In the last year, blockchain technology has gone big in a way that few online phenomena ever do. Much of this is due to an explosion in the value of bitcoin, the digital cryptocurrency that made headlines around the world in December 2017 when its value reached over €16,000 after less than ten years of existence. At that point, bitcoin stopped being a strange form of money known mostly to the internet-savvy and became a white-hot commodity.
The rise of bitcoin caused the global financial press to debate whether it was and is a fad, but it’s clear that blockchain— the technology which allows cryptocurrencies like bitcoin to exist — is here to stay. As of 2018, hundreds of companies, banks, and investment firms are exploring blockchain, including Apple, Berkshire Hathaway, JPMorgan, Bank of America, Wells Fargo, and the Bank of China.
Here are some basics about what blockchain is and what it can do for B2B marketing:
The basics of blockchain technology
The origins of both the bitcoin cryptocurrency and the blockchain technology that enables it are the stuff of internet legend. In January 2009, an internet user ‘mined’ the first bitcoin using principles of cryptography and computer science, with the ultimate goal of creating a digital currency that would not be beholden to any central authority like a bank or government.
If a digital currency was to exist without the oversight of a regulatory agency, then it would have to produce consistent results, be open to a decentralized public network, and prove resistant to tampering. Blockchain solved these problems and made cryptocurrencies possible.
Each bitcoin is created according to extremely complicated calculations which require a great deal of processing power to crack. Once one of these puzzles is completed, the figures are added to a block, which is available for all to see, making the transaction secure. As an increasing number of transactions are completed, they are ‘chained’ together, and thus we get the term ‘blockchain’. The more figures chained together in the block, the stronger the blockchain is.
There’s plenty more that could be said about how blockchain functions (it’s very complicated technology), but we’ll stick with what’s relevant to firms doing business online. You’re probably most interested in what blockchain can do for B2B sellers.
Using blockchain for business
The world’s biggest firms are racing to exploit blockchain because it’s clear that it offers many applications for online businesses of all sizes.
It seems like every few months there’s a tech giant that undergoes an unnerving data breach, exposing sensitive customer data to cyber-criminals. What may sound surprising is this: the fact that blockchain is decentralized over a network actually makes data more secure, not less.
Blockchain encryption takes advantage of the technology’s incredibly complicated algorithms like this: data is protected by the blockchain, and only a unique and complex key enables access. Unlike systems using passwords and stored on servers, blockchain technology is a new degree of formidable security.
As far as preventing cyber-fraud and theft, blockchain offers a lot to B2B firms. Tech giants like Equifax and Apple can survive embarrassing data breaches because of their size. If you’re in the B2B arena, though, you know that the cornerstone of any deal is trust that one business will protect the other’s data — and blockchain could make that easier than ever before.
Cloud storage costs
There’s another reason why firms are moving away from centralized cloud storage like that offered by Amazon (yet another victim of a data breach). That is the most important reason, namely the cost.
A centralised service will store your data on its servers for a price. A decentralised cloud storage company, on the other hand, rents the all-important space from a network. This makes it more secure, for reasons we highlighted above, but it also has the promise of making storage cheaper. Storj, one of the leading blockchain storage companies, claimed that it paid out US$1,600 for one month of storage, and was determined to lower that cost drastically as it scaled. All this is enough for one tech journalist to declare that blockchain “may soon underpin cloud storage.”
Just like the unique nature of blockchain promises to make data safer from theft, it can make data safer from tampering or fraud. One cybersecurity expert recently told Forbes Magazine that precisely because of the “architectural nature” of the blockchain, “Typically, once data is stored on the blockchain it cannot be manipulated or changed — it is immutable.”
In short, because of its structure, a blockchain only gets stronger as it is built. This makes data more secure against forgery or fraud — facts which can give an early adopting firm an advantage.
It’s no coincidence that most of the biggest and most influential figures in tech are connected to PayPal. PayPal was developed at just the right time to meet people’s need for a digital wallet in the new Web 1.0 world, and it revolutionized online purchasing. This decade has seen an explosion revenue for in businesses like Square and Venmo, which similarly offer the chance of making e-business easier. People need to move money online, and there’s a hunger for online solutions which make this simpler and more inexpensive.
Blockchain shows all the signs of being yet another revolution in how we pay. It shows particular promise to B2B firms, whose ledgers are generally larger than those of individuals and businesses in the B2C realm. While digital wallets are often enough when dealing with smaller sums, B2B businesses often deal with payments that are orders of magnitude larger. One of the innovators in decentralised cloud storage, for example, handles payments through blockchain because their B2B business “could never be done through traditional payment methods.”
What to do next
Blockchain is still a technology in the early adoption stage, but it will likely be a major factor in the online marketplace of the future. It should be on your firm’s radar, since your competitor will be doing their research on blockchain technology, too.
Blockchain is still a relatively new and, for many firms, strange innovation. Has your firm started exploring the world of blockchain for your B2B business? Let us know in the comments below!