Not long ago, possession meant holding something in your hand. Over the past two decades, a series of disruptors created a digital society, where the most salient feature is the ability to copy. But soon, every industry will face the blockchain disruption — a new paradigm where ownership of digital material can be transferred without making a copy. What will this world look like?
Cryptocurrencies like Bitcoin provide a clue. Without blockchain technology, Bitcoins could be counterfeited as easily as copying computer code. The critical breakthrough of blockchain technology is the use of a consensus mechanism, across multiple entities, to create an immutable, distributed ledger — a transcript where rules can be transferred, but never altered. This is how Bitcoin allows strangers to transfer electronic cash without middlemen.
Bitcoin is only one application of blockchain technology. According to one study, 15% of banks and 14% of financial market institutions intend to implement full-scale, commercial blockchain-based services this year, and those adoption rates are expected to reach 65% within three years. Meanwhile, the FDA and IBM’s Watson Health are exploring ways to use blockchain to build a patient data exchange to create an audit trail of all transactions on an unalterable distributed ledger, and in the process transform the meaning of accountability and transparency in healthcare.
Ad tech impact
The long-term effects of blockchain on ad tech will be a topic at today’s IAB Programmatic Symposium.
Can blockchain address the unintentially unwieldy and opaque supply chain in ad tech? Yes. Establishing transparency and trust requires a central and secure way to record, review and execute a deal. Today, deals are typically stored in formats and locations that are disparate and nonstandard. Initially creating standards and enabling collaboration are essential steps on this path.
The blockchain transformation won’t happen immediately. Nor will it eliminate middlemen entirely, as long as middlemen provide services around the new transactional trust. Agencies that help clients plan and trade strategically can thrive. Nevertheless, the blockchain revolution forces us to confront a new development.
To offer one example, a song that was once housed in a CD and sold only at record stores can now be distributed a billion times over with the click of a button. This is, by now, an old story, one that can be summed up in a word: Napster. We’d do well to ask ourselves what the record industry would look like today if it had been able to answer Napster’s attack with blockchain technology?
One positive outcome would have been an easier way to transfer value and control to artists. On the other hand, we might not have seen as many innovations in music distribution. But it’s clear that the recording industry could have averted disaster and thrived in a digital world in which the right to listen was inextricably linked to the right of ownership.
The point is, every industry will face a blockchain disruption that will transform the internet and our society.
Facing this challenge requires cooperation because cooperation is part of blockchain’s core design. Even for simple record keeping, ad tech, like the financial sector, must move thoughtfully and cooperatively toward a new standard of trust. So let’s start the conversation, because the next revolution is at our door.