Even if we haven’t dabbled, we all heard about Bitcoin. Of course we do – it’s pretty much indisputable that it’s the most famous cryptocurrency in the world. I have a few Bitcoins in my digital wallet, which I use primarily to tip a few online musicians and artists that I like, but I know people who make a lot more use out of Bitcoin than I do.
I also know plenty of people who steer clear of such a potentially volatile investment completely – either through sheer ignorance of exactly what Bitcoin is and how it works, or through a considered refusal of the risks inherently involved with investing in a digital currency. However, one thing’s for sure – everyone’s heard of Bitcoin.
Slightly less famous (as these things tend to be) is the technology behind Bitcoin – Blockchain. Put very simply, Blockchain’s key function is to serve as the public ledger for all Bitcoin transactions. Let’s turn to Investopedia for a proper definition:
A blockchain is a public ledger of all Bitcoin transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. Each node (computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions) gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network. The blockchain has complete information about the addresses and their balances right from the genesis block to the most recently completed block.
Hmm, it all sounds a bit complicated – so let’s break that definition down into simple English. Blockchains act as proofs of Bitcoin transactions. Blocks are created each time transactions complete, and then go into the permanent database of the blockchain. With the completion of each block, a new block is then created for any new set of transactions. All blocks are linked together (like a chain) and each block contains a hash of the previous block, so there’s a trail that can always be followed right back to the original block.
What’s important to note is that Blockchain is a distributed database, which means that it exists on multiple devices and servers around the world. Each transaction is timestamped, verified by multiple users, and then encrypted, making it an extremely secure system, even though (or arguably because), unlike a bank, there’s no central computer, financial institution, government or single party in control of it. Indeed, to this extent, Blockchain is considered revolutionary.
Blockchain beyond finance
I know what you’re thinking – why is any of this important to marketers? Well, first we need to get our heads around the fact that, although currently Blockchain is primarily being used for Bitcoin and other financial purposes, this by no means is indicative of the technology’s limits.
Blockchain’s strength is in its ability to keep safe record of reams of digital information – hence it’s the perfect solution for digital currencies. However, there is no end of data – and particularly sensitive data – that could potentially be (and is already) stored on a blockchain: licences, medical records, birth and death certificates, insurance policies, etc., etc., etc.
Indeed, it’s looking more and more likely that Blockchain is going to become more and more ubiquitous in the digital world. In an article for Breaking News, Gina Chon reviews a new book entitled Blockchain Revolution:
“A new book about the technology behind bitcoin refreshingly looks at possibilities beyond currency and finance. “Blockchain Revolution” shows the versatility of the distributed-ledger concept – essentially, a database kept complete and accurate thanks to cross-checking by a network of computer users – from improving democratic processes through more secure voting to making humanitarian aid more effective.”
It’s important for marketers to be ‘in the know’ about blockchain
This is a good question and I’m pleased to be given the opportunity to answer it. Whilst presently marketers can get away with only a limited understanding – or indeed no real understanding at all – of Blockchain, this collective ignorance will not be sustainable in the not-too-distant future.
Privacy and authenticity are becoming an ever-more important factors in all digital transactions, and if you’re selling goods or services online, then you’ll increasingly need to be finding ways to prove to your customers that you’re safe to do business with. Indeed, with the EU’s General Data Protection Regulation (GDPR) coming into effect over the next couple of years, data privacy is going to quickly turn into a top priority for online businesses around the globe – and Blockchain is one of the means that you may begin to layer in added security to all online transactions.
But, what’s perhaps more important in marketing terms is transparency. Recent outrages such as the horse meat scandal in the UK has brought more pressure from consumers who want to know more about where the goods that they consume come from, and the humanitarian and environmental impact that the production of these goods have had. Indeed, historically, as Leonardo Bonanni, Founder of Sourcemap, puts it:
Without understanding the impacts of goods and services, we buy into systems that deplete natural resources, worsen environmental and social problems and endanger humans and ecosystems. Supply chains are conventionally held secret, limiting the stakeholders who can prevent environmental, social and health and safety problems.
30% of consumers in the UK, for instance, express concern about the issues regarding the provenance of the goods and foods that they buy – yet struggle to transpose these concerns into meaningful purchasing decisions, largely because the information isn’t there. This simply won’t be good enough in the future, and indeed there’re organizations that are using Blockchain to tackle these issues right now.
One such is Project Provenance that is currently experimenting with Blockchain technology “to enable secure traceability of certifications and other salient information in supply chains. Provenance enables every physical product to come with a digital ‘passport’ that proves authenticity (Is this product what it claims to be?) and origin (Where does this product come from?), creating an auditable record of the journey behind all physical products.”
The potential of this initiative – for businesses, consumers, society in general, and the global environment – “is hard to overstate”, as a whitepaper found on the Project Provenance website puts it: “preventing the selling of fake goods, as well as the problem of ‘double spending’ of certifications present in current systems.”
The future of marketing
At the moment, an open and transparent supply chain is a competitive advantage – but it’s one that more and more businesses are cottoning on to. And this means that eventually, as a marketer, you’re going to have to prove your business is acting responsibly with minimal environmental impact and sustainable manufacturing.
What’s more, privacy is becoming an increasingly important factor for consumers and Blockchain can provide the goods here, as well as on the traceability of all products.
These things are of course all currently in the experimental phase, and so whilst it’s not imperative that all marketers become immediately literate in new Blockchain technology, it’s nonetheless essential that you begin your education now ready for the market shifts in the near future.
What else should marketers be aware of in the realms of Blockchain? Please share your thoughts and guidance in the comments below.