Exploring How Data Marketplaces May Work With Blockchain-Based Identity
There have been multiple articles condemning Facebook and Google for making money off the data they collect from users. Two things are making that more difficult now: first, GDPR and its requirements to gain consent for data usage, and second, many vendors in the blockchain-based identity space like Pikcio are decentralizing identity data in order to give control back to users, keeping data out of centralized third party applications.
With more personal control over our data, we now stand to gain from monetizing our own data — getting the profit that currently goes to big tech vendors (and credit bureaus, hospitals and pretty much any third party that has a large store of consumer/user data.) But while getting paid directly for our data seems like a great move forward in terms of fairness for users, there are still many questions that need to be addressed in the move to monetization, including:
- How will the buyers of data find the sellers of data and vice versa?
- How can data monetization happen easily without forcing data buyers to literally transact with each user individually — an expensive, cumbersome process if the buyer wants to procure a large data set?
- To what extent do users have to become negotiators on their own behalf, deciding on a case-by-case basis what data to share and how much to charge?
These questions will be addressed by the rise of a new intermediary — a data marketplace (and more likely, multiple data marketplaces.) Some blockchain proponents love to discuss how blockchain’s peer-to-peer trust model removes intermediaries, but in reality blockchain will remove middlemen that add no value while creating new market-moving intermediaries. And data marketplaces will be value-adding connectors that play a key role in helping data buyers and sellers find each other.
Data marketplaces will be hubs where consumers can choose to connect and see what buying offers are available based on what kinds of data the consumer is potentially willing to share. The seller can do this at an individualized level, where the seller evaluates each opportunity individually before deciding to participate (for example, being willing to let researchers buy anonymized health data but not pharmaceutical companies) or the seller can decide on a larger scale that he/she is always willing to monetize certain kinds of data (clothing purchase habits, for example.)
Buyers will connect to the marketplace to place offers to buy data, outlining what they’re willing to pay and how the data will be used. These offers will then get broadcast to buyers based on applicability and user pre-defined settings. There may even be some negotiation function where sellers and sellers can refine the existing offers.
In many cases, these data marketplaces will be new ventures — either as add-ons to other decentralized applications, or as standalone apps that get integrated to existing systems. In other cases, it’s likely that some vendors who already have large data stores and access to large customer sets will become data marketplaces. Telecom vendors, for example, could refine their business models to share data monetization revenue with customers. Big tech vendors could do the same. They would have to offer more transparency into data sharing, create consent mechanisms, and of course create an equitable revenue sharing model.
All of this will create new value for consumers and enterprises as data marketplaces emerge as blockchain-based identity matures. The first step will be to ensure solid, trustable blockchain-based identity solutions as the foundation for any consumer-led data monetization. With a core reusable identity data store, consumers can participate in marketplaces to sell non-identifiable data or anonymized data knowing there is transparency in the process, privacy in the data sharing, and equity in the financial incentives.