Read any article on fintech and you will likely come across reference to digital cryptocurrencies, and the engine that powers them – blockchain.
Blockchain is an immutable, public, distributed ledger that allows transactions to be confirmed by a decentralised network of stakeholders. In simpler terms, it’s a bit like a giant shared spreadsheet, negating the need for a centralised arbiter (such as a bank or government) or the requirement for trust to be established between participants. It is also impenetrably secure by design, meaning that entries cannot be modified or deleted, and the identity of participants’ is verified (but not necessarily disclosed) through public-key encryption.
Blockchain is still predominantly associated with the financial world – and cryptocurrencies such as Bitcoin – but further applications are now being explored, from identity management and voting systems to medical records. It also has the potential to solve several challenges in the world of digital advertising – or, at least, the IAB is looking into it.
With digital ad fraud still a major issue for the industry, blockchain has the potential to provide a robust solution for eradicating fraudulent publishers from the supply chain. There is a misconception that blockchain makes participants anonymous. While this is true in some cases (Bitcoin), it doesn’t have to be the case and, in fact, public-key encryption means that blockchain is actually one of the most secure methods of proving identity.
Therefore, a secure and transparent blockchain database of un-modifiable impression data could mean that fraudsters employing domain-spoofing or bots could be quickly exposed and blacklisted. The same database would also provide agencies with watertight datasets for auditing campaigns. The barrier to this scenario is adoption: for blockchain to work it requires multiple providers at different levels to sign up (brand, agency, DSP, exchange and publisher), and unless a major player takes the leap, this is unlikely to happen soon.
There is also the potential for digital ad buying to be improved with blockchain. MetaX is testing an incentivised blockchain voting system to build collaborative whitelists of validated domains and their associated publishers, allowing buyers to easily identify quality inventory. Blockchain won’t, however, extend to the real-time buying process – it just doesn’t have the scalability. Blockchain typically takes 10-30 seconds to complete a transaction, and the Bitcoin blockchain currently initiates about 5 of these per second. AppNexus on the other hand – one of the largest real-time exchanges – processes millions of ad-calls at the same time. To record this volume of transactions through blockchain would require unprecedented amounts of processing power and data storage.
While these developments are exciting for digital advertising, they are still mostly theoretical. The few companies attempting to realise these blockchain applications are in their infancy, and their tech is still in development – the very earliest we can expect to see some of them launch is 2018. But if the theories do become reality then the future is promising, and we can look forward to increased trust, security and reliability in digital advertising.