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Blockchain technology is making waves. By now, most of us will have heard of it one way or another, but most of us aren’t exactly clear on what it is or how it works, let alone why it’s having the impact that it’s having. Blockchain technology isn’t as complicated as it seems, but it’s new, and it’s different, challenging the way we have previously thought about data storage and distribution.
Before we can implement its benefits, we need to fully understand what blockchain is all about, how it works, and how we can use it to our advantage.
What is Blockchain?
On the face of it, blockchain seems a lot more complicated than it actually is. In fact, the blockchain concept is quite simply an enormous database of sorts. Blockchain, also referred to as Distributed Ledger Technology (DLT) and is unique in that it creates a history of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing.
To get the best picture, it’s key to understand what a database actually is. Many of us know what a database is, but it’s one of those terms we take for granted, so here’s an excuse to get better acquainted with a database.
Understanding Databases
A database is a collection of information – data – that is stored electronically. The information in databases is normally structured in a table format to allow for easy filtering and searching, thus providing a clearer overview of the data as needed.
How does that differ from, say, me using an Excel spreadsheet to organize something? Spreadsheets, like you, would use for a basic budget or plan, for example, tend to be designed for use by at most a small group of people. This makes them useful for collecting, storing, and using data gathered by departmental teams or individuals.
On the other hand, a database deals with significantly larger data sets, dealing with massive loads of information. This is one of the reasons they’re often housed on specific servers built on powerful computers – it takes a lot of space and power to access, filter, and use the data contained in these databases.
Understanding Blockchain
Now, what’s up with blockchain? How is it different from a regular database?
The key difference is in the way blockchain databases store their data. A blockchain’s data is stored together in groups – also called ‘blocks’. Each block has a certain capacity limit and when they’re full, they then link to another block and form a chain of data, thus the name ‘blockchain’.
Unlike the database, where data is stored in tables, blockchain structures its data in blocks – this means that all blockchains are databases but not all databases are blockchains if that makes sense. The way that blockchains are structured also means that there’s a clear and irreversible timeline of when the data comes in – when a block is filled, it is ‘set in stone’ and is locked into this timeline, complete with a timestamp. This makes it incredibly easy to track the data’s journey and keeps the data unadulterated and secure.
If you’re looking for an easy way to picture how blockchain works, think of a Google Doc. When it’s created and its shared with a group of people, the document is shared – distributed – instead of copied. This creates a decentralized distribution chain that gives everyone access to the Google Doc simultaneously – no one is locked out while waiting for changes, but all document modifications are being recorded and can be tracked and traced. This is very simplistic analogy, of course, but it’s a good place to get started.
How is Blockchain Used?
Blockchain technology can be used for a variety of purposes, from providing financial services to administering voting systems, but to give you a basic idea:
- Cryptocurrency
- Banking
- Asset Transfers
- Smart Contracts
- Supply Chain Monitoring
- Voting
What’s the connection between Blockchain and Digital Marketing?
Blockchain is relatively new, but it’s already making a big impact on digital marketing. Most people who have heard of blockchain may associate it primarily with cryptocurrencies like Bitcoin. For digital marketing, it provides transparency, security, and accessibility of monetary and data flows. It can benefit not only the business, but the consumer as well – allowing for improved monetary outflow for businesses on digital campaigns, and direct ownership of data.
Data is what drives the markets, a new currency, if you will, that fuels businesses with information and insight into consumer behaviour.
The Impact of Data-Privacy Awareness
Since the increased awareness about data privacy and the scandals that sprung out of previously relaxed attitudes, restrictions and regulations on data storage, use, and sharing have become stricter. It’s no surprise, therefore, that we are now seeing the exodus of third-party cookies and the IOS 14.5 update. The further we go down this path, the more innovative digital marketers have had to become.
Blockchain technology potentially gives control back to data owners targeting digital advertising. This creates a direct data exchange between consumers and brands, resulting in better transparency and improved trust.
How can Blockchain benefit Digital?
1. Improves Digital Marketing & Advertising Campaigns
Due to blockchain’s ability to link merchants directly with marketers and providing transparent data insights, eliminating the need for a liaison. Data from digital advertising can be difficult to interpret – and can sometimes be inaccurate – making improvement difficult. Being more in touch with campaign data is one of the advantages of blockchain – monitoring campaigns in real-time is achievable with blockchain. This is one of the reasons why we’re seeing big brand names like Unilever applying blockchain to improve their digital advertising efficiently.
2. Boosts Transparency
In digital advertising, it can be tricky to know if the metrics you gain are actual people or bots that are skewing your results. Research is now showing that bots have cost companies more than 7billion USD in 2016. With blockchain, there is a clear, transparent chain, encrypted within the digital ledger system. As a result, the transparency is inviolable for every piece of data moving through the data flow chain. This will save organizations a lot of money by making sure that their ads are actually reaching their targeted audience, thus assuring that companies are getting what they paid for.
3. Generates Trust & Credibility
Businesses prefer blockchain because it enhances the security of data and information, providing increased protection. Similarly, shared data is more easily verified and tracked, allowing for an increase in trust between parties. Small businesses, in particular, is finding it incredibly useful to use blockchain to build trust because it allows them to prove where their products are coming from and forge a willingness to be open with their customers.
4. Prevents Fraud
Blockchain can be used to authorize and record authenticated digital outlets, thus preventing any fraudulent access. With the increased transparency and tracking ability, it’s easy to ensure that only those who should have access are allowed in. It’s one of the reasons why brands like Toyota have been using blockchain specifically for this purpose, and are seeing a 21% improvement in website visitor traffic already.
5. Improves Content Monetization
As we’ve said many times before, content is at the heart of digital marketing, and a solid content marketing strategy is vital to promoting products and services. Through blockchain, consumers, bloggers, and streamers can be rewarded directly rather than through third-party content platforms
Future Outlook of Blockchain
Blockchain is already making a big impact, but what is clear is that it is slowly and steadily changing the digital world. There is a shift of power, digital privacy and data protection awareness is driving a change, and blockchain is part of this change.
Some reports estimate that blockchain solutions will grow from 1.5 billion (2016) to nearly 16 billion in 2023. Every industry can see a use and a benefit in blockchain technology; the financial sector alone has already shown a 60% growth in 2018.
Wrapping Up
Blockchain is a fascinating new technology that is changing the way we store and work with data. It is going to keep making waves and impact the digital scene for years to come, and it’s important that we stay on top of the changes it creates in its wake and the opportunity it presents.
If you’re keen to find out how you can use blockchain technology to benefit your business, you can always get in touch with us. We stand ready to help you navigate the changes and the opportunities and make sure your business excels.
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