Bitcoin has hit a new record high after passing the five-figure mark and investors in the cryptocurrency continue to shrug off warnings that the bubble is about to burst. It is now worth more than seven times an ounce of gold – pretty impressive for something that started the year at $1,000 (and people said that was high). It is unsurprising therefore that the majority of us know about Bitcoin, even if we’re not 100% sure what the whole cryptocurrency thing is about.
However, many of us are stumped when it comes to blockchain, the technology that sits behind Bitcoin. It is defined as: “… 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”.
In other words it’s a new way of storing data. And the reason that many people, particularly in the finance and insurance industries, are getting excited is that it is significantly more secure than existing databases.
This is because blockchain is a distributed database which means that it exists on multiple devices and servers around the world. Each transaction is timestamped, then verified by multiple users, and then encrypted. Consequently there is no one entity in charge of it. Once encrypted, any data put into the blockchain can only be changed if all the stakeholders agree and any changes made are registered.
This makes hacking incredibly difficult. The very fact that blockchain is self-auditing means that breaches can be detected before they become large scale problems. These are the reasons that blockchain is being hailed as a secure, verifiable and highly transparent platform.
So what has this got to do with marketers? Quite a lot actually. And apologies in advance, but I have to mention the impact of the now infamous and ubiquitous GDPR. As everyone knows, next May privacy becomes even more of a business priority. Firms have a greater legislative responsibility to protect their customers’ personal information and are required by law to report any data breach within 48 hours.
Blockchain provides a tamper proof way to share and store personal information which means it will enable businesses of all kinds to build in layers of increased data security. To date there have been no serious blockchain hacks, illustrating the attractiveness of the technology.
GDPR is also concerned with consumer consent and blockchain is already being looked at by progressive marketers as an effective way to process information, including managing customer permissions and providing a way to process huge amounts of data in an anonymised and compliant manner.
But it isn’t just about safeguarding privacy. It has innumerable other applications relevant to marketing – such as supply chain transparency, superior ad serving, identity verification and more powerful loyalty schemes (such as www.loyyal.com) to name but a few.
Maybe 2018 won’t be the year that blockchain goes marketing mainstream, but, certainly within five years, marketing managers will be adding blockchain to their resumes. Get ahead of the curve while you can.
Stuart Broughton is managing director of Rubicon Insight