Blockchain: What Is It and Why Should Marketers Care?
Blockchain is a buzzword I think you ought to listen to. It’s more than just Bitcoin or Cryptocurrency (crypto)—it’s a platform.
But first, here are three concepts to keep in mind that will make blockchain easier to understand:
- Decouple the concept of blockchain from crypto. Think of Bitcoin as the first blockchain Use Case.
- Focus on the high-level. Don’t get caught up in the technical. I’ll provide a list of links to Primers if you want to take a deep dive.
- Suspend the questioning of how. Let's stick with the question of what.
Blockchain and crypto are intrinsically linked. Initially, the idea of a blockchain was modeled by a mysterious entity called Satoshi Nakamoto. He/She/They engineered blockchain to decentralize currency (Side note: no one knows the identity of Satoshi Nakamoto, author of the Bitcoin white paper. Some speculate it's a group and not an individual).
While cryptocurrency runs on blockchain technology, blockchain is greater than crypto alone. Over the next 5 years, blockchain implementations will make way into all industries in some shape or form. Its superpower lies in five key concepts:
- Distributed Ledger - Basically the opposite of a centralized database. The ledger spans across a massive number of nodes. No single location can be compromised (that's the theory anyway).
- Hash/Security - How the data is encrypted, verified, and found.
- Consensus Protocols - The act of processing complex cryptographic puzzles (sometimes called mining or the work). This is how data is added to the blockchain (find a deeper dive of this here).
- Immutability - Once the data is added to a blockchain ledger, it's essentially etched in stone. It can never be modified. This is due to the use of Consensus Protocols and Hashing (find a deeper dive of this here).
- Smart Contracts - Code which runs in response to external messages. Based on the messages and data, the smart contract requests a new block be added to the blockchain and those changes need to be agreed upon by the network via Consensus Protocols (find a deeper dive of this here).
How does this apply to marketers? Satoshi Nakamoto's release of the Bitcoin code into the wild kicked “digital darwinism” into full effect. The result is hundreds of derivatives. Not the least of which being Ethereum. Due to Ethereum's ability to leverage "smart contracts," it will be a popular choice for blockchain initiatives for the foreseeable future.
AdLedger—a consortium made up of companies including IBM, Salon, ComScore, and Publis—chose Ethereum as the blockchain technology to develop their Ad-delivery platform on. Claiming $9B/year in Ad fraud, they claim to have developed a blockchain based solution not only to combat fraud, but also to increase overall privacy.
From AdLedger’s Website:
"AdLedger is an Ethereum-based system to disrupt online advertising. It allows advertisers to enter their budget into a smart contract, where they will be matched with with publishers with relevant content. We have proven fraud-prevention technology, and algorithms to target ads based on context, geolocation, time, etc…
MISSION -Essentially, we replace ad networks with smart contracts. This provides greater transparency, verifiability, and much lower fees. We estimate that we can slash the fee from 60% to 5%, making our technology more appealing both for advertisers and publishers." https://adledger.org/
AdLedger and others leveraging its technology like Mad Network have much to overcome and prove. They are making super bold claims out of the gates and trying to solve some heavy duty problems. Given the lack of maturity in the technology, they could be setting themselves up for failure or more likely, disappointment. Putting aside technical issues of throughput, the challenges any new technology faces with adoption in legacy industry are substantial. Advertising and marketing are large ships that will take some time and a good deal of energy to redirect. Their claims about fraud protection and privacy are bold and a little premature. Don't mistake my criticism for a lack of enthusiasm. Just the opposite, I am a full on believer. With deep experience in disruption, I know it's always better to under promise and over deliver—not the opposite.
AdLeger is more of a proof of concept at the moment. In the digital world, first movers are rarely the ones to own the space. Facebook was not the first social network, Google was not the first search engine, Apple was not the first computer/entertainment/mobile company, Netflix was not the first online movie company, and Amazon was not the first online seller.
Digital advertising and marketing technology are in a constant state of evolution. So, what to do? In my opinion, blockchain will be a central part of the standard marketing ecosystem stack in two to three years. The hype will ebb and flow. In fact, when it does become ubiquitous it will be transparent to most users just as the flavor of database—be it Oracle, MySql, or others—is irrelevant to end users of any given site. What's important are the experiences and features it enables. What blockchain will ultimately enable is likely unknown to some extent other than the themes of greater accountability and security. The most impactful disruptors are probably in a garage somewhere right now.
Prepare to jump in.
More on Primers:
Satoshi Nakamoto on Wikipedia
Blockchain Primer by Deloitte here