IN THE SPOTLIGHT
The Importance of Blockchain Technologies
By Anabel Cooper
The meteoric rise in Bitcoin’s worth has truly put cryptocurrency on the map this year. Blockchain is the technology that supports Bitcoin, but its possible applications extend much further, with particular relevance to applications in finance, the public sector and a host of other areas. Blockchain is basically understood to be the integration of several types of technologies, including consensus mechanisms, public key cryptography, distributed ledgers and the blockchain data structure itself.
By data structure, I mean database, where data is composed and managed in a series of blocks. These blocks are interlinked, with a small fragment of data in one block confirming the verification of the adjacent block, carrying on through the chain. This means that if someone attempts to change one part of the chain, the rest of the chain ceases to recognize itself and becomes useless. This is what makes blockchain technology so incredibly secure and resistant to tampering.
Public Key Cryptography
Public key cryptography helps to ensure that every member participating in the blockchain can be identified uniquely while also validating modifications to the blockchain with a secure private key. Public key technology is being used in other areas but is uniquely important to maintaining the development of blockchain and makes certain that only those with proper authorization can modify the system while helping to encrypt data within the blockchain.
Older ledger systems required participants to keep their own decentralized ledgers or otherwise put their faith in a centralized ledger. Decentralized ledgers proved problematic, being costly to maintain and keep safe. There was also the possibility of time lapsing before divergences were detected. On the other hand, centralized ledgers necessitate all participating members to put their trust in a central authority that was also prone to security vulnerabilities. Distributed ledgers, however, mean that all participants (or “nodes,” as they are known) maintain a fully updated version of the ledger, and a sufficient number must provide authorization to any modifications to the whole. In this sense, it’s a much more democratic system of data management in which every participant has a hand in the system’s checks and balances.
Consensus mechanisms underpin the system of modifying the blockchain, where the nodes validate possible changes in accordance with a pre-established set of rules. All of the nodes need to be in consensus about the validity of the modification, and when the parameters for a change have been met, every ledger is updated to reflect the change at rapid speed. This helps make blockchains very secure and is a big selling point for the technology.
Relevance to Marketing
While blockchain may not radically alter the DNA of current marketing techniques, its execution could be changed dramatically. Fundamentally, blockchain cuts out many middlemen for all kinds of transactions. This is particularly relevant with regards to ad space on the internet compared to traditional programmatic content. The growing concern that ads will show up next to the extremist content of Google might not be negated, but it would be far easier for marketers to see exactly where their money is going. Blockchain means it’s possible to eliminate a lot of intermediary management of assets that are costly and often difficult to extract value from. The technology could help with branding as well.
Thanks to the integrity of blockchain’s security structure, it could be possible to, for example, trace the origin of meat found in a supermarket to the farm where it was produced. There is great potential to use this to increase trust in marketing and the protection of data around it. While the technology will be of most relevance to financial services, it’s sure to leave its mark on other areas of modern life and should crack the popular consciousness within the next few years. Marketers should be quick to keep abreast of the coming developments and make the most of the opportunities to simplify marketing transactions wherever possible.
Anabel Cooper is a 26-year-old editor from Harlow, England, with a deep interest in cybersecurity. She has a master’s degree in literature and works as a copyreader and news writer in Longman.