Harnessing the Power of Blockchain to Transform Marketing and Communications
Blockchain could be as disruptive as the Internet. Are you ready?
By Stephen Dupont, APR, Vice President, Pocket Hercules
You’ve heard of Bitcoin, right?
Launched in 2009 by an anonymous user on the Internet, Bitcoin has become one of the world’s most recognized digital currencies. Backed by no government, this peer-to-peer cryptocurrency has risen in value from just pennies to more than $2,800 (as of June 8, 2017) each as users purchase items, anonymously, from each other, worldwide (the price of 1 ounce of pure gold, as of June 8, 2017, was $1,269).
Bitcoin is one of many cryptocurrencies that have emerged over the past five to ten years, including Litecoin, Ether (Ethereum), and others.
But perhaps more significant than cryptocurrencies is the technology that powers them. It’s called Blockchain, and it has business leaders in a number of industries, in particular, financial services, excited about how it could transform our economy.
What are the implications of Blockchain? To understand the technology, consider, that a dollar bill is essentially nothing more than a piece paper. Because people place value in it, however, the dollar represents a unit of trust that we can exchange for the things we need. Thus, we are paid in dollars in exchange for the work we provide for others.
Likewise, Bitcoin consists of blocks of encrypted code, which are placed in a ledger, where everyone can see the total number of existing Bitcoins at any one time (there are 21 million total Bitcoins). The value of Bitcoin is generated through the trust that people place in this currency.
Likewise, other types of value can be locked up in blocks of data, which can be made available to a network of people who, in turn, see all available assets within the block. For example, the person who created Bitcoin has said that of the 21 million total Bitcoin, 12.5 million have been “mined” through software programming. Everyone who owns Bitcoin can see the online ledger of the Bitcoins that have been successfully mined online as of today.
This ledger system is called a Blockchain. When everyone in a network agrees to the value of the asset behind the encrypted code, those blocks of data can be bought, sold, traded, exchanged, or gifted.
The opportunity for marketing and communications, as well as other fields, with Blockchain technology is huge, according to Paul Armstrong, an emerging technology advisor and strategist with HERE/FORTH, and author of ‘Disruptive Technologies: Understand, Evaluate, Respond’.
“It’s a foundational technology,” says Armstrong, “meaning other things can, will and are being built on and around it. The potential to reshape industries and the way things are done is pretty staggering once you get your head around the basic principles and move beyond Bitcoin.”
“Blockchain isn’t something you can really feel or touch,” Armstrong adds. “It needs a use case and a business problem to solve. I often refer to it as the least sexy but the most disruptive technology out there. Blockchain is still very much in the embryonic stage in its lifespan and how it will change and evolve is exciting.”
“Blockchain is going to transform entire industries,” says Sanjiv Singh, Director of Management Consulting with the consulting firm KPMG. “It will be an important tool that organizations use to commoditize and verify information.”
“Blockchain has the potential to impact every industry from healthcare to government, finance to retail, real estate to agriculture, and more,” adds Liana Douillet Guzmán, senior vice president at Blockchain, a Luxembourg-based software technology company. “We are already seeing applications, like ours, that are enabling millions across the globe – including those who are excluded or underserved by the incumbent financial model – to transact, save and hedge their way to a better financial future, immediately and without costly intermediaries.”
In a world where we regularly read about identity theft and online fraud, many within financial services, cybersecurity, and related industries look at Blockchain as a technology that can rebuild trust among individuals and organizations, particularly in countries where people do not trust their government or other institutions.
“By enabling businesses to transact immediately in a secure, private and transparent fashion, Blockchain technology will revolutionize the back end of business systems across the globe, providing unparalleled interoperability and efficiency,” says Douillet Guzmán. “Nearly every major institution — from finance to healthcare, government to consumer product goods — is exploring what Blockchain means for them.
“These big institutions stand to benefit a great deal from the efficiency and transparency and privacy that this technology offers, but so does the woman in Afghanistan who, for the first time, can hold value independent of her father, or the doctor in Venezuela who is watching her bolivar become worthless and worth less every day and can use Bitcoin to store value, or the landowner in Cambodia who is one of 70 percent of people in this world whose land title is flaky and can use this technology to protect his land.”
Imagine, for example, that you live in a country with frequent political disruption. One day, a government official knocks on your door and says, “There is no record of you owning this property, therefore, your government now claims it.” An encrypted record of that property in an online ledger, however, available for all to see, could mitigate such situations.
Similarly, Blockchain could facilitate the exchange of contracts, titles, and other documents in the purchase or sale of an asset or piece of property between parties.
“The true value of Blockchain lies not in the technology,” says Singh, “but in the network of people who belong to the Blockchain and unite to determine the value of certain digital assets.”
Jack Zwick, chairman of the Exagon Fund, says, “Blockchain has ushered in an unrestricted/uncensored peer-to-peer exchange, secure identity, decentralized truth consensus, and record keeping validation, to name some of the leaps Bitcoin is responsible for. If we can build a transparent network of monetary exchange without corruption and third parties, we can do it with just about anything. This includes how we trade, how we think about the voting process, how to end wars, and how to create prosperity within society.”
For example, notes Zwick, with Ethereum, another Blockchain network that allows users to send and receive tokens that represent value over an open network, the focus is on smart contracts, which could be used to exchange medical records, stocks, bonds, or other types of property. This is also being considered as a possible mechanism for ensuring secure online voting.
As it relates to the world of financial services, the developers of Blockchain envision a future where consumers become their own banks and trade assets with others, directly. Until recently intermediaries were required for financial transactions to establish trust. But that is changing, says Blockchain’s Douillet Guzmán.
“Blockchain technology is upending this trust model and allowing users across the globe to transact directly, at a fraction of the cost and time,” she says. “Just like peer-to-peer technologies changed the way we shared files and made phone calls, Blockchain technology will make it possible for people to perform economic transactions with each other without a bank, without Forex markets or merchant processors.”
Transforming Marketing Communications
“We are at the precipice of a digital revolution,” Douillet Guzmán says. “That will change every aspect of our lives, including the retail and sales experience. Customers will be able to get what they want, when they want it. Today, the majority of consumers prefer to purchase online or digitally, driving rapid growth e-commerce and online shopping. They also value personalization and customization and businesses are competing to offer that high-touch experience. Digital wallets will allow transactions to happen instantaneously, and give customers they convenience they desire.”
For marketing, this could be anything from significantly reducing ad fraud and fake news through super-secure verification to anonymous big data manipulation – particularly of interest considering recent data breaches and public opinion surrounding data. Beyond this, marketers in the luxury goods or healthcare markets are also looking at Blockchain technology as a way not just to increase security and trust but also to curb illegal copies and protect brand identity.
For example, Armstrong points to Bitmark, a Taiwan company doing groundbreaking work in the area of digital ownership by creating a registry for people to identify and locate the ownership of items such as files, images, movies, etc.
In the future, one of your most valued assets will be your verified identity. As marketers wonder how many people view an ad, advertisers will be forced to provide ledgers of encrypted identities that represent real people to prove viewership of digital ads (banner ads, video pre-roll, etc.). These ledgers also would help content creators (photographers, videographers, illustrators, musicians, audio talent, models) to collect more royalties. Companies such as adChain and Monegraph are developing this space.
Similarly, direct marketing firms may command a higher price for mailing lists (for example, email, U.S. mail, text numbers) certifying that actual human identities are linked to actual email addresses or U.S. mail addresses — to differentiate from other lists that offer varying degrees of accuracy.
Along these lines, encrypted identities could be used to facilitate online polling, or online contests, which, again, would provide more certainty to advertisers that a name and email address entered into an online contest is actually connected to a real human being.
Similarly, marketers that offer “points” to reward customers for loyalty could transform those points into digital currencies that would allow loyalty program participants to buy, sell, or exchange currency with the company, with other customers or with other partnering companies. A credit card offering reward cryptocurrency, for example, could partner with Amazon or other partners that accept the same digital currency, providing consumers more choices in accessing loyalty rewards.
“I could see the use of digital currencies being used to reward consumers for reading an article or viewing an ad,” suggests Zwick. “For example, 21.co is a company that is using this approach to monetize your time in reading promotional emails.”
Leveraging Blockchain for Communications
Blockchain may also be useful in the communication of sensitive information. For example, those in charge of investor relations for publicly traded companies, fearing that financial information (earnings reports, major operations or personnel announcements, for example) could be hacked before reaching the market, may use Blockchain to encrypt that information for a ledger available to a company’s investors. Investors would know that the information is certified “real” and not “fake news.”
The intent of Blockchain is to bring trust back into the equation,” says Singh. “It can take a great deal of legwork to check the validity of a news report. Having confidence that a piece of news is real can help in building or maintaining trust.”
To build and protect corporate reputations, Blockchain could be utilized to track the movement of products from the source of manufacture to the consumer. For example, data about the sourcing and handling of a food product from every point within the food chain could be documented and stored in a Blockchain. If that company experienced a crisis situation, such as E. coli contamination or food tampering, a food chain trail could prove useful in documenting food safety safeguards.
“A story that I think sums up how communicators should think about Blockchain is the Walmart example,” says Armstrong. “It used Blockchain to track its pork supply chain in China. In this case, it was less about the technology and more about the stories of trust that Blockchain can help a company tell and the value it can add to your brand affinity and trust levels.”
A similar process was used by Everledger, which created a Blockchain to reduce the trading of blood diamonds. Formed in April 2015, the company has digitally encrypted more than 1 million diamonds into a blockchain network.
“Diamonds are just the beginning,” says Leanne Kemp, founder and chief executive officer of Everledger. “Our technology can be extended to any item where provenance matters, such as fine wine or fine art.”
Everledger’s digital verification platform of high-value assets replaces industry-wide paper-based processes that are fragmented, susceptible to tampering and often interrupted as an item changes ownership or location throughout its lifetime journey. Everledger ensures the ownership and authenticity of an item is securely recorded on a digitized ledger, which, unlike paper records, can’t be altered or fraudulently copied. From blood diamonds mined out of Africa to the movement of counterfeit goods over borders internationally, Everledger is building a global verification system that ensures transparency at every stage of the supply chain process and encourages ethical sourcing.
Everledger’s Kemp makes clear that technology in and of itself cannot be the sole driver of change. “Consensus, or a level of trust among participants, is required to bring technology to market. In the diamond industry, we’ve seen this through the United Nations-mandated Kimberley Process established in 2001 to eradicate diamonds being used to finance human warfare.”
Similarly, Blockchain could change the funding of charity projects internationally. With such a digital ledger, those who donate to such projects would have more confidence that their donations are not in danger of being siphoned off by dishonest government officials. For example, if your local bank set up a Blockchain, it would allow you to contribute to the economic development of a community in another country while providing you the assurance that your funds were actually received and used for their intended purpose.
In planning and research, marketers could use Blockchain for predictive polling. Questions could be posed to a network of users who provide their input responses in a decentralized forum where the marketers are certain that real people are truly contributing to conversations about elections, sports, award ceremonies, and the like. Armstrong says ConsenSys, a Brooklyn, N.Y.-based venture production studio building decentralized applications and various developer and end-user tools for Blockchain systems, is doing exciting things in this area.
Connecting to the Internet of Things
Because news and data constantly need to be updated, Blockchain may be utilized to feed encrypted data to networks of people or organizations based on sensors and other things or devices connected to the Internet of things (IoT).
“Blockchain and the IoT create an interesting dynamic,” says Justin Grammens, co-founding partner of Lab 651, a software engineering firm that works with a range of companies, from start-ups to Fortune 100 corporations, to develop IoT products and applications. “I view Blockchain as just one of the many tools that will be required for the vision of the IoT to succeed. With a predicted 20 billion devices online by 2020, Blockchain will be needed to create public records of data that can’t be tampered with to enhance the security of the system as a whole.”
However, explains Grammens, it goes further than that. “Blockchain at its core is a distributed system,” he says, “which means that it doesn’t require a central authority to function. If 20 billion devices are all trying to communicate with each other, a centralized system will literally grind to a halt if it needs to communicate back to a central authority.
“Imagine,” he adds, “if you had to call someone on the phone every time you had to make a decision in your life. Your speed and productivity would come to a halt. Blockchain will enable devices to securely and quickly make decisions by trusted sources that are closer from a network standpoint to where they are located.”
So, for example, agricultural analysts might receive data from sensors strategically inserted in cornfields across the United States that measure ground moisture.. That data points could allow industry analysts to predict harvest yields, which, in turn, might affect corn prices.
“Take this example a step further,” Grammens adds. “Imagine if the sensors and the system that they fed would not only inform analysts, but the grain exchanges used a cryptocurrency to bid and affect yield prices in real time. When you are talking about systems on a global scale that have the ability to affect world markets, it needs to be distributed and not manipulated by a central organization.”
Similarly, such data could be compiled for residential and commercial energy use, water purity, consumer traffic flow at brick and mortar retail locations, and much more.
“Another example is automobile crashes,” adds Singh. “With all of the sensors and computers that are used to operate today’s cars and trucks, imagine if instead of calling your insurance agent to report an accident, information from the vehicle’s onboard computer is automatically communicated to an insurance company’s Blockchain. As crash data is transmitted, the insurance company auto responds with where to take your car for repairs, and it automatically begins the claims adjustment process.”
Bottom line: Blockchain for Marketers and Communicators
As practical applications of Blockchain continue to emerge, it may be several years before Blockchain becomes a mainstay in corporate marketing and communications departments. Based on the momentum that Blockchain technology is building, it appears to be a matter of when, not if, marketers and communicators will design new applications that contribute value to the customer experience. It’s fair to say that marketers willing to adopt the new technology, particularly efforts to build trust with key stakeholder groups, will realize significant advantages over their competitors in the years to come.
Stephen Dupont, APR, is VP of Public Relations and Branded Content for Pocket Hercules (www.pockethercules.com), a brand marketing firm based in Minneapolis. Contact Stephen Dupont at www.linkedin.com/in/stephendupont or visit stephendupont.co.
©2017 Stephen Dupont. All rights reserved.