Cryptocurrencies And It’s Importance In Digital Marketing
Bitcoin? Tether? Ethereum? How about a virtual currency that can act as a medium of exchange on a global scale? 20 years ago, this hardly existed and had been seen as almost impossible, but today, the majority of the world uses cryptocurrency, and roughly 2.9 to 5.8 million people in the United States have invested, in hopes of making themselves more prosperous in the future. Only a few Bitcoin enthusiasts were on board when Bitcoin first appeared in 2009. However, as a consequence of its legitimacy over time, it began its development, and eventually, it led to the creation of numerous other cryptocurrencies.
Bitcoin, the first decentralized cryptocurrency, came into existence in 2009, and since then cryptocurrencies have evolved from there. Initially conceived as a means for people to transfer the currency anonymously, cryptocurrency has grown tremendously in value and is being hailed as ‘digital gold’ by many users.
EVOLUTION OF CRYPTOCURRENCY
It doesn’t take long for something new to be copied when you introduce it to the market. This was definitely true for Bitcoin. As Litecoin, Swiftcoin, Namecoin, to name a few, entered the market in 2011, rival cryptocurrencies started to emerge. Given the current market value of Bitcoin is $44 billion, this is not surprising. In order to take advantage of this, developers around the world are creating new cryptocurrencies every single day, all hoping to create the next Bitcoin. Some of the major cryptocurrencies which evolved over a period of time are:
- Bitcoin (BTC): Bitcoin is widely known as an original cryptocurrency. A free and open-source software, it was created in 2009. It was Satoshi Nakamoto, under the pseudonym Satoshi, who created this digital currency. A peer-to-peer transaction is transparent with Bitcoin because it uses blockchain technology. Although users can see these transactions, their security is assured through the cryptographic algorithms woven into the blockchain. Each owner of a Bitcoin is given a “private key” that enables them to decrypt the transaction. There are no intermediaries involved in a Bitcoin transaction. With Bitcoin, there is no central
authority figure as in the case of a bank. With Bitcoin, individual users may send and receive money anonymously around the world. - Litecoin (LTC): As an alternative to Bitcoin, Litecoin has been around since 2011. The Litecoin network is like other cryptocurrencies-it is a decentralized, open- source currency that has no central authority. Major differences between Bitcoin and Litecoin are-
a) Transactions are said to be faster with Litecoin.
b) The Bitcoin and Litecoin coin limits are 21 million and 84 million, respectively.
c) The algorithms for Litecoin and Bitcoin are different, with Scrypt being the one for Litecoin and SHA-256 being the one for Bitcoin.
3. Ethereum (ETH): Ethereum is a cryptocurrency and open-source platform that was born in 2015 with the advent of blockchain technology. Ethereum Blockchain not only keeps track of digital currency ownership but also enables developers to use any decentralized application’s code to pay for transaction fees and services on the Ethereum network, allowing them to use Ethereum for many decentralized applications.
4. Bitcoin Cash (BCH): Developed to improve the features of Bitcoin, Bitcoin Cash is a type of digital currency. Bigger block size in Bitcoin Cash allows more transactions to be processed quicker.
5. Zcash (ZEC): The codebase of Zcash was derived from Bitcoin. Researchers at Johns Hopkins University, MIT, and other respected institutions built it on a decentralized blockchain. Zcash distinguishes itself from other cryptocurrencies by placing an emphasis on privacy.
Even though we have seen a spike in value across thousands of live cryptocurrencies in 2017, they are still not finding use in our daily lives. Bitcoin owners typically purchase the currency as an investment, rather than using it as a new way to shop online. In the aftermath of an unprecedented boom in 2017, 2018 began with a different tone than 2017. The market collapsed and fell by 65%, leaving new entrants uncertain about the
future of cryptocurrencies.
IMPORTANCE IN DIGITAL MARKETING
To understand how cryptocurrency affects social media marketing trends, a good example would be YouTube.
In the current digital marketing industry, there are four main players: the user (you), the publisher (content creators), the advertiser (companies trying to promote their goods), and the platform (Facebook, YouTube, etc.). Advertisers looking to target specific audiences will seek out the right publishers and sign contracts with them that will allow them to advertise on their channels. By integrating blockchain into this process, the system would be transformed dramatically, as well as many other aspects of it.
In the first place, users would enjoy greater anonymity. Numerous instances have been documented in which platforms have been using private data without the consent of users. A case in point is Mark Zuckerberg, who went to trial for selling Facebook user data to Cambridge Analytica. Often, advertisers use this data for target advertising. It happens quite often, but if blockchain were to be integrated, users would be better protected since the data would be less accessible.
Next, Blockchain integration could enhance the user experience by offering incentives for them to view the advertisements. If users watch the entire advertisement, there could be a reward system.
Additionally, publishers would be fairly compensated. Publishers receive virtually nothing in compensation when companies advertise their products. Platforms tend to be stingy with royalties, keeping most of them. Take, for example, Luis Fonsi’s most viewed video on YouTube, “Despacito.”. The song currently ranks second on YouTube with 7.3 billion streams (for comparison, the world population as of 4th August 2021 is 7.8 billion), YouTube only recouped $11.8 million for it (as of August 2021). Therefore, most of the revenues from ads are not going into content publishers’ pockets but instead to platform providers.
Digital marketing using the Basic Attention Token (BAT) is the perfect example of cryptocurrency-infused marketing. A digital advertisement token, BAT, is based on the Ethereum blockchain. In addition to creating a decentralized ad exchange that connects advertisers, publishers, and users, the token will also provide a means to monetize user attention and remove all the needless expenditures associated with ad networks. This token rewards all parties involved: users are reimbursed for their time, publishers earn a reasonable share of ad revenue, and advertisers get a more profitable return on their investment, all at the same time.
Thus Blockchain integration enables buyers and sellers to cut out the middleman (digital platforms) and a third-party marketplace won’t be necessary for the transactions to be completed.
CONCLUSION
Despite blockchain’s growing role in business and marketing, that is not a bad thing. By reducing costs, increasing transparency, and increasing consumers’ trust in your business, will help small businesses compete with larger ones.
We briefly discussed some possible outcomes, but all of this is hypothetical at this point and there is no guarantee cryptocurrencies will cause digital marketing to change. Nevertheless, wouldn’t it be beneficial to be prepared if it happened?