Although the technology is relatively new, cryptocurrency is already making waves in multiple industries. In fact, there are some who argue that it will change the face of finance and marketing forever.
Despite its relative infancy, cryptocurrency has already impacted the marketing world pretty significantly, even as experts work to understand the risks and benefits involved. Here are some reasons you should be paying attention to cryptocurrency, as well as some explanations of this groundbreaking technology, to get you started on mastering it.
First off, what is cryptocurrency?
Before you dive into why cryptocurrency is important for marketing, you need to understand what it is in the first place.
Cryptocurrency is a form of blockchain technology, the technology that bitcoin and other distributed ledger systems are based on. Basically a gigantic ledger of transactions, blockchain is an open and shared database that operates in a decentralized network format. It allows users to transfer and add information to it anonymously, without security compromises.
In other words, cryptocurrency, like Bitcoin, is an anonymous financial system that employs blockchain technology to operate. Instead of using a credit card to pay for an item online, users can use Bitcoin or another form of cryptocurrency. And it's getting pretty popular — in November 2016, the market capitalization of Bitcoin and other cryptocurrencies reached$13.8 billion.
It's important to remember that many uses of cryptocurrency in advertising are still a few years away, as there isn't much happening in this area yet. However, there's no harm in being ahead of the trend.
Cryptocurrency may make it tougher to access consumer information
The use of cryptocurrency might make it more difficult for marketers to collect the kind of data on consumers that often inform advertising strategies. In this regard, 86 percent of internet users have tried to remove or decrease their digital footprint online; and cryptocurrency will make this more possible than ever, because it will deplete the amount of consumer data available.
Currently, it's pretty easy to collect huge amounts of information on potential customers to attract leads. This is largely because the platform you use, like Facebook or Google, owns the data and sells it to you. Marketers can use this information to figure out audience segments, test which ads work better than others, predict customer behavior and more.
With cryptocurrency, however, many leads and buyer information will become anonymous, secure and encrypted — making it difficult for marketers to figure out who bought what, and how customers are responding to marketing tactics. Individuals will be in more control over their personal information, which could make it nearly impossible for marketers to gather it and design marketing strategies accordingly.
For these reasons, marketers need to start figuring out new ways to collect information to inform their strategies, if they want to keep up with consumer wants and needs.
Consumer attention and information may cost more
One way marketers could navigate the potential lack of consumer data is by paying users directly for their personal information, to be allowed to market to them online, instead of paying the platforms they use.
Since the blockchain technology behind cryptocurrency means that no single entity can own or control networks, users will be in control. Cryptocurrency itself further complicates this picture, as businesses eventually will be unable to tell who bought what product or service. Companies may need to pay users directly for their information and for the opportunity to market to them, instead of platforms like Facebook or Instagram.
For instance, new social media platforms like 21.co and Steem (which has over 30,000 current user accounts and is growing) allows marketers to engage with users for the opportunity to get the purchasing and other personal information about them that would otherwise be unavailable due to cryptocurrency. Businesses have to do the legwork to reach out to users, and the users can then decide if they want to engage.
The tricky part here is that the average customer is going to want more compensation for his or her purchasing and other information than a platform might charge for that same information now. The plus side, however, is that if the customer allows you to access his or her information, that person is more likely to be interested in your brand.
We know that discussions on cryptocurrency involve a lot of hypotheticals, largely because we don't yet completely understand what it's going to do to marketing.
However, although cryptocurrency may not affect your own business marketing model, it's a strong representation for where digital trends are heading in the next few years. Even if the changes aren't as dramatic as now believed, it's a good idea to prepare and explore the potential of cryptocurrency so that you aren't taken by surprise.
What are some other ways you think cryptocurrency might affect marketing in coming years?
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This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors