Blockchain customer personalization
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Consumers Could Drive Data Sharing and Personalization with Blockchain Marketing

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In an era increasingly concerned with data consent and protecting consumer information, blockchain-powered identity management tools could soon eliminate fears of data privacy theft and unleash a new paradigm of consumer-driven personalization.

The technology behind Bitcoin and other cryptocurrencies has the potential to support identity registries where people can accumulate and share data about their buying preferences without revealing any personally identifiable information (PII). It’s a hypothetical win-win that gives marketers the specific audience knowledge they need to drive effective campaigns, while placing control in the hand’s of the customer.

No such registries exist at scale today, but the building blocks are in place, and technology giants such as IBM and Microsoft have created platforms to support pioneering blockchain development. A 2018 survey by Wintergreen Research predicts that the global market for blockchain will exceed $60 billion by 2024. With this expected development comes expanding opportunities to use this technology to further individualize our marketing approach.

Identity management is widely seen as one of the best use cases for blockchain. The technology creates distributed ledgers that can be rendered virtually unhackable, which is why cryptocurrencies like Bitcoin and Ethereum are effective.

For cryptocurrency, blockchain creates individual tokens that have never been hacked and cannot be double-spent. When a merchant receives a Bitcoin as payment, they can trust the veracity of the digital token as surely as if they’d been handed a $100 bill.

Blockchain pioneers use the term “trustless” to define this quality. It means that trusted transactions can occur in the complete absence of a traditional provider of trust, such as a credit card company, bank, or government. A blockchain such as Bitcoin can be made so reliable by its design that the human need for trust is satisfied without any third-party verification.

These same trust-based principles can also be transferred to the marketing sphere, opening up new potential for personalization tactics that don’t jeopardize consumer trust or brand credibility.

Creating Personalized Digital Identities

Identity management registries use blockchain today to create wholesale identities and to verify credentials. For example, the World Food Programme (WFP) uses its Building Blocks registry in refugee camps to establish identities for displaced persons who may have no passport or other government-based identity. In its current iteration, the registry establishes an individual’s identity and associates it with an iris scan. A registered refugee can enter a dispensary at a refugee camp and claim the food and goods apportioned to them by identifying themselves via scan.

digital identities

Image attribution: David Preston

Another early-stage use case is credential management. Learning Machine, a blockchain startup, has created BlockCerts, a blockchain-based registry for credentials such as diplomas and certificates. A college or other institution can cryptographically certify a credential on BlockCerts, where it can be verified electronically by a potential employer using a key provided by the applicant.

The vision for marketing espoused by vendors such as Dapps Inc. has customers freely sharing information with marketers for their own benefit. This idea seems far-fetched in light of today’s data thievery epidemic. Customers are increasingly shielding their identities to avoid data theft, and with good reason. More than 2.5 billion data records were stolen, lost, or exposed in 2017, according to the Breach Level Index. High profile incidents like the 2017 Equifax hack that exposed the PII of 148 million people make it difficult for marketers to connect with customers who are reluctant to risk identity theft.

Dapps Inc. CEO Vikal Kapoor told TechTarget in 2018 that current data management processes are ineffective because distrust prevents parties throughout the business cycle—partners and customers alike—from sharing meaningful data. Dapps is building applications for Salesforce that store transactional data on ledgers that are shared among partners to maximize shared visibility into order status and purchase histories.

Customers Drive the Sharing Process

In the company-to-customer relationship, the potential for transformation is enormous. One proposed solution is the development of a global, anonymous registry specifically designed to encourage personalization. People could register and create identities that shield all their PII while simultaneously revealing their accumulated shopping histories and preferences to anyone with a key.

If customers gain confidence that they can share information with marketers without risking data theft, the tables can flip for personalization. Marketers would no longer have to pay aggregators for semi-useful data shards, because customers would freely share their profiles to help marketers match their preferences.

digital safety

Image attribution: Yiran Ding

Businesses might meet customers in a data-rich marketplace, or a registry might make profiles portable and enable customers to present their data key to their preferred businesses. Blockchain can also support that trust by associating every subsequent transaction with each individual profile, including any sharing of the data. This would build confidence, because customers could easily detect any data sharing.

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This brave new world does not exist yet, and it is unclear who might build such registries. The question of who would control the data has an answer that is unique to blockchain: No one would control the data, just as no central authority operates Bitcoin. Blockchain stores data across multiple instances of an identical ledger that updates with each transaction and requires no separate data entry or management.

This is a source of both strength and weakness for the technology. Distribution creates strength, because it is virtually impossible to hack thousands of ledgers at once. Hacking one ledger in a large blockchain is useless, because the moment any data is altered, the blockchain flags the altered node as an exception, rather than passing on the altered data.

Individual businesses should not plan to build the consumer preferences registry themselves. Blockchain development is complex and expensive, and an effective implementation requires a network of thousands of nodes to ensure security. The best approach is to accumulate some blockchain knowledge in-house and register with global collaborators such as Hyperledger, which is a subsidiary of the Linux Foundation. Embrace innovative thinking, develop use cases for proofs of concept and pilots, and put yourself on the leading edge.

By developing ideas and forging partnerships, brands can help drive projects forward until they achieve critical mass and deliver transformative value. Any brand that can create actual trust—which is blockchain’s best selling point—can eliminate loss-of-privacy fears and liberate customers to embrace personalization as the ultimate consumer benefit.

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Featured image attribution: Jezael Melgoza

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John MacKenna is an Editorial Strategist at Skyword and former editor of Blockchain Informed. He has written about the business applications of blockchain for TechTarget, Distributed.com, and Energy Central.

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