Blockchain has captured the attention of digital marketers across the globe. But what is Blockchain? Blockchain today has been likened to the early days of the Internet; nobody fully understands how it will evolve, but it is a technology with ability alter our lives.
If the Internet helped mobilise information, Blockchain is helping to build trust and alter the way we exchange value between us.
History of Blockchain
The origins of Blockchain are from Satoshi Nakamoto’s seminal paper from 2009, where this mysterious figure outlined a vision for a decentralised digital currency monitored by cryptographic algorithms and peer to peer network of computers. This currency, known as Bitcoin, grew in popularity over last ten years to the point that one Bitcoin worth $1 in April 2011 reached a peak of $17,900 in December 2017.
Although the long term future of Bitcoin is unpredictable, the underlying technology behind is undeniably set to alter our lives. The glue that holds Bitcoin together is Blockchain.
Blockchains are essentially long sequences of unalterable code that store information much in the same a ledger does. The validity of any information on a Blockchain is checked by a peer-to-peer network of computers all running cryptographic algorithms.
One of the great innovations in the Blockchain community was the development of ‘smart contracts’ through a currency known as Ethereum. These smart contracts are able to encode bite size computer programs into the blockchain, representing things such as loans and bonds.
Today there are innumerable startups looking to unlock the potential of Blockchain. This innovation is also happening in the field of marketing and advertising, with Blockchain powered software and browsers looking to subvert major advertising distributors such as Google and Bing.
Explanation of Blockchain
Blockchain can be compared to a spreadsheet simultaneously shared across multiple computers. What makes Blockchain unique is that it uses cryptographic algorithms to check the validity of information being inputted. This verification process is repeated on all computers on the peer to peer network.
It is similar, say, to a wedding. Traditional marriages typically involve some third party to witness the union. A highly respected member of the community, such as a priest, would oversee the ceremony. Anybody who wanted to contest that the two were not married would have to put their word against that of the institution or the priest. Having family and friends attend also added to the validity of the occasion.
If we take the analogy of a wedding, we can compare the peer-to-peer network to everyone in attendance. However, instead of a priest, we have a digital transparent ledger that can be referred to by anyone and can never be altered.
In this way, Blockchain allows us to verify the validity of an interaction without requiring a third party of mutually trusted institution. In this way, Blockchain is completely decentralised and impervious to issues such as corruption.
But how does this relate to the web and specifically to digital marketing?
Before this system, there was no way to effectively verify ownership of digital assets, especially copies of digital assets. Digital money, for example, was impractical as users could simple copy a coin a thousand times and make themselves rich. Likewise, pirates could copy digital files and no-one would be able to tell which was the original.
Blockchain is the solution to this, it allows us to stamp our digital assets. As you can imagine, the ramifications of this could be remarkable.