For digital marketing — from ad tech and agencies to the entire ecosystem — initial blockchain conversations should center on application and readiness. For example, how do we use
these new solutions to help publishers, agencies, advertisers, and consumers? Is my organization actually ready to green-light a multimillion-dollar blockchain initiative?
Here’s
my answer, mid-2018: I’m a blockchain proponent but I also believe that digital marketing must focus on solutions that leverage only the best elements of distributed-ledger tech.
The promise of blockchain — a way to bring consumers, publishers, and the middle players together in powerful, transparent and dignified ways
— that’s real. But making sure the tools we develop truly include the strongest and most important features of the tech … that’s the part I’m watching, because
there’s the potential for some quality-drift out there in the blockchain space.
Back to Bitcoin
The first successful public ledger in the
blockchain space that we know of was built to support bitcoin, the cryptocurrency that put distributed-ledger on the map. Every blockchain solution aside from bitcoin sacrifices at least one key
element of the security, decentralization, consensus rules, and/or incentive structure that bitcoin includes. This is why it’s the foundation to which we need to turn.
Even
today, this iteration is the most robust and assured we’ve ever had — a public blockchain of transactions with ownership assigned by cryptographic proofs acting as a store of value
for billions of U.S. dollars. These transactions are validated by a peer-to-peer network, using consensus rules for what constitutes a valid transfer between participants.
Bitcoin does not require permission to participate, and transaction blocks are signed by a dynamically adjusting proof-of-work which is performed by “miners.” Key to
bitcoin’s success, these miners — rewarded with monetary incentives to follow the rules — invest large amounts of up-front capital toward specialized computers, and the electrical
costs of running them, to perform this work.
The bitcoin foundation is the one on which we should base our industry’s work, and we can’t ignore the numerous
failures we’ve seen over the last nine years of bitcoin’s existence. Recent advents show that second- and third-layer solutions built on bitcoin can serve the protocol well, however. For
instance, earlier this year RSK launched a smart-contract platform which offers
the same security as bitcoin in terms of double-spend prevention and settlement finality but that also allows organizations to experiment with new features.
Due
Diligence
As we look to potentially use blockchain to run what’s expected to become a $215 billion global mobile-advertising industry, we must apply the same level of skepticism we would for any significant in-house development effort. Make
certain you incorporate the following steps into your process.
- Be sure the solutions you green-light do not sacrifice security in the name of
transparency.
- Don’t sacrifice decentralization — and the robustness it brings — for control (and the attack surface it
brings).
- Don’t substitute proven consensus mechanisms for unproven theoretic solutions.
- Many
proposals won’t even pass first-blush review for scaling into the future: are you sure you want to dedicate time, resources, and money to build upon an unproven foundation?
- Lastly, be sure that you can answer this question: Is the problem you are solving really in need of all the characteristics bitcoin brings? If not, you likely don’t
need a blockchain at all and are accepting huge technical inefficiencies by doing so.
Finally, yes, digital advertising can introduce blockchain
to reduce discrepancies in ways that that have never been available to all participants in the ecosystem before — but it’d be a missed opportunity if our industry simply settles for
efficiencies around media-buying settlement steps, for
example, when the big picture — serving consumers and all our industry stakeholders in more powerful ways — is right in front of us.
Bitcoin has opened up an
entirely new way of transacting. It is still early days for the technology, and there is a huge opportunity in front of us to build a more trustworthy ecosystem of transactions.