it from fraud (this is handled by the blockchain). Because cryptocurrencies aren’t tied to any government, they can be used anywhere, with no regard for foreign exchange rates, or any of the hassle that comes with transacting internationally with cash. There are many cryptos at play right now, the most popular being Bitcoin, followed by Ethereum.
The math and cryptography behind blockchain and cryptos is fiendishly complex. But marketers don’t necessarily need to understand the particulars here.
“You don’t need to know exactly how it works. Just like very few marketers know that SMTP makes your email work. All you need to know is that [email] is better than faxing,” Epstein says. “If you’re a marketer… you need to be focused on the implications of [blockchain].”
Of course, not everyone is thrilled about the prospect of widespread use of decentralized digital currency.
“Existing systems like the Federal Reserve are terrified of non-fiat, democratized currency because they wouldn’t be able to control interest rates and inflation, not to mention sales tax at state levels. Will [cryptocurrency] go mainstream? Yes, but not quietly, and not without conflict,” says Trey Stout, CTO and co-founder of Handwriting.io and ScribbleChat.
Governments and banks are already outlining plans to regulate blockchain, though those efforts may end up about as effective as governments and media company’s attempts to tamp down on internet piracy.
It may take five years. It may take 30 years. Blockchain is coming as surely as winter in Westeros. Japan already recognizes digital currencies in much the same way that it does physical currency, and more, and more legitimate, businesses are accepting bitcoin all the time. The cryptos themselves continue to proliferate, a digital gold rush of sorts — a trend the co-founder of ethereum came out against recently.
For now, marketers should closely watch the progression of cryptocurrency and blockchain. Experiment with smart contracts, and other blockchain technology. Introduce blockchain into the regular marketing technology stack.
“Step one is find out how can you use blockchain technology to do what you’re doing better. Step two is where you get to the world where blockchain is everything and is everywhere,” Epstein says. “These new currencies are designed to influence the way blockchain is used by the end user. It comes down to how you want people to use the new internet,” Brook says.