what changes are planned and expected for the future – WAU

Blockchain and Digital Marketing are related. Although the technology has become popular with bitcoins and other cryptocurrencies, it can be applied disruptively in other business areas, including the digital market. Now understand how blockchain works and what changes it can bring to your company.

From the world of cryptocurrencies to Digital Marketing strategies: do you know how blockchain can help your business?

Blockchain is a term that has been gaining momentum in recent years. Whoever works with bitcoins is probably already used to this concept, which refers to a great public record of all transactions carried out with that virtual currency.

Okay, but what does this have to do with Digital Marketing? That’s what we’re going to talk about in this article. Professionals in the area need to know this technology, which can impact the strategies and ways of acting for agencies and clients that are on the path of digital transformation.

Next, we will better understand the relationships between blockchain and Digital Marketing and the changes that this technology can bring to your business. Follow us!

What is blockchain and what is it for?

Blockchain is a public record of transactions, which guarantees its efficiency, security and transparency through cryptography and a networked model.

Understand that it is not a product or a supplier, nor a single system (there are several blockchains!). We are talking about a data architecture concept, which can be applied to record transactions in several areas.

Although not limited to financial transactions, the most popular blockchain is the one that supports transactions with virtual currencies. So let’s explain what bitcoins and cryptocurrencies are before you understand the role of blockchain.

Popularization with bitcoins

In the past few years, you must have heard the story of someone who invested in bitcoins and made good money from it, right?

Launched on the market in 2009, bitcoin is a type of cryptocurrency, that is, virtual money. Like any physical currency, it can also be used for payments or transactions, including financial investments.

This means that you can buy the currency and sell it for a higher price, depending on fluctuations in the financial market. And, in recent years, cryptocurrencies have undergone a great appreciation, since they have become popular even with major players, such as IBM and Microsoft. And that’s how a lot of people made money from bitcoins.

However, cryptocurrencies have a very particular feature that differentiates them from physical currencies: the lack of state regulation. Participants can negotiate directly with each other, in a system called peer to peer (P2P), or point to point.

This system that enables transactions is called blockchain. In this free environment, it functions as a large virtual, public and shared ledger, which is responsible for ensuring the safety of transactions.

How blockchain works

In an unregulated environment, the system needs to have some characteristics to arouse users’ trust. Therefore, the blockchain has some mechanisms that guarantee efficiency, security and transparency for the system, in addition to data confidentiality.

Basically, the blockchain is a “chain of blocks”, in literal translation. In this system, transactions are recorded in encrypted data blocks, which are validated by the users of the network and then chained together (forming a “chain”).

Seems complicated? Let’s explain better how blockchain works in this step by step:

1. The database records a transaction request, which must be digitally signed by the interested parties. Although the information is shared, the identity of the people involved is protected by a private key (called an address), which is generated by encryption.

2. When a transaction is requested, it is analyzed for validation. This analysis is performed by a member of the network (called miner, or miner), which verifies the authenticity of the digital signature and makes the transaction official. For this service, he receives remuneration in bitcoins. This decentralized working model is an essential feature of blockchain.

3. As any member of the network can view transactions, it is necessary to ensure that they cannot be changed. Therefore, when a transaction is validated, it is linked to the previous block and the next, which generates a sequence of unique and immutable codes. Thus, in short, the transaction is registered, validated and safe in the database.

Advantages and disadvantages of blockchain

Okay, the process is anything but simple. But you can already see how the system is different from a traditional bank, right?

The blockchain is known as a trustless system. This means that it does not depend on trust in third parties – as when you transfer money to someone through a bank. You don’t even have to trust the person you are doing business with, as the system model ensures security.

And that’s a big advantage of blockchain! The system itself, decentralized and encrypted, prevents fraud attempts or hacker action, who would need to circumvent millions of computers and algorithms to be successful.

In addition, the absence of intermediaries and the online system streamlines operations and reduces their costs – all the more reasons for blockchain to attract so many stakeholders.

So, if all operations are tracked, trusted, protected from attack and still suffer less taxation, doesn’t blockchain seem like an excellent technology for companies? That is why it has stood out as a solution for recording transactions.

Still, it should be noted that blockchain is not entirely immune to fraud. There is a potential type of attack, called a 51% attack, that can happen when an organization dominates more than half of the blockchain’s computing power. In this way, it could interfere with the functioning of the system or intentionally modify the record of the most recent transactions.

While this risk exists, there has never been a successful attack on bitcoin and other major cryptocurrency transactions.

In addition, another major challenge in applying this technology is the need for general collaboration. It is impossible to create a blockchain if there is no network of computers and operators to make the system work safely.

But, even with some risks and disadvantages, blockchain is a concept that is here to stay, as a solution for several areas of activity – including Digital Marketing, as we will see below.

What is the relationship between blockchain and Digital Marketing?

Blockchain technology is disruptive. It is not only transforming the financial market, but also other business areas that demand security for business transactions and corporate processes. And it can happen in any market.

Still don’t understand how blockchain can be applied in other areas? A nice example is this: in partnership with Microsoft, the Belo Horizonte City Hall adopted the blockchain in the rotating street parking, replacing paper coupons.

BH transport credits are now traded via blockchain to interested companies who, in turn, offer users in their own applications. Thus, every transaction is validated by the network, which makes the sale of credits much more efficient, secure and transparent – essential qualities for a public system.

The City Hall opted for the decentralized system over a single supplier that would develop the intermediary system, as in other cities. This is a good example of how blockchain is an ideal solution for situations involving intermediaries and parties that do not trust each other (partner companies and City Hall, for example).

Now, thinking about Digital Marketing, it is common that there are intermediaries in the most diverse activities in the area, isn’t it? And often, the parties involved don’t even know each other.

This is what happens, for example, when you pay for a banner on a website through Google Ads or Facebook Ads.

This is also what happens when you buy a product in e-commerce and this transaction is validated by a financial institution.

And there are many other examples of transactions in the digital market, in which it is necessary to have an intermediary to guarantee the security of trading.

However, blockchain and Digital Marketing can come together to eliminate this need. If the parties involved want to negotiate with each other, they can do so through the blockchain’s decentralized system.

Even without knowing each other, an advertiser and a website that offers advertising space would have the security of the networked system, whose participants validate the transactions and attest to the parties’ reliability. In addition, without the presence of an intermediary and with direct negotiation between the parties, prices tend to fall.

Next, we will better understand how this relationship between blockchain and Digital Marketing can bring some changes to companies.

What changes can blockchain bring to Digital Marketing in the coming years?

Blockchain is still not as popular. We will wait a few more years to see this technology transform the way of doing Digital Marketing and negotiate services in this area.

But it’s good to keep an eye on what’s next! Now know the changes that blockchain can bring about in this market.

Blockchain as a means of payment in the digital market

If you can afford a cup of coffee with bitcoins – as long as the cafeteria accepts, of course – why not use virtual currency to charge or pay for Digital Marketing services?

In the coming years, blockchain could become a means of payment in the digital market. Instead of accepting or making payments in cash, boleto or credit card, you can use cryptocurrencies.

Often, Digital Marketing providers are in other countries. Then, the blockchain would also facilitate transactions with its online system and without intermediaries from one country or another, which would make payments difficult and costly.

With the maturity of the blockchain in the coming years, this tends to become increasingly common. But cryptocurrencies still need greater adherence among companies, including small businesses, for this form of payment to become popular.

Elimination of intermediaries in negotiations

It is not just as a means of payment that blockchain can be used in the digital market. The decentralized system itself can be a solution for advertisers, in a market where the presence of intermediaries is constant.

For example: when a brand wants to place a banner on the internet, it can speak directly to websites and portals. However, for not knowing the owner of that site, the brand is left behind to negotiate and make transactions with him.

For this reason, Google usually acts as an intermediary, through its ad system, Google Ads. This platform connects advertisers to thousands of trusted internet sites and their own search engine. In addition to extending the reach of campaigns, it also provides security to advertisers and websites that payments will in fact be made.

However, Google does not do this for free. For each transaction, he gets a portion of the amount, which increases advertising costs. And, as he is one of the internet giants, he has control over the prices of ads, which brands need to adapt to.

Have you thought, then, if companies could eliminate this intermediary, maintaining the level of confidence in transactions? The blockchain can make this change possible.

In this collaborative system, advertisers and publishers can be verified by members of the network, who validate the transactions they consider to be reliable. In addition, negotiations become more agile and less costly without the presence of an intermediary, which tends to make ads more profitable and increase return on investment.

No, we are not saying that Google will die! It also doesn’t mean that you should drop your strategy on Google Ads, okay?

But it is worth keeping up with the evolution of this technology that can gradually eliminate the use of third-party platforms. Blockchain can transform the way you do business in the digital market – and more than that, it can change the internet as we know it today.

We don’t even notice, but whenever we access a website, there is an intermediary: the browser. The same happens when we access Facebook or WhatsApp, which are also intermediate applications.

And do you know what these intermediaries do? They keep all user data, know everything they do on the internet – from what they buy to the people they talk to – and still use that information to sell advertising on their channels.

However, privacy is an increasingly valuable requirement for internet users. Who says they want to share data with platforms they don’t even trust? They just want to use the internet.

Therefore, there are already some initiatives to transform this environment and create “a new decentralized internet” based on blockchain. Blockstack and Skycoin are some examples.

These projects aim to provide access to online sites and applications with full control of data by users, without having to hand them over to the big internet companies.

Now, imagine how the Digital Marketing market can be transformed with this? Currently, companies and agencies rely on giants – Facebook and Google – to communicate with their public on the internet.

Without user data in hand, what could they do to publicize their brands? It would be necessary to collect this data directly with consumers. And so, they would need to be much more relevant to convince them to do so!

Then we are talking about a great revolution in the digital market: power in the hands of users. But take it easy! This is still far from happening.

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Reliability of data and online media transactions

When an ad for your brand is running on Google or Facebook, who guarantees that it is getting clicks and views from real users? There is no guarantee. Brands simply rely on platform numbers.

Facebook itself has already admitted that, for a long time, it presented a wrong metric to advertisers, which inflated the numbers of video views.

Robots and click farms are other problems that hinder the results with Digital Marketing and the transparency of investments. A survey revealed that ad fraud would cost advertisers a $ 19 billion loss in 2018.

It is no coincidence that major brands, such as P&G and Unilever, have raised their voice to make digital media purchases more transparent.

Solving this problem is complex. But the blockchain can offer a solution: once the transactions carried out by the system can be viewed and validated by members of the network, including stakeholders, the process becomes much more reliable and transparent.

So, under the system sharing logic, every purchase and ad serving could be viewed, shared and validated on the blockchain. Thus, fake ads, robot views and fraudulent deliveries would be identified and prevented by the network. Today there are specific solutions for this, based on blockchain, like AdChain.

Another way to guarantee the reliability of data in transactions is the adoption of smart contracts. Blockchain-based solutions for this also exist, such as ClearCoin.

This system adopts a model of continuous transactions between advertisers and publishers. Payments are released as the campaign runs and delivers results. For this, the shared system guarantees the reliability of deliveries, according to the agreed terms, which also prevents fraud in digital advertising.

Anyway, if you are a Digital Marketing professional, you already know how dynamic this market is. New trends and technologies are constantly emerging, and you need to be on top of them to take advantage of the best opportunities.

Blockchain, therefore, is one of the forces that can change the advertising and digital market in the coming years.. By eliminating the need for intermediaries and bringing more transparency to transactions, brands will need to adopt a new mindset for doing business.

This is no longer a buzzword or something that only “IT people” use, okay? Blockchain is a concept that tends to spread in the most diverse types of businesses that are in the process of digital transformation, in search of more efficiency and security for their transactions.

Now, do you want to better understand what digital transformation is and what it has to do with marketing? Read our free e-book on this subject now!