In the The inside story x 3 series, experts from the Plan.Net group regularly explain a current topic from the digital world from different perspectives. What does it mean for granny, and for an agency colleague? And what does the customer – in other words, a company – get out of it?

In recent years, hardly any other technology has painted so many scenarios of a golden future as blockchain, THE solution for decentralised, tamper-proof storage of transaction data. But what’s next?

My granny and blockchain: What is it and is it the same thing as those bitcoins?

Not really, dear granny; blockchain is actually the technology that provides the basis for non-physical currencies like bitcoin, among other things. Simply put, blockchain is an extendible list of data records that are arranged in blocks – hence the name. Imagine a train that gets more and more carriages attached to it over time. In these data carriages, every process – a payment transaction in the case of bitcoin, for example – is recorded chronologically. Since this ‘data train’ is not just stored and updated on a single computer, but on many different ones, the data are much more secure. This is because if somebody wanted to retrospectively modify a data record – say they wanted to cover something up, for example – it wouldn’t work, because the single piece of false information wouldn’t be able to combat the many correct ones.

Bitcoin, a digital payment system that can be used worldwide, is based on the blockchain principle. Extremely secure and simple to use, it manages without a bank because the payment transactions take place in a network in which everyone can co-operate. But although it sounds good in theory, in practice there are a few disadvantages. In order to access these digital coins, you need an online bureau de change that you can hand over your money to. Unfortunately, however, it is very difficult to know whether this currency exchange is sufficiently protected against attacks from hackers. In addition, there are very few things you can buy using bitcoins, as bitcoin is actually extremely unsuited to being used as a means of payment: processing payments takes a long time and involves high fees, and the value of the currency is too variable. And that’s why it’s quite a bad idea to invest your savings in bitcoin – unless gambling is your passion.

However, blockchain also has potential in areas other than digital currencies: for example, end-to-end, transparent supply chain documentation in the food industry. In several countries, blockchain technology is also frequently used in public administration, for example, for notarial services or the administration of medical data. But it’s still got a long way to go.

My colleague and blockchain: Will it help us to create transparency in online advertising?

In the digital media business, there are several potential areas of application for blockchain. One example is the transparent and secure handling of campaigns that use programmatic advertising. In this context, blockchain would be able to solve problems around ad fraud, brand safety and billing by providing end-to-end, tamper-free documentation in the chain that shows which impression was delivered to which bid as well as where and when. In terms of reporting performance value, too, blockchain would be able to help to ensure consistent data records between publishers, agencies and customers.

To this end, a number of start-ups have already designed solutions, but large-scale use is still blocked by huge development and coordination costs among all parties involved. However, it does not always have to be blockchain – the Ads.txt initiative from IAB Tech Lab is a simple tool that has already made great strides in terms of helping to avoid inventory fraud.

Blockchain for the customer: So which of the many providers are trustworthy?

Programmatic media is interesting for advertising companies too, of course. Moreover, blockchain can be deployed as a commercial platform between producers and customers in the area of content delivery, for example, in the field of image rights.

In recent months, numerous start-ups and established technology companies have launched products and apps based on blockchain. The biggest disadvantage for many providers: as a rule, each platform uses its own currency as a means of payment in the form of coins or tokens, which are used to pay for transaction processing as well as buying and selling media stock or digital licences. If several services are used, companies basically have to have a wallet full of different currencies on hand – and it’s not just holidays that this is impractical for.

First sale of these currencies (known as an Initial Coin Offering, or ICO for short) has given start-ups around blockchain a fresh opportunity to raise capital. However, belief in the platform’s success is still the underlying factor: if the business model works, the value of the currency increases at the same time. This is useful for the investors and platform operators; not, however, for anyone who would like to use the currency to buy media or (digital) goods on the platform. And by no means are all providers successful. Research carried out by the cryptocurrency news site bitcoin.com shows that of the more than 900 ICOs in 2017, almost 60 per cent of the companies failed or as good as failed. For now, the best course of action is: wait, drink a cup of tea and see how things develop.

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