Just as a Bit Torrent file distributes content, the blockchain distributes trust
What is the blockchain?
The blockchain (or just block chain – no one seems to be sure) has, since its creation in 2008 by an anonymous developer, been associated with Bitcoin. It powers this, and every, crypto-currency. The very basic idea is that it’s a distributed ledger that can share large amounts of data over the Internet and cannot be taken down. It means that systems and processes can securely work together with complete anonymity and without recourse to a third party such as a bank or government. Just as a Bit Torrent file distributes content, the blockchain distributes trust.
Some forward-looking brands are actively exploring the potential opportunities to add value using the blockchain. IBM is looking at the use of blockchain to seamlessly manage a huge array of IoT devices, thereby eradicating the need to remember the passwords to 200 connected devices! Financial institutions from BNY Mellon to UBS are also testing the technology, which could prove highly disruptive to their sector to drive greater efficiency and security across their operations, from brokerage to M&A.
How can marketers benefit from blockchain?
What’s important for brands to realise is that blockchain is the enabling technology to connect a wide range of value-creating mechanisms. Value in this context can be defined not just in monetary terms, but also in terms of reputation, social interactions, experiences, memories, relevancy to tastes and ambitions.
Value can be enshrined on the blockchain through concepts such as ‘smart contracts’. For example, the way a vehicle is used will create value that could be optimised. This could lead to new payment models. It could mean you pay for the way you use the car, and no longer need to purchase your own. The vehicle will know how much petrol you use and where it is likely to go, so will suggest a fill-up at a cheap station even if not empty. Insurance payment could be defined by your driving behaviour, along with advertising on your home TV or mobile, which could be based in part by the data generated by the car.
The blockchain allows consumers to take greater levels of control, whilst providing advertisers with the mechanisms they need to target with the most relevant message or service in a way that suits an anonymous end user
The blockchain allows consumers to take greater levels of control, whilst providing advertisers with the mechanisms they need to target with the most relevant message or service in a way that suits an anonymous end user. Your personal data can be held within a blockchain and relevant sections can be shared with the right brands. Major purchases such as a car or even a barbecue could be shared with trusted brands which can let you know about associated services and goods that are right for you, from insurance to patio gas, while you remain anonymous. The blockchain can provide brands with the detailed structured data sets they need to provide personalised services and messaging whilst also providing consumers with the privacy and control that they require.
Not only will this approach help disrupt the models of ownership of products and the way that they communicate, but also the nature of the value chain as companies compete to deliver the most value; to be the more trusted provider.
It’s never too early to start preparing for the potentially seismic changes that lie ahead
This could lead to big changes in the FMCG world. For example, for some consumers it may be the producer that creates the most value, which could see the removal of retail intermediaries from the supply chain. This could mean consumers buying all of their household products on a subscription basis from a P&G or Unilever, delivered in one big box each month for a significant discount over supermarket prices.
On the other hand retailers can integrate other forms of value into their proposition. Supermarkets may provide curation services that match products from multiple sources based on individual needs. So our smartwatches may analyse our health measures in real-time, and retailers (with the relevant opt-in permissions) may curate a weekly shopping list based on desired health goals.
While there are still many hurdles to overcome in terms of security, the use cases and economic models, the blockchain has the potential to shake up the way consumers interact with brands and advertisers. It’s never too early to start preparing for the potentially seismic changes that lie ahead, so keep an eye on technology and industry developments as the digital revolution continues.