Blockchain: Facebook's biggest threat
Remember when you first opened a Facebook account? It was interesting, new and importantly, completely free of charge. Or so we thought. Fast-forward to the present day and our relationship with the social network has soured. It’s the same with Google, Twitter and Instagram too. Somewhere along the line the internet giants started getting more out of us than we do from them.
It all comes down to our personal data. We surrendered it thoughtlessly and have been rewarded for our mistake with a glut of internet advertising. But there is hope in sight: blockchain, and the principles it hinges on, can help us wrest back control.
Facebook, Google et al knew the commercial potential of our personal data from the start. They monetised their service and with our details at their disposal, they’ve been lining their pockets ever since. We scroll through screens filled with advertisements we never signed up for – while Google and Facebook’s share of global ad revenue continue to soar. We overlooked how invaluable our data really is. And as a result, we’ve effectively become the product.
But blockchain’s democratising qualities would level the playing field. Of course, blockchain can flummox, but it’s actually very simple. And for the uninitiated, the concept is best introduced in terms of a ledger. Ledgers have been used to keep track of financial accounts for centuries. The English word comes from the Dutch legger, meaning "a book laying or remaining regularly in one place". And that origin is crucial. When we think about blockchain as a ledger it’s important to remember that entries can never be overwritten. The data is irremovable and unchangeable, but there is one big difference: with blockchain these entries aren’t in one place, they’re everywhere.
Blockchain is more accurately described as a distributed ledger. And the most well-known example of this principle in action is bitcoin. As the technology underpinning bitcoin, blockchain proved that money could change hands without the need for a central authority, otherwise known as a bank. Information is distributed across the general public by recording transactions in the form a distributed ledger, with each participant having a stake in it. This distinction, with distributed ledgers replacing centralised ledgers, takes the power away from a central bank by sharing the transactional information across anyone who participates in the network. The result? We all become bank tellers.
But blockchain isn’t just about bitcoin. This same principle of decentralisation could be readily applied to social media too. Personal data is no different from currency, in that it can also be stored uniquely on a distributed ledger with no central storage controlling it. So blockchain can be used to seize control back from a central hub, such as Facebook, by allowing us to use our personal data as the bargaining chip that it really is. And by redistributing the way our data is shared, blockchain could utterly redefine how online advertising works.
So where does this leave us? Put simply, a fairer system will emerge. The public, owning their data instead of giving it up, thus become both the messenger and the media. If bitcoin has made it possible for each of us to be bank tellers, applying blockchain to the way our personal data is managed could make us all into media agencies. It’s an odd thought, but actually not as unfamiliar as you’d think. The rise of influencer marketing, especially in the fashion industry, has proven that we aren’t averse to ads coming from other people. It’s already happening a great deal on Instagram, Facebook, Twitter and despite initial resistance, Snapchat too. All that matters is that the content is relevant and authentic.
This impending shift is all part of the natural order of things. The transformation of online advertising will emerge in the same way as other recent stores of disruption. Whenever a single group has control over the supply, somebody tries to disrupt it. Just think, Portuguese explorers set out as disruptors too. They wanted to end Venice’s monopolisation of the spice trade between Europe and Asia, so they searched for a sea route to India. When they found it, the overland route ceased to dominate, breaking Venice’s stranglehold over such a profitable business.
I believe blockchain could do the same to online advertising. And a change is well overdue. As with the internet, a massive shift first develops slowly and hidden away from view. But when it does finally emerge, it transforms our lives entirely.
Brian Cooper is chief creative officer at OLIVER Group UK