The New Tech on the Block – Blockchain

When any new technology comes to the fore, it is human nature to examine it closely and search for new applications.

Hype

Blockchain technology originated with cryptocurrencies such as Bitcoin and Ethereum, and it has proven itself to be so robust that many people are searching for ways to use it that no one else has thought of yet. A lot of that attention is concentrated in the areas of Social Media and marketing.

Although blockchain technology is probably not the game changer for Social Media that it is currently being advertised as, it will certainly improve social media marketing any number of small ways, and those ways will all be advantageous to social media marketers. Here is how to tell the truth from the hype and to take the best advantage of what blockchain technology has to offer marketing.

How It Works

Like many fundamental innovations, there is nothing terribly complicated about the blockchain. The technology has been compared to “digital DNA,” and that is certainly an apt comparison in many ways. Like DNA, a blockchain is simply a systemic record of a certain amount of information that is designed to be downloaded and stored in many sources.

The blockchain is a long record of information that is hosted by as many computers as possible, ideally in the thousands, so that any suspect blockchain interaction can be compared with existing copies in other computers. This allows people to easily see if any sort of fraud has occurred and to track it back to its source. Since existing copies of the blockchain cannot be edited, it is impossible to remove information from it.

By distributing the blockchain so many computers, the system is shielded from most hacking attacks and security is very much stronger. However, the storage issues involved in the blockchain are immense. A  standard blockchain would suffice for the storage of simple text-based data such as bank records.

How Will It Work With Social Media?

However, because of its enormous storage requirements and the number of people who have to download it in order for it to function, it really cannot be used for anything more than that with current technology.  Storing extensive customer records, photographs, or audio files in the blockchain remains, at this time, more fancy than fact. Therefore, from the marketers point of view, a blockchain-enabled social media platform offers very little more in the way of security than what already exists.

Marketing would not be noticeable more targetable, since people would share no more information about themselves than they already do.  Cryptocurrency monetization will be built in, but that process is already occurring.  New technologies like cryptocollectibles are essentially platform-independent.  So it will not “replace money” and it is unlikely to make social media platforms notably more valuable than they already are.

The data stored on the blockchain is not going to be notably more valuable to marketers than the consumer data already gathered and disseminated. Although it will be helpful for individuals and governments to have a long-term unalterable personal record stored on the blockchain, the real benefits of that will not appear until the identity program has been instituted for decades.

However,

…there remains the fascinating possibility that one of these social media network monetization schemes could catch fire in the cryptocurrency market, creating value for all users and inflating the pool of money available for advertisement.

All of the putative blockchain-based social media organizations feature, at some level, a cryptocurrency reward concept for their service. Most of them have some sort of scheme by which the cryptocurrency, currently worthless, is distributed to users and influencers.

A possible game changer could come in the form of Interledger, a way to make micropayments across different platforms/ledgers. Google is working on its own payments disruption with its Payment Handler API destined for Chrome 68. This will allow any payment system or provider to easily hook into Chrome’s payment mechanism for a smooth payment experience. It would also create a payment environment where cryptocurrencies could compete on a level playing field with traditional payment methods.

This will naturally result in the concentration of these tokens in a certain group of influential users, giving them more economic purchasing power and placing them in a more favorable position for social media marketing. Perceptive social media marketers will be able to monitor the blockchain transaction record, identify these influencers, and shape their efforts towards them.

As the transitive properties of marketing and influence travel back and forth, value will be created. The social media platform, symbolized by its attached cryptocurrency token, can accrue tremendous value. After all, many of the most valuable cryptocurrencies in the world were originally based in games.

Litecoin currently has a market capitalization of nearly $7 billion, and few remember that it began as an in-game money system for the old video game Second Life.  There is every reason to believe that something similar to that could happen with blockchain-enabled social media networks, and an active social media company would find themselves in perfect position to take advantage.