Blockchain is one of the most important innovations hitting the world today, and it's having a profound effect on multiple industries. The global blockchain marketplace is booming in value and is expected to grow from over $240 million in 2016 to an incredible $7.7 billion by 2022.
But what is blockchain really, and how is it slated to change everything we know about transactions and record keeping?
What is Blockchain?
Blockchain is a complicated process, which is likely only going to be deeply understood by a handful of technical experts. However, just like the advent of personal computers, the technology is quickly becoming accessible and usable by the general public.
Blockchain was originally developed to manage digital currencies like Bitcoin, but since then it has been applied to many other sectors beyond just financial. Any business can use blockchain technology to facilitate, authorize, and record the exchange of value such as a service, product, money, or information. It has often been called a public, digital ledger, and with that function in mind, here’s how it works:
- Blockchain is composed of a network of users who have access to previous records, which are refreshed as new transactions happen
- Once a transaction is initiated it is recorded as a "block" with massive amounts of data attributed to it that are public and easily verifiable
- That block is sent through the peer-to-peer network to be validated and accepted
- Now approved, the block is added to the "chain" of other blocks. Once this happens, the block cannot be altered or deleted, and no blocks can be inserted before it. The chain is permanent, and its sequence cannot be interrupted without significant computing power and hours in hacking – as the network of users grows, this feat will become even more impossible
- After being added to the block, the value exchange is processed
Each transaction essentially "updates" the entire ledger, so that the chain is continuously being recreated. The ledger is refreshed on each device that requires it, and all the information is shared and readily accessible via a collective database. Because it is decentralized, the information is resistant to hacking or corruption while also being highly accessible.
Who Uses Blockchain?
Governments, corporations, banks, and pretty much any business can use (and are using) blockchain for financial transactions and record keeping.
IBM is using blockchain for employee compensation, Oracle is using it for cloud storage, and Walmart will be using it to track supply-chain and delivery information and activities. These are just a few of many examples of how larger companies are using the technology.
Other real-world examples include:
- Land Ownership – Both Georgia and Sweden are in the midst of developing land registry records systems.
- Welfare Payments – The UK is using blockchain as a means to record and distribute welfare and pension payments in the interest of lowering the risk and occurrence of benefit fraud as well as the registration of assets.
- Public Archives – Delaware is using the technology to store corporate and government data on blockchain ledgers so that they are more accessible to both employees and the public in the interest of accountability.
Incorporating Blockchain into Marketing Activities
While blockchain’s initial purpose was for financial transactions (i.e., Bitcoin dealings), there are plenty of other applications. Digital marketers are interested in this technology to maintain a competitive edge. There are a few ways blockchain can help marketers such as:
- Cloud Storage – Storing vast amounts of data that is accessible across devices and locations
- Smart Contracts – Facilitating the process, authenticating information, and enforcing the terms
- Fraud Detection and Prevention – Identifying users and validating goods to be exchanged
- Data Collection for Online Marketing – Verifying then translating data input by clients from a variety of sources
- Data Control – Storing client data in a manageable and private way, and organizing customer information to ease targeted ad creation
Since blockchain operates on the basis of all information being transparent and verified by it users, companies can acquire data via markets that are authenticated and public, meaning that the "privacy" issue that has been facing major companies of late will not be a factor. Once marketers understand how to implement the technology in their data collection and usage systems, clients can be reassured that their data, money, and products are safely managed. Using blockchain means complying with their mandate of transparency and accountability, so committing to these values will become a competitive advantage that your customers will appreciate.
Blockchain symbolizes innovation, and that's precisely why organizations using it will have a leg-up. It's important that business people in all sectors have a grasp on what it is and why it's important because it will undoubtedly be a key component of our future lives.
Key Benefits of Blockchain for Businesses
The uses of blockchain in business processes and transactions are quite vast, but here are a few key areas that marketing businesses will want to bear in mind as they consider the integration of this fascinating technology.
Increased Transparency & Accountability
Since blockchain records are public, anyone can gain access not only to the records themselves, but can easily find out how information is being handled. Corporations who choose to use the technology for record keeping are sending a message to the public and shareholders that they are choosing to be transparent. Clients that you target for marketing purposes will know that your privacy policies are not just words on a page, but a deep commitment to corporate social responsibility.
Better Value Verification
As blockchain allows the public to verify huge amounts of data at once, this can serve well for the kind of information that businesses can provide to customers. For instance, when it comes to brand name luxury products or even auctioned art, customers won’t have only the promotional materials to judge but will be able to verify a true record of the legitimacy and value for the item in question.
More Accurate Data Collection & Ad Targeting
Especially crucial for marketers, blockchain allows companies the opportunity to collect massive amounts of consumer information data (via financial or other transactions) and store it all in one “place,” which creates a more significant opportunity for ad targeting. This ease will not only save companies a ton of time in market research activities, but it will also help them address consumer needs more accurately without bombarding them with irrelevant advertisements.
Decentralization Means Direct Dealings
Cutting out the “middleman” with records that are verifiable and public over time and space means that more people will (or at least should) have access to financial markets and more. For instance, it offers financing alternatives to millions around the world who are unbanked or underbanked.
But in the marketing world, it can have a significant impact on paid website advertisements, or pay per clicks, that currently must be verified by gatekeepers like the Google Display Network before becoming viable. As a marketer, your SEM efforts may be made seamless by blockchain technology.
Disadvantages and Risks of Using Blockchain
There are always risks when incorporating new technology, and to this extent, it may not be worth it for all businesses to “rush” into using blockchain just yet.
One of the biggest concerns people are expressing is that there is no real regulation for currency and transactions – which means that, in a volatile space there’s plenty of room for schemes and scams. It also should be noted that right now it is a rather slow and cumbersome process, a factor that is likely to improve into the future. So it may take some time until this system is streamlined and suited for your business needs.
Want to learn more about using blockchain for the growth of your company? Get in touch with one of our experts today!