Analyzing Advertising on the Bitcoin Blockchain
In this report, Bitfury shares analysis by its Crystal Blockchain team on certain cases of using the Bitcoin Blockchain for user targeting and advertising.
Starting as early as 2014, crypto and blockchain companies have used the Bitcoin Blockchain to conduct advertising campaigns. Historically, it has been difficult and/or expensive to advertise on traditional platforms like Twitter or Google, and the Bitcoin Blockchain provides an alternative, less expensive avenue. This can vary from sending simple transactions with messages attached to them to full-scale campaigns that target thousands of users.
These companies usually use one or more of the following tactics:
- Create a bitcoin address with their company name. You can generate addresses like this from many sites at no cost, and then use the address to send and receive bitcoin. For example, many exchanges use bitcoin addresses with their company names to promote operational transparency.
- Put a custom script in the outputs section of a transaction. This script usually reflects an encoded message — Bitfury even had an employee register proof of his wedding on the Bitcoin Blockchain using this method. By sending just a small amount of bitcoin (as low as a satoshi), you can record messages into the Bitcoin Blockchain. Bitfury itself has used this technology in our land titling blockchain pilot in the Republic of Georgia to timestamp more than 1.8 million digital signatures onto the Bitcoin Blockchain.
- Creation of manual tags. When using a blockchain explorer (such as blockchain.info), users can view the “tags” associated with an address. Companies can ascribe tags to the addresses they use and own.
Using Bitfury’s Crystal Blockchain, we have analyzed some of the most well-known advertising campaigns conducted on the Bitcoin Blockchain — starting with the recent campaign by a mixing company, BestMixer, that targeted thousands of users without their consent, causing confusion and (in some cases) financial repercussions.
Campaign #1: BestMixer
Bitfury’s Crystal Blockchain team began researching this campaign after we saw multiple posts on online forums from people who had received transactions they weren’t expecting from a BestMixer address. BestMixer is an anonymous online bitcoin mixing service with a high risk score on the Crystal Blockchain platform. Our initial research led us to Bitcoin Talk,where BestMixer posted about this advertising campaign. The rationale for beginning this campaign was that, “given BestMixer is an anonymous project, our advertising methods are severely limited.”
To date, BestMixer has sent 57 transactions with almost 47,000 outputs of 888 satoshi each. They targeted addresses with large bitcoin balances as well as recently active blockchain addresses. This cost BestMixer around 0.416 BTC, or approximately $2,725. These users did not opt into receiving this advertising from BestMixer, and the scope of their outreach led to many posts online questioning the transactions and their origins.
Understandably, most people were concerned about these transactions, as they had not requested them. An additional cause of concern for this advertising campaign is that BestMixer sent these transactions to users at Bitfinex and Bitflyer. These exchanges charge a deposit fee of 0.0004 BTC for small deposits. Many users were forced to pay these fees after receiving these unsolicited advertising transactions. Using our Crystal interaction tool, we discovered that there were at least 217 Bitfinex addresses and 149 Bitflyer addresses included in this advertising campaign, and we estimate that the receivers had to pay almost $1,000 in fees as a result. Between these fees and the concern the campaign evoked online, we consider this an unsuccessful advertising campaign and appeared more like spam to its recipients instead of legitimate advertising.
Here are a few other historical examples of using the Bitcoin Blockchain for advertising:
Campaign #2: Laxo Trade
Laxo Trade’s campaign was one of the first examples of blockchain advertising. As you may see on the screenshot below, the output addresses in many transactions have the tags in alphabetical order — suggesting that Laxo either found or compiled a list of these users for targeting based on their tag names on Blockchain.info. Laxo advertised itself by sending small amounts of bitcoin to many addresses from a bitcoin address that contained the company name — “1LaxoTrQy51LnB289VmoSAgN6J6UrJbfL9.” The bulk of the campaign was conducted on September 6 and 7, 2015. The company sent 109 transactions with 12,173 outputs and the estimated cost was $68.04.
Campaign #3: Factom
From March 31 until April 7, 2015, Factom also conducted a campaign on the Bitcoin Blockchain. They used the address “1FactomGnNFTsTVx8jiGjcLKDpyL65GDsH” to send 0.0005 BTC to early adopters of Koinify, top Bitcoin addresses and other wallets found online. They sent transactions to 9646 addresses, and we estimate they spent approximately $1,447 on this campaign.
Campaign #4: JUBTC
JUBTC demonstrated another example of advertising campaign by adding tag on its wallet on popular explorers. Using the address “1AK4LYE6PYwBmSYHQX3v2UsXXHTvCAsJeK,” they sent small sums to the addresses with some of the largest bitcoin balances. To date, they have completed 1,432 transactions, sending approximately 800 satoshi each time. When viewing the address in an explorer, you see that the address is tagged as JUBTC and that it lists the company’s phone number and website. We estimate they’ve spent only $83 on this advertising.
Campaign #5: Donation Requests from Unknown
Some individuals or companies have also realized that they can use bitcoin transactions to request donations. Normally, they create an address with a request in the name (for example: 1DonateWRyjJzd29uAdM86bgPUD331ade4) and send small sums to addresses that have a large amount of bitcoin as a donation request.
Two examples of this are:
- 1DonateWRyjJzd29uAdM86bgPUD331ade4 — this address has sent 2 transactions. We estimate this cost to be about $10 total — and they received one transaction of $5.50 after that.
- 1HELPMEWinQPNsYmbJU2siyKUCEZaNYj7j — the address sent 2 transactions as donation requests ($0.02) and received a transaction in return with $12 from an unknown address.
We cannot say for sure how impactful these advertising campaigns were, but what is clear is that more and more uses will be found for bitcoin and blockchain technology. If you are interested in using Crystal Blockchain to learn more about the Bitcoin Blockchain and view these campaigns for yourself in our easy-to-use interface, contact us at email@example.com.