‘Blockchain’ is a term that you have probably started to hear a lot more recently, especially with the emergence of Bitcoin and the attention this has got in the media. Predictions are that blockchain is going to have an impact on digital marketing, and therefore as digital marketers it’s something that we need to be aware of.
The Blockchain / Bitcoin myth starts with the name Satoshi Nakamoto, which is a pseudonym used by the unknown person or people who developed bitcoin, authored the bitcoin white paper in 2008 and deployed bitcoin’s original reference implementation. Blockchain was invented as a by-product of the invention of bitcoin as a way of technically solving the problem of double-spending with a digital only currency.
The problem of double-spending is that unless you have a trusted intermediary that validates transaction how can you be sure that a unit of value, when held digitally, isn’t just simply reproduced and spent again. By solving the problem of double-spending, blockchain allows the development of virtual / digital / crypto-currencies which do not rely on intermediaries. The same ‘proof of transaction/value’ that blockchain can provide however provides a powerful tool for the effective management of other digital value without the use of intermediaries.
The truth is that no one knows exactly who developed blockchain, but the fact is it’s here and initial signs certainly suggest it is here to stay.
There are a few definitions out there of ‘blockchain’, but this one from Don and Alex Tapscott, authors of Blockchain Revolution, summarise it as:
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
To put another way, picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet automatically. You now have a basic understanding of the blockchain.
Information held on a blockchain exists as a shared, and continually reconciled ledger of transactions. Academics refer to the technology as Distributed Ledge Technology or DLT as this is effectively what it is. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, it uses a distributed network model (see below) meaning the records it keeps are truly public and easily verifiable.
To understand blockchain and how it works it’s important to understand different network types:
Without going into the full technical details of the cryptography and also avoiding terms like mining there is something very important about the way the blockchain is formed.
Each new block contains a fingerprint of the last block in the chain. This fingerprint is used in the cryptography process and therefore impacts the way the data is recorded. The thing to remember about this is that if you wanted to change a single block, because it has this finger-print, you would also have to change all of the other previous blocks because by changing a block the fingerprint is changed each time. This means in simple terms that if you want to change a blockchain you have to overpower all of the other computers in the network that access this blockchain in order to then change every single previous block in order for your changed blockchain to reconcile across the network. In practical terms this isn’t possible and therefore it is assumed that the blockchain is UNCHANGEABLE once written.
Blockchain could bring a number of potentially positive changes for us as consumers:
For us as digital marketers the real question is what will be the impact of blockchain on digital marketing? There are a number of potential impacts and they could have benefits for businesses as well as consumers.
If you search for blockchain browsers there are a number of different things that will come up including:
However, we will cover what people will understand as a web browser that uses blockchain within its architecture, which is Brave. There is another close option which is the Android specific version of Opera, but that is not as interesting for our look forward.
Brave is a web browser in the traditional sense like Google Chrome, Microsoft Edge or Firefox, but it champions your privacy. The browser blocks unwanted ads which are run on many popular sites, streamlining your browsing experience and preventing trackers from recording your location, behaviour or other browsing activity. Crucially it uses blockchain as the technical foundation for a new way to monetise website content and advertising.
It’s trying to fix a number of problems that it has identified with the web including (and these are stats directly from Brave, so that should of course be noted):
It’s important to note that Brave still allows advertising, but it’s permissive, not compulsory. You can select which sites you allow to show you ads and this helps people to stay private and retain control of their data. Crucially people’s personal data resides on the individual’s own device and is NOT saved on a public blockchain!
If you want to give the Brave web browser a try, then you can download it for Windows and Mac.
There are some immediate impacts of the way Brave have used blockchain for your digital marketing.
The foundation principle for the Brave browser is to give the user the control of rewarding publishers for great content, without necessarily selling ads or implementing a pay wall. With the concentration of 73% of all digital marketing spend with just two companies publishers are struggling with declining revenues. Many content publishers have tried pay walls, for example the Times / Sunday time where they charge users a subscription fee to content. Others have tried by monetising through referral / affiliate schemes, such as Future Publishing. Basic Attention Tokens or BATs as they are referred to, are a new way of helping publishers of quality content monetise this.
The principle is that the user gets credits for using the Brave browser and can then choose how to allocate these credits to publishers they want to reward for great content. This can be done on a proportion of time that the user spend on a publisher’s website and / or one off tips can be given in BATs to sites that provide particularly helpful / good content. Users can also choose on a site by site basis which sites they will see the adverts for.
We think that the model is not complete in that it really requires an advertising system to allow the advertiser to set up and run campaigns with the payment being BATs to the users. There are some options that are open to the Brave team here and we are looking forward to more sophisticated options for the advertisers to drive the model and its revenue forward.
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While personal data is not stored on the blockchain by Brave the system is also founded on the protection of personal information. So much so in fact that when you open a private browsing window in Brave you benefit from your website page requests are bounced around three Tor servers thus anonymising your connection and location. All browsing history is saved on the local machine and if the user switches to DuckDuckGo or Quant as their search engine then no search data will be recorded by any third-party either.
If a visitor to your website is using Brave with just the default settings then they will not even appear in your Google Analytics data as a visitor. Therefore if there was large-scale adoption of this technology you could see a point where people would need to analyse log files in order to get an accurate picture of visitor numbers and pages that were viewed. For anyone who has been in digital marketing as long as I have and remembers log files – it's not a pretty way of looking at user activity on your website.
So, if Brave and blockchain is going to have the above impacts then what are we doing to do as digital marketers to overcome them and keep our efforts working? How can we stay ahead of the competition and even use its implementation as a way to gain competitive advantage?
Blockchain is not a fad, it’s going to change our world and it’s important to be aware of it. Awareness and taking the necessary steps can help you to gain a competitive advantage over your competitors.
Brave is just one application of blockchain that will impact digital marketing. We can see that decentralisation of control and direct payments will impact what we do as businesses online. We are going to be providing more in-depth information on these subjects in the future. Get in touch to ensure you are on the email newsletter so that you are alerted to the new content.
If you would like to find out more about how you can develop your own specific digital marketing approach to gain a competitive advantage from the changes blockchain is bringing, then please contact our team using the button below who will be happy to start a conversation.