Crypto Commentary

Is Blockchain the Future of Social Media?

  • 05 Jun, 2018

  • 8 Min read

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It’s no secret: security is important when it comes to our personal data. “Americans are increasingly concerned about online security and privacy at a time when data breaches, cybersecurity incidents, and controversies over the privacy of online services have become more prominent,” states a report by the U.S. Department of Commerce (USDC).

Considering Facebook’s recent data breach scandal, in which the personal information of an estimated 87 million people was compromised to serve as voter research in the 2016 U.S. presidential election, you would think the USDC report was released a month ago. It is, however, based on data collected from 41,000 U.S. households all the way back in July 2015.

Evidently, concerns about online security and privacy have been an issue in the making for a long time.

Far­-Reaching Consequences Of Recent Social Media Privacy Concerns

One immediate effect of increased social media privacy concerns is that many users are opting out of using social platforms entirely, many going as far as deleting their account. This results in an expanding challenge for advertisers and publishers, who have come to rely on social media as a primary distribution channel for their content and ad campaigns.

At first glance it might seem as if companies and social networks were the only ones affected by this cultural trend, but it actually goes much further than that. According to the USDC report, the dwindling faith and trust in centralized institutions is actually affecting the U.S. economy.

“Forty-five percent of online households reported that these concerns stopped them from conducting financial transactions, buying goods or services, posting on social networks, or expressing opinions on controversial or political issues via the Internet, and 30 percent refrained from at least two of these activities,” the report alleges.  

The Response Of Social Media Platforms To Changing Attitudes

As a result of the recent data breach, Facebook announced a revamp of its security and privacy settings. While this will give users more control over how their data is being shared, it will have some consequences for marketers.

Having access to less user data means that targeting a more narrow audience based on specific interests will prove to be more difficult and expensive. Therefore, marketers will most likely have to appeal to and spend more money on broader target groups. This, in turn, means that users will end up seeing ads for products that might be irrelevant or totally unrelated to their shopping preferences.  

On the other hand, while there might be less user data for advertisers to access in general, the current nature of the Internet and social media was not ideal for marketers to begin with. That’s because not all data is good data; and not all user accounts are real accounts, which was another issue that revealed itself during the 2016 U.S. presidential campaign, when fake accounts created by bots were spreading misinformation to pit voters against each other.

In short, even if an advertiser is able to target a narrow group of consumers, the fact that there is almost no way to verify which users are real and which ones are fake means that parts of their advertising budgets can oftentimes go to waste.

All of this points to one thing, which is simultaneously the problem as well as the solution to the current social media challenge — there is a tremendous need for more transparency.

Blockchain Technology Can Solve The Problem

In the most simple terms, blockchain technology provides a system for storing, transferring, tracking and authenticating online data in a decentralized way. Instead of being stored on one central server controlled by one institution, the data is distributed across a multitude of computers controlled by thousands of people without a central body managing them.

In a way, blockchain-based platforms have the ability to democratize data, meaning that every user has control over their information like they would have control over their vote in a democratic election. If you don’t provide it, no one has it — and if you do provide it, it’s anonymous. This would essentially make users both the decision–makers as well as the owners of the network they are members of.

Vladislav Artemyev, the CEO of Scorum Coins, put it best when he told AdWeek that, “Trust is the key word […]. Blockchain could provide the missing link. Blockchain technology removes barriers and creates transparency, so that everyone involved is aware of the transactions taking place, which improves trust between all parties.”

Let’s take a look at the benefits blockchain technology provides to the two key parties involved in social media.

Blockchain Benefits To Consumers

1. Transparency

The decentralized nature of blockchain provides that there is no one central figure or organization — e.g. a company or government — that controls the system from behind a Wizard–Of–Oz–like curtain. Every transaction on a blockchain–based platform is tracked and audited by multiple servers and developers, hence, making it impossible to secretly take actions that wouldn’t align with community guidelines and ethics.

To put this into context, the recent Facebook data breach, for example, caused so much outrage because the personal data of the 87 million affected users was shared with third-parties without the consent of those users — it happened entirely behind closed doors. This is the direct result of operating on a centralized system, in which the controlling authority can make any decision they want without consulting the community their platform is built upon.

On a decentralized blockchain platform, where every transaction can be traced to its original “instigator,” this type of unethical behavior can be prevented because it would be revealed to the user community right away.

2. More Control Over Your Data

In addition to offering more transparency, blockchain-based social networks also allow their users to control their data one hundred percent of the time. That’s because when blockchain technology was built, initially, to establish the famous cryptocurrency known as Bitcoin, the creators needed to come up with a solution that would rule out double spending.

As a result, a unique ID (“hash”) was assigned to each Bitcoin token every time a transaction occurred. This made it possible for the blockchain system to keep track of where the coin was going at all times; so the coin couldn’t disappear, but it could also not be duplicated. It would only exist once, wherever it went.

Applying the same principle to your data in a social network, this means that only one iteration of your data set exists, the one you authorized. It will be traced wherever it goes without ever being duplicated. More importantly, this would also mean that if you deleted your data in one place, it would be eliminated everywhere else on the blockchain-based social network. No traces of it would be left anywhere for unauthorized third parties — such as advertisers — to buy and sell.

This would apply to all the data you’d create in the lifecycle of a social network — if you deleted an old message you sent to a friend, for example, it would be gone forever as opposed to being stored as a backup on some remote server.

Blockchains make it so that third parties, such as Facebook, who are controlling your data, would be taken out of the equation and make way for you to have a direct relationship with whomever would like to access your data.

3. Relevant Content

Having complete control over your data also results in another benefit of a blockchain-based social network would bring: relevant content.

In the current, centralized social media universe, you barely have any control over which article, picture, or video might appear on your feed. It’s the companies operating the platform that decide what you are going to see on your feed based on algorithms that ultimately benefit their profit motive more than your entertainment or well-being.

Being able to control your data means being able to decide which type of content or advertising campaign is right for you and which one is not.

4. Turn Social Media Activity Into Money

If you are a content creator or simply an active social media player with a significant amount of followers, you probably know the pain of having to go through third-party ad networks or subscription services to turn your activity into profit.

Within a blockchain-based system, however, you and your viewers, readers, or listeners could build a direct relationship enabling them to reward you for the valuable entertainment or information you provide with cryptocurrency payments. Since it would be a direct transaction, no revenue would have to be shared with a middleman like a third-party platform provider.

This wouldn’t just be true for social media influencers with a large audience, but for friends and family, too. If someone posts something that made your day, you could return the favor by sending them a thank you in form of a small cryptocurrency payment without bank transactions or fees delaying the process. Think of it like this: an “upvote” or “like” could be a cryptocurrency token. Steemit has actually already started offering a model like that.

Blockchain Benefits To Companies

1. Online Identities Can Be Verified

The transparency and control of user data that inherently comes with blockchain–based networks is not only beneficial to consumers, but also to companies who pay for advertising.

While it may not always seem like it, most advertisers are actually not interested in spamming you with annoying commercials. In fact, they would rather spend marketing money only on targeting the people that would actually be interested in purchasing their products or services. In addition to that, it is also important to marketers that the users they are targeting are not only the right demographic, but also real people (as opposed to fake bot accounts).

Both of these issues can be solved through the use of blockchain–based platforms, because, as discussed, once user data has been verified with a hash ID, it can be traced to its origins at all times and no fake duplicates can be produced. This means that marketers will know immediately when they are dealing with a real human being, thereby making campaign spending more efficient and success rates for potential sales much higher.

2. Improved Analytics And Higher ROI

This ability to verify the identity of users leads right into the next benefit for companies, which is that blockchain technology allows advertisers to measure their campaigns and target audiences more precisely.

That’s again due to the fact that all data on blockchain–based networks is actually verified, which results in accurate information that can be taken at face value because it has not been manipulated by fake accounts or bot farms imitating human behavior. With improved analytics, marketers will be able to dial in their campaign strategies more meticulously and turn them into higher ROI (return on investment).

3. Reduced Operational Costs

Similar to the way content creators can increase their revenue by cutting out the middleman, companies will be able to use more of their advertising dollars to reach potential customers rather than on paying the platform they are advertising on. (Basic Attention Token, on the Brave Browser, is already starting to address this issue).

This, in turn, will not only benefit marketers, but also the content creators and influencers they are paying to promote their brand message. Without having to go through a middleman like Google’s ad network — and by compensating in form of cryptocurrencies — advertisers could just work with creators and influencers directly and put more of the money in their pocket that would otherwise be split with third party platform providers.

The use of cryptocurrencies would make the payment process faster, more secure, and more global in nature since no international transaction fees would have to be deducted.

“Blockchain technology will erase the blurred line of doubt and make the merge easier for advertisers and publishers to join forces,” Simon Golestan, CEO of The Millennial Marketers, recently told AdWeek. “Speed, security, transparency and safety are necessary in such a competitive marketplace. Blockchain will open more doors for brands and influencers worldwide to create exposure, engross consumers and increase sales.”

In conclusion, blockchain technology benefits both sides of the social media equation — consumers and companies. The unprecedented transparency and control of personal data has the potential to establish a new world order in which users and advertisers can work hand in hand while fraudulent information, such as fake news and bot users, can be eradicated.

Now the only question is, will the already existing social networks transition to this model, or will new, blockchain–based networks disrupt and take over the social media landscape as we know it? Only time will tell.

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  • Digital Money Platform
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