All Along the Blockchain Most people think that Bitcoin is just a really good way to buy heroin online. Or launder money from your Ashley Madison extortion ring. Or send funds to your favorite terrorist organization. That’s the way the press likes to talk about Bitcoin and its underlying technology, the Blockchain. And that’s a pity because it’s blinding a lot of people to the potential of these new technologies. In this week’s email, I’d like to share some different perspectives about digital currencies, cryptography and the wider use of the Blockchain. It might feel a bit abstract, but I think it could solve the largest issue facing marketers today – trust. Bitcoin is the new Internet Marc Andreessen is a smart guy. Not only did he help create the first widely available internet browser, Mosaic, he was also a co-founder of Netscape, Opsware, and now the Venture Capital firm Andreessen Horowitz. He has made a lot of money seeing the potential of new technologies before anyone else does. And he is a huge believer in Bitcoin. In the article below, he explains the fundamental economic and practical problems that Bitcoin solves. Application to Marketing: Andreessen is not a big fan of advertising. He believes that the micropayments made possible by Bitcoin can eliminate banner ads and spam. I get it. Most venture capitalists have been so burned by advertising-supported internet companies that they have developed a palpable hatred for digital advertising in all its forms. I’m going to respectfully disagree that most people will be willing to pay money to avoid advertising messages. But it’s worth understanding his argument. Availability: We ain’t there yet. Read More No, the Blockchain is the new Internet Bitcoin works because it has a shared ledger of digital events. It is unnecessary that two parties trust one another because the transaction is witnessed and confirmed by the majority of the participants in the system. Imagine a crime happening on a busy New York street during lunch hour. A few witnesses may get the events wrong, but the shared consensus of hundreds or thousands or even millions of witnesses is unlikely to be wrong. This system of trustless transactions confirmed by multiple participants is Bitcoin’s Blockchain. Ultimately, such a system has the potential to extend well beyond digital currencies to anywhere where trust is lacking online. Application to Marketing: There is a company called Ethereum that has started to provide “smart contracts”. This is a contract that can be executed between parties without mutual trust based on a shared set of criteria. Once the criteria is satisfied, money changes hands automatically. Does that have something to do with marketing? Read on. Availability: Ethereum exists, but it is mostly experimental at this point. Read More No, the Blockchain is for Criminals! The problem with being a criminal is it’s so hard to trust people. You want to do something criminal to get money, but you can’t trust anyone you’re working with because they’re criminals and they can’t trust you because you’re a criminal. The Blockchain efficiently solves that problem. Since smart contracts can be confirmed independently, two people engaged in criminal activities need not trust one another as long as they can agree on an outcome that satisfies the contract. Application to Marketing: Not much. Criminals don’t tend to advertise. (Much.) But you should remember arguments like this exist if you’re going to talk about the Blockchain to your clients or bosses. The counter-argument to the idea that the Blockchain is useful for criminals is that cash is also useful for criminals. But I’m guessing you probably still have some in your pocket. Availability: There are no documented cases of someone using the Blockchain for criminal contracts. But, it’s going to happen and it may have happened already. Read More And This Affects Marketing How? Marketing is undergoing a crisis of trust. Marketers know that eyeballs are moving to digital, but traffic in digital media is too easy to spoof. Yet, there are incentives for everyone involved in the marketing ecosystem to pretend that phoney traffic is real. If that bubble of shared-delusion pops, we are all in for a world of hurt. But think about this a different way. Imagine that eyeballs are a currency. A value is assigned to that currency (CPI) and that value has been agreed upon by everyone involved. However, a huge amount of fake currency (bots) are being introduced into the system. This has eroded trust in the currency and the value is falling as a result, hurting everyone who depends on the currency. Now, what if we treated every viewable impression like a smart contract? The Blockchain confirms that the viewer exists and is human, so currency is present in the system. The ledger could confirm the person’s existence based upon their transaction history (which sites they had visited in the past, how long they had stayed, etc.) The Blockchain confirms that the ad has been viewed and thus money can change hands from advertiser to website owner. No trust is necessary. Build up these micro-transactions by the millions and then billions and you can begin to see a world in which the full faith and credit of the digital advertising system has meaning again. There’s no link for this. It’s just my opinion.