As I started thinking more deeply about the reasons for lack of adoption and why projects stagnate, it also occurred to me that the potential of blockchain is underestimated. There was too much noise in the market. Many projects/ICOs were started just as a money grab, people came up with the narrowest niches to make their coins in hopes of getting rich quick. Add the traders and speculators to the mix and the signal was lost.
Instead of thinking how to get funded, I approached blockchain from a perspective of being 10 years in the future, and beyond using cryptocurrency only as a payment ecosystem. How could blockchain’s properties and features be used serve the people? What are the pressing problems blockchain can be applied to solve? What can blockchain do if it had 1 billion users? And, how do we get there?
There was a big list of answers to these questions, and it was not my intent to address each one. The problem I ended up focusing in on was the erosion of trust in large tech corporations. Personal information was being collected and sold without knowledge or consent for advertising dollars. When I requested my own information from Facebook, it was a shock that it wasn’t just the public posts and comments, but also all my private conversations from the first day of use to present were sold as a package to any marketer that paid the right price. I “deleted” my account that day and never went back.
It wasn’t just Facebook, that model has become standard practice in the industry, in return for using their service free of charge, you were sold as the product. They make billions of dollars and you get to see pictures from friends and family. As technology advances, the cost benefit seems disproportionately favorable to these corporations and the consumer gets very little say in the whole process. In many cases, there are not even viable competitors for the consumer to choose from.
Once the decision was made to address this particular issue, the next obvious question was what does the solution look like? Why would anyone give up using familiar services and switch to a different solution? What features would be important to them? And most importantly, how does it benefit the end user?
For any solution to disrupt the existing and familiar services, it can’t be a slight improvement. It must be significantly better. So, I started with the obvious, personal data was being sold for hundreds of billion dollars every year. What if it can go directly to the consumer instead?
A back of the envelope estimate was made using only data from Facebook and Google. In 2017, each had about 1 billion active users, and Facebook generated $40B while Google generated $110B revenue from that user base. These two companies were used as the basis of comparison because most of their revenue came from advertising. And as more people are projected to use their products in the next few years, the revenue is projected to grow with it.
That means roughly 1B users are generating $150B of ad revenue, or $150 per user per year. Both the user base and revenue per user should grow as more people are spending more of their time online. The real question then becomes, is that enough to attract some users away from those services? My theory is that it is. I will cover why in a later post, but for the time being, let’s move on to the how.
To summarize the solution in the broadest sense, users are by default opted out of sharing any info with advertisers. But they will be able to opt in to share a variety of personal info such as age group, income group, location (differing levels by country, state, or zip code), spending preferences, brand preferences, particular interests such as weight loss or quit smoking, etc. And the more they share, the more valuable they are to advertisers that want to target a specific demographic. They can also set their own rate for how much their interactions will cost an advertiser, for example, for watching a 10 second video, they may set a price to 5 Notes.
While advertisers can set their marketing campaigns to target end users by the same info. And they can set the price they are willing to pay per tier of personal info shared. So, they may want to pay no more than 8 Notes for a 10 second interaction from someone that has shared every category of personal info, and they will buy 2 million such interactions with the eligible demographic, starting with the lowest set price and working up until either the 2 million users are reached or when everyone that set their price at 8 Notes or lower are reached. This not only allows advertisers to focus in on their preferred demographic, set effective and exacting limits on spending per end user reached, but they also know the audience are incentivized to be receptive to their marketing efforts. It is also efficient for the advertiser and fair to the end user because it is essentially a bidding system and only prices that both parties deem acceptable will result in transactions.
Advertisers can further incentivize end users by offering discounts or Notes in exchange for checking in, forwarding the ads, or similar actions. As more users and companies see the benefits of this system and get onboard, the ecosystem can expand to an all-encompassing loyalty program for every significant brand out there because they can reach a significant portion of the world population. Such an ecosystem will neatly combine advertising and loyalty programs from many companies into one common platform and currency.
That’s obviously very ambitious. The next question is how do we get to that point? This will be covered in the next blog.