Understanding Blockchain – What It Is & How It Can Positively Impact Our Economic & Social Environment

Before we can begin a discussion on the implications of Blockchain for digital media, it’s of foremost importance to establish what Blockchain actually is.

It was first conceptualised by Satoshi Nakamoto in 2008, with the initial focus on providing a solution to the problem of double spending in cryptocurrency. Satoshi Nakamoto released version 0.1 of Bitcoin software on 9 January 2009. Blockchain was created to ensure transparent, write-once history of every unit of currency. In very simple terms, Blockchain is a distributed ledger – a scattered database that is used to maintain a constantly growing set of records, called ‘blocks’.

Because each block contains a timestamp and a link to the previous block, they are inherently resistant to external modification. Recorded data in any block cannot be modified at a later date and requires the complicity of the network majority. It therefore provides a transparent and publicly available ledger of value exchanges in a secure and unchangeable environment.

The Impact of Blockchain

It might be surprising to imagine but potentially the next driver of huge change on a global scale isn’t social media, big data or even AI but could indeed be Blockchain. The Blockchain can potentially remove the need the middle-men that exist in our current system of commerce and finance. That means moving away from banks and governments facilitating trade and instead using a de-centralised, transparent, autonomous system for exchanging value.

Imagine a world where everything of value can, and likely will, be exchanged in a digital format. The central banks will look to the e-currency experience to create central bank backed assets and in terms of enterprise simple processes like supply chains can be recorded in the Blockchain – items can be tagged and followed through the supply feed, creating a fully traceable product. This applies to anything from digital payments to coffee beans making their way to the final coffee maker.

Blockchain allows for positive change, particularly to those less well served by current economic structures. For example, people who currently send cross country payments will see a drastic reduction in the cost of processing that transaction through the use of e-currencies, underpinned by Blockchain. If you look at land titles, this is another area where Blockchain can supply an immutable record of trade. Most recently, with the earthquake in Haiti, an entire nation saw most, if not all of the country’s land titles wiped out, because they were held in records in only one building.

Blockchain can meaningfully change identity too. Imagine all the refugees who want to register their identity but can’t. Blockchain could provide their route to sanctioned identification.

What Does Blockchain Mean for the Digital Advertising Industry?

Because Blockchain allows this transparent and publicly available ledger, it provides a solution to some of the biggest challenges in digital marketing currently – ad fraud, malware, bot traffic and ultimately transparency of the trade.

In July, Dennis released news that Google’s Digital News Initiative had granted them $182,000 to create an SSP (supply side platform) prototype that operates using Blockchain. The goal is to root out any potential fee-skimming within digital ad transactions so publishers and buyers can see exactly where the money is going. The scheme also has the backing of five other publishers including the Guardian, Financial Times, CNN International, Reuters and Mansueto — all members of the programmatic ad alliance Pangaea.

Publishers have grappled with the bitter reality that for every £1 advertisers spend programmatically, only a small proportion gets to the publisher — in some cases just 30p. Data suppliers somewhere within the digital ad transaction process eat up the rest. Creating an SSP that uses Blockchain and thereby builds a transparent environment for trading should enable publishers a clearer view of the supply chain, almost like an itemised bill of who paid what and when, eliminating any black holes.

The Development of Blockchain for Digital Advertising

adChain is an example of a company specifically looking to close in on the Blockchain opportunity for the purpose of improving digital advertising fraud. Through the creation of the adChain registry they are making strides in building a forum in which the digital ad industry can collectively define what fraud is and where to draw the line. This is currently done through a process of adTokens which relies on the Ethereum-based Blockchain to work. The adToken (ADT) incentivises people to determine how reputable a publisher is and therefore whether that publisher should be whitelisted. This helps brands decide which publishers they should spend their money on.

BAT or Basic Attention Token is another example of this new value exchange. Built by the team who co-founded Mozilla and Firefox, you can use BAT to acquire various advertising and attention-based services on the Brave browser platform. The Brave browser anonymously monitors user attention, then rewards publishers accordingly with BATs. Advertisers consequently benefit from higher ROI, better targeting, and reduced fraud.

Another area to benefit from Blockchain is ad buying. Later this year the New York Interactive Advertising Exchange will launch – allowing brands, agencies and publishers to buy and sell inventory on a futures basis – in partnership with Nasdaq.

But there are a few issues with Blockchain in its current format. Firstly, like most things in digital, for them to become useful they require significant adoption. Blockchain is reliant on multiple players and if people aren’t using it, there is no functioning value. We’ve seen this a few times in recent ad tech history – where there is tech available to measure something but there is a time lag to uptake. Secondly, Ethereum-based Blockchain doesn’t currently have the bandwidth to support the scale of the ad industry at large. Currently an Ethereum-based Blockchain can process transactions at a rate of 20 per second, which is significantly behind the speed of real-time bidding.

Blockchain’s Future in Digital

In my opinion, overall, it looks like Blockchain can and will change the way we plan, buy and sell advertising space in the future and for the better. Blockchain will bring a much-needed fresh view on the advertising industry, hopefully cleaning up its image for backhanders and fake quality. I am excited by the potential and think it can only help the client-agency relationship by clarifying roles and steering those agencies with forward-facing experience and knowledge into the limelight.

What are your thoughts on Blockchain? How do you think these developments will change the way digital advertising operates? Let us know in the comments below.