You’re sure to have heard of blockchain, but understanding how blockchain works and how it can be used in your firm is the next step for financial firms. You may be thinking that ‘blockchain’, ‘cryptocurrency’ and ‘bitcoin’ are merely buzzwords, and their time in the spotlight has come and gone. However while specific cryptocurrencies, like bitcoin, have generally seen a fall in value, the technology behind it—blockchain—is still very much active and is set to cause a technological disruption (Inc, 2018). Over the years, the introduction of new technology has disrupted the way marketing has been done; TV made marketing visual, the internet made marketing faster, social media made it two-way and mobile made it location independent, with blockchain set to be the next technological disruptor within marketing.
We can already see blockchain starting to be used—in fact a group of banks based in Europe, including HSBC, announced that they completed their first live blockchain-based financial trade via their jointly developed we.trade platform. This effectively highlights that the technology is being adopted and used successfully with the intention of having it used in a more widespread, day-to-day capacity (Coindesk, 2018).
So what is blockchain? What’s the difference between bitcoin and blockchain, and how can it developed to market your firm in the future?
How Blockchain works:
Blockchain and cryptocurrencies are separate entities. Bitcoin, ethereum and lightcoin are all examples of cryptocurrencies, whereas blockchain is the technology that makes cryptocurrencies a possibility.
By breaking down how blockchain works into laymen’s terms, blockchain is to traditional digital transaction methods what Google Sheets is to Microsoft Word.
Microsoft Word is a centralised word processor, meaning that when sharing a Microsoft Word document it needs to be saved, sent to a recipient, edited, and then sent back to the original user. The problem with this is that the original user is locked out of the document until the recipient is done with it. Traditional banks work in a similar way when transferring currency; as the data that they hold is centralised, they briefly lock access during the transfer, update the information and then reopen access. While this process takes only a matter of seconds, advanced malware can hack into the system during this time—attacking data easily as it’s all in one place.
Google Sheets is a de-centralised word processor, which allows multiple users to access and edit the document at the same time, in real time. This means that there’s always 100% visibility on the document for all parties that have access to it. Information held on blockchain exists as a shared and continually updated database, meaning that there’s no centralised version of this information that exists for hackers to corrupt. As there is no ‘middleman’ step, blockchain has no single point of failure, and is not controlled by any single entity.
The technology broken down: A block is a record of new transactions (that could mean the location of cryptocurrency, or company data, or even client files). Once each block is completed it’s added to the chain, creating a chain of blocks: a blockchain (Medium, 2018).
I thought Blockchain could only be used for digital currencies?
Don and Alex Tapscott, authors of Blockchain Revolution (2016) state that: “Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value”. By breaking down how blockchain works, it isn’t restricted to only digital currencies—at the very base of the technology it’s a system that allows any digital information to be distributed and not copied.
This creates a platform whereby any information can be transferred securely—including client information and company marketing data.
How will it improve my firm’s marketing efforts?
Blockchain’s transparency creates trust for users—something all successful marketing is moving towards.
In the current marketing environment, transparency and trust are a top-priority for both clients and firms. This comes after the likes of the new EU GDPR and the Cambridge Analytica scandal, both of which highlight the importance of data protection, transparency of data usage and essentially the value of trust users have with corporations.
The integration of blockchain technology will improve various marketing processes exponentially, including:
1) Improving the integrity of delivery and targeting
Engagement and campaign performance will be measured and verified to ensure optimal delivery to the right audiences—specifically, those that want to be targeted. Individuals that have opted in will be identified as real people and not bots, strengthening the integrity of the entire delivery network while capturing more significant real-time data.
2) Sharpened client data security
Marketers today thrive on client data, but the global paradigm shift for more rigorous security standards will reshape the way client data can be used. This kind of data security will be necessary to impact the three primary drivers for marketing; client experience, business performance and ROI.
Blockchain will provide a new way to manage client data assets on the brand side, but it will also empower clients to manage their own data and identity. Tokens and transactional exchanges for value will gain widespread adoption, as brands will ‘pay’ and reward clients for committing their attention and providing more data related to their interests and preferences.
3) More accountable brands overall
Due to how blockchain works, it will be much more challenging for a brand to cover up any negative work practises since blockchain incentivises authenticity through a distributed network. In other words, it takes ten times more effort to fabricate data on the blockchain than it is to simply be a true and honest brand. As a result, only the best and most authentic brands will survive.
Now we know how blockchain works…
…It’s clear that the invention of this technology will be as disruptive for marketers as the internet was.
From what we know about it right now, blockchain won’t change the day-to-day duties of marketers, but it will create a much better platform and standard for marketers to work on.
While blockchain is an emerging technology to keep your eye on, it’s important to improve your marketing strategy before running into adopting any new tech. Talk to one of our account managers to see what we can do for you, including what our pay-as-you-go package entails.
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