What is blockchain, and why is it vital to communicators?

The global online ledger has retail sales implications for manufacturers, as well as applications in elections, identity security, consumer protections—and much more, as PR pros get creative.

Why don’t most producers of goods sell directly to customers?

There are no Whirlpool stores. If you want a Whirlpool refrigerator, you go to Sears or some other appliance retailer. Even if you visit the Whirlpool website, you will find that each product listing comes with a “Where to Buy” button.

Whirlpool is not in the direct-sales business. Managing all those consumer transactions is not a Whirlpool competency. It is easier to be a wholesaler, selling in bulk to retailers whose business model is based on consumer sales and the complex chain of financial transactions that go with it.

The Internet has enabled e-commerce and the likes of Amazon, disrupting brick-and-mortar retailing with more streamlined processes for financial transactions. Still, Whirlpool needs retailers to sell its goods to consumers, and the wholesale/retail dichotomy remains firmly in place—though perhaps not for long.

Large companies have launched big experiments with a new technology that could enable Whirlpool (and GE and Black & Decker and Samsung and every other producer of goods) to sell directly to customers. This technology could do to Amazon what Amazon did to brick-and-mortar retailers.

The technology is called blockchain

It’s technical, it’s geeky, and although its uses can include all manner of things, right now it is mostly talked about in terms of financial transactions. Its potential to affect every business on the planet is so huge, though, that in order to avoid being blindsided by it, communicators must understand it and prepare for it.

For communicators, there are two basic reasons to get up to speed on the blockchain:

1. You will be communicating about how it affects your organization. Your company may embrace it and start to use it, or it may be broadsided by it. Either way, you’ll have to talk about it to your company’s various stakeholder audiences.

2. The blockchain will have uses for communicators.

Blockchain explained

Let’s say you want to invest in bonds. It normally takes two days for that transaction to clear, because of the complicated process of verifying the transaction. A number of institutions are involved, including (but not limited to) banks, traders, exchanges and clearinghouses.

The purpose of this complex process is to verify that money was exchanged for the bond and that the bond was delivered to the person who purchased it. All business financial transactions have similar processes, even if it’s just a credit card purchase of a Kylo Ren action figure.

Enter the blockchain.

Think of a ledger in which transactions are recorded. Now think about storing that ledger on a number of computers all over the world. Whenever a transaction is recorded on the ledger on one computer, it is updated on all the others. Strong encryption makes sure nobody can tamper with the data.

If your company sells Kylo Ren action figures and I want one, I can buy it directly from you. The transaction is recorded instantly on the blockchain, enabling your company to verify that I have sent the funds, and you can ship Kylo directly to me (light saber included). When you use blockchain, waiting days for funds to clear is a thing of the past.

Blockchain rose to prominence with Bitcoin, as explained in this video from the Financial Times:

As the video notes, there are challenges to adopting the blockchain for every kind of transaction based mainly on scale. That’s where some big names come in.

Last year, Microsoft partnered with a blockchain startup called Consensys and launched a cloud-based blockchain platform for banks and insurance companies that use Microsoft’s Azure platform. (The platform uses technology from Ethereum, which offers a cryptocurrency—the currency units are called “ethers”—to compete with Bitcoin. Ethereum is now the second-largest cryptocurrency behind Bitcoin.)

The blockchain and money

Microsoft isn’t acting alone. Other companies working to build blockchain include Cisco Systems, IBM and Wells Fargo. In the meantime, 11 major banks have tested the Ethereum blockchain platform, part of a consortium of 42 lenders coordinated by a software company called R3 to find ways to use blockchain in financial markets. Among the 11 banks and Barclays, UBS and HSBC.

According to Reuters, “The 11 banks in the simulation, operating across four continents, each used their own computer, or ‘node,’ and transferred ‘Ether’ to each other…They were able to settle the transactions almost instantaneously…compare(d) to settlement times of days or even weeks, depending on the asset class, under the current systems used by banks.”

Nasdaq is testing blockchain for selling shares of stock.

The publicly traded company Overstock is issuing stock (with SEC approval) via blockchain. Visa and DocuSign have introduced a process to let people rent cars without all the paperwork, with each car assigned a unique digital identity registered on the blockchain, which is linked to DocuSign’s eSignature and Visa’s payment processes. A Telegraph article explains that this will let the customer “pay for the lease and insurance, as well as in-car payments like tolls, maintenance services and parking, on the fly.”

Blockchain isn’t just for financial transactions

As blockchain continues down its transformative path for financial markets, communicators must explain the impact on their organizations, how they are applying it or working to defend their positions against it.

(Remember, who needs a retailer to handle sales for you when you can manage them instantly on your own? As Roger Arnold explains: “What Amazon did to Sears is what the Ethereium platform may do to Amazon, as producers start to use the Ethereum blockchain to bypass intermediaries in order to deal directly with end consumers.”)

Money isn’t the only use for blockchain, and communicators will have to explain them as well as use them.

For example, I have been playing with a new smartphone app called UProov (that’s “you prove”), available for iOS and Android. The app enables you to take a picture, record audio or shoot a video and then record that you have produced that content on the blockchain, providing proof that you took the picture when and where you did.

As a CoinDesk article explains, you could take a picture when you first walk into an Airbnb rental and see there is already damage in the room. Because the picture you took was recorded on the blockchain, the property owner won’t be able to claim that you caused the damage. The article lists several other uses for UProov.

Essentially, recording anything on the blockchain is a digital form of notarization. (You don’t have to record your content with UProov; you could also select a file on your mobile device.)

Using UProov, for example, you can take a picture of something you created that serves as a copyright, though you don’t need UProov to do that. You could save a document as a PDF file and submit it through a website called Proof of Existence. The site allows you to “anonymously and securely store an online distributed proof of existence for any document.”

The mind reels at the number of PR uses to which the blockchain can be put. Proof of Existence suggests you use it to ensure the integrity of documents. “If you store a proof for your document and later re-upload it,” language on the site explains, “the system will only recognize it if it is completely and fully the same document. The slightest change, and we’ll recognize it is different, giving you the security that certified data can’t be changed.”

That could apply to anything from an executive speech to a press release. Imagine its value as content producers increasingly syndicate content across multiple social and publishing platforms.

Blockchain can be used to prove ownership of software in development, the details of a contract or ownership of digital content. In health care, it could be used as the platform for decentralized patient records management. Companies that depend on customer reviews could use it to prove the authenticity of a review (for example, proving that a bad review wasn’t written by a real customer but instead by a competitor or disgruntled former employee).

A technology called Monegraph lets you not only claim ownership of your work, but also set rules for its use. The Monegraph website proclaims puts “artists and publishers in control of their media licensing, so they can get paid for what they make.” The site is aimed at photographers, artists, filmmakers, musicians and publishers.

Musical artists should also know about Blockchain Technology Group, which is developing a blockchain-based music-streaming service that improves on royalty systems that currently allow small amounts to fall through the cracks.

Ultimately, blockchain could change the way people vote in elections. According to FollowMyVote.com, “By casting votes as transactions, we can create a blockchain which keeps track of the tallies of the votes. This way, everyone can agree on the final count because they can count the votes themselves, and because of the blockchain audit trail, they can verify that no votes were changed or removed, and no illegitimate votes were added.” Ambisafe is working on a tamper-proof national voting system.

It can help protect individuals from identity theft. A business called Onename lets users create tamper-proof digital identities.

Companies are looking to blockchain to streamline and strengthen supply chains, recording on the blockchain each step a part or product has taken.

Communicators, take note

These are just the uses that have been dreamed up in the earliest of days, when most people haven’t even heard of the technology. Just imagine the applications that will be innovated as it becomes more common.

The PR and communications industry does not have a great track record when it comes to recognizing the importance of emerging technologies. Going all the way back to desktop publishing, the industry has shrugged off email, the Internet, the Web, social media and mobile technology (among other advances) until recognition of their importance set in and practitioners had to play catch-up.

Currently, the industry is paying scant attention to beacons, programmatic technology, Virtual and Augmented Reality, and a host of other innovations that will become part and parcel of communications in the next few years.

Once again, we have an opportunity to be ahead of the game with blockchain. A Google search of PR and blockchain, however, reveals only a few instances of PR people addressing it-most from Phil Gomes and me. (The rest are press releases from companies announcing blockchain services or agencies touting their blockchain-based clients, including this one.)

Let’s not blow it.

A version of this article first appeared on Shel Holtz’s blog.

(Image via)

Topics: PR


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