Why publishers should care about blockchain now
Few would argue that 2017 was a watershed year for bitcoin. When the nine-year-old cryptocurrency caught the attention of average consumers last year, it skyrocketed to over US$19,000/coin.
Most of the world was caught off guard by the financial frenzy around the alternative form of money because most people had no idea what a bitcoin even was. Suddenly there were hundreds of articles spouting terms like blockchain, ethereum, soft forks, hard forks, private keys, public keys, EOS, ICO…the list goes on.
While it’s all very confusing, one thing is clear. 2017 wasn’t just a watershed year for bitcoin, it was a tipping point for the internet (or should I say tripping point). The underlying technology upon which bitcoin was built, blockchain, is poised to turn the internet on its head — and digital publishing back on its feet.
Before I get that, let’s start at the top.
What is blockchain?
Blockchain is a decentralized, replicated ledger (think spreadsheet) of transactions in a network built using open-source protocols. Every verified transaction (e.g. the transfer of an asset from one user to another) is recorded in a block of data which is chained together with other verified blocks in the network (hence the name blockchain).
Assets can be tangible (e.g. money, deed to a house, hotel room, boat) or intangible — non-physical items of value categorized as:
• Financial (e.g. cryptocurrency such as bitcoin)
• Intellectual (e.g. trademark)
• Digital (e.g. online content)
What makes blockchain unique?
The internet we’ve come to know isn’t what it used to be. Yes, it still provides a many-to-many communications capability never before seen in our history, but it’s also…
• Basically controlled by oligopolies (e.g. Facebook, Google, Amazon, PayPal, eBay, etc.)
• Not secure — home of multiple forms of cybercrime
• Untrustworthy — ripe with advertising fraud and misinformation (#fakenews)
• Lacking the open protocols needed to protect identity and intellectual property
Blockchain is like the internet in some ways, but so much better in terms of its openness, security, transparency, trustworthiness and safety.
1. With blockchain no central authority has control
Recently I read a long, but excellent article by author, Steven Johnson, in The New York Times that discussed blockchain versus the internet in terms of authority. Here’s a quick synopsis.
40+ years ago when the internet, as an information exchange network, was launched to a limited group, it was founded on open software standards (e.g. SMTP, IMAP, POP, HTTP, etc.). It was that openness that gave everyone free access to build and access web pages and use communication services like email. By design, there was no central authority providing permission to use the internet.
But when the web became the de facto standard for accessing information on the internet,
companies started to build applications on top, also using open protocols (e.g. XML, WSDL). What happened was that within those applications were private databases that were controlled by the organizations that developed the sites. You could still visit the website of a business, but you couldn’t access its services or content without permission, and often some form of payment (e.g. money, personal information).
The internet ended up becoming a closed, centralized system where trust was given to the institutions (e.g. banks, retailers, and social networks) — organizations that continue to be hacked on a regular basis, resulting in phishing, identity theft, fraud, loss of assets and ruined credit ratings. These days, it’s not a matter of if you’ll be compromised on the web, it’s a matter of when.
In a public blockchain there is no central authority to give or refuse users permission to transact over the chain — no honey pot to hack.
Bitcoin is a good example. It was the first digital currency based on blockchain architecture that removed intermediaries (e.g. banks) from the financial transaction process, creating a true peer-to-peer network.
With bitcoin, people with almost complete anonymity, have 100% control over their money and it cannot be seized, frozen, censored, or stolen. Their transactions can’t be controlled, intercepted, stopped, or manipulated by others.
Ethereum is another good example. But instead of being the internet of money, ethereum is the internet of smart contracts.
Smart contracts are applications on the ethereum blockchain that execute all the votive aspects of an agreement/promise/commitment between users. Smart contracts can be used to replace insurance policies, wills, license agreements, purchases of sale, joint ventures, etc. Just like cryptocurrency tokens can’t be changed or lost, neither can smart contracts.
2. Security is ensured through consensus protocols
Blockchain’s decentralized architecture provides robust security that gives users complete control over their own transactions, but no one else’s. Privacy is ensured through the use of 256 bit private keys — impossible-to-crack passwords for a bitcoin or ethereum wallet.
Anonymous participants on a blockchain, regardless of where they are, run full copies of the blockchain/ledger (called nodes) on their computers. These participants are all responsible for verifying transactions by using their hardware and software resources to solve a cryptographic puzzle. It is this consensus protocol that ensures a common, definitive ordering of transactions and guarantees the consistency and integrity of the blockchain across geographically-dispersed nodes.
The first user to solve the puzzle is rewarded, the transaction is executed, and logged in the ledger by the winner. Rewards were originally paid in bitcoin, but they can be any tangible or intangible asset.
Now, I expect you’ve heard all the hype about how bitcoin was hacked, but that is fake news. The nine-year-old cryptocurrency, whose market
cap as of February 7, 2018 was roughly US$138B, has never been hacked. What have been hacked are bitcoin exchanges and some users’ wallets. The problem isn’t bitcoin or blockchain; it’s the people and companies that insanely store private keys where hackers can find them — on the internet.
Something that should be noted as well is that blockchain does not recognize borders or people per se. In a public blockchain like bitcoin or ethereum, assets can be owned by any entity on the network, including machines. It’s why blockchain is being considered a potential technology for securing the Internet of Things (IoT).
3. Transparency breeds trust
When a transaction is recorded on a blockchain it can be seen by everyone. And because blockchain uses public key cryptography in the sending and receiving of messages, that transaction can never be deleted, forged, or modified in any way. Where every record is essentially immutable and completely transparent (as there is with bitcoin), a blockchain is a platform of trust.
Now there are critics that would argue that blockchain’s support for user anonymity creates a breeding ground for criminal activity. Certainly there have been many reported cases of nefarious behavior (e.g. extortion, money laundering), but it’s nothing new.
The internet was ripe with criminal activity in the beginning and still is to this day. Online or off, there will always be those who play by the rules and those who don’t. The key is for law enforcement to stay on top of blockchain technology and leverage it to serve and protect its citizens.
So what’s in it for publishing?
Certainly all the blockchain benefits outlined above are good for everyone, including media, but the unique value for digital publishing comes with solving the problems that have been haunting the industry since the dawn of the internet — plagiarism, copyright infringement, advertising fraud, and fake news, to name a few.
From the moment publishers started posting articles on the web, they started to lose control of ownership. Today it is virtually impossible to administer digital rights online.
But with ethereum smart contracts, intellectual property rights for content (e.g. text, video, images, music, and ads) can be securely and transparently stored in the ledger, and tracked and enforced as that content is shared, copied, rented, donated, licensed, referenced, or sold across the network. Republishing of content brings to creators additional revenue at every step!
There are already companies experimenting with solutions to ensure fair monetization of attribution and protection of rights. Others are dabbling in the advertising space to increase transparency and eliminate ad fraud.
Some are looking to use blockchain technology to completely remove advertisers and intermediaries from the creation-consumption equation, connecting readers and writers directly to fund investigative journalism in a decentralized marketplace. It all sounds very utopian, but how will they solve the content discovery problem without the help of intermediaries?
Despite any shortcomings in these early initiatives, this experimentation is great because it helps shake out the technology and inspire further innovation.
A new internet is coming faster than you think
Now, you’ve probably heard that bitcoin, ethereum and all of the other public blockchains built on the same recipe are basically where the internet was in the early '90s. And that like the internet, it will be at
least a decade before blockchain hits mainstream.
But I caution you to not get too comfortable assuming that you have lots of time before you have to think about blockchain. Remember with computers doubling their capabilities every 12-18 months, in only 10 years, technology will be 1000 times more advanced than it is today. The rate of growth of blockchainbased applications and related innovations is already showing exponential potential.
Did you know that Google was one of most active corporate backers of blockchain startups in the past few years? Since 2012, Google and other large businesses have invested over US$1.2B. The number one backer was SBI Holdings in Japan. Google was second, investing in six companies including: Veem (merchant services), LedgerX (private enterprise services), and Storji (data storage).
Amazon, which bought amazonbitcoin.com three years ago, just secured three other cryptocurrency-related domain names (amazonethereum.com, amazoncryptocurrency.com, and amazoncryptocurrencies.com).
On January 4, 2018, Mark Zuckerberg wrote that he would study how encryption and cryptocurrency (elements of blockchain technology) could be used in Facebook. By month’s end, he had banned of all ads promoting cryptocurrencies on the platform. Curious timing.
It will be interesting to see how blockchain, which is all about decentralization, will be exploited by three of the most centralized platforms in the world. Certainly they could all build private blockchains within their walled gardens and conduct business as usual, but would consumers want to join them given their history if decentralized solutions are available to them?
Watch, listen, learn, and plan
I’m not suggesting that you jump on the blockchain bandwagon now and throw a lot of money at it. But it’s imperative that publishers educate themselves on this technology, keep up to date on its evolution, take note of what’s happening in other industries, and start planning for a new, open, decentralized internet.
But, please don’t do what most did in the 90s when they tried to fit the internet into existing business models and audit structures. A repeat of that skeuomorphic mindset will only get you into deeper trouble.
Today’s closed and centralized authority paradigms will not survive this revolution, and that’s what blockchain is. So get ready for it now and start to build and nurture a culture of innovation within your organization and your industry.
Plan with blockchain and all its possibilities in mind. Be open to new opportunities and recognize that although many attempts at commercializing the technology will fail, some will transform the industry in ways many of us never imagined.
Blockchain is a topic that needs to be discussed on a regular basis within our industry in an open, transparent, and collaborative way. Only together will we be able to capitalize on all it has to offer.
And don’t forget, IoT, artificial intelligence, artificial reality, and virtual reality are evolving quickly and will someday integrate with blockchain. The potential is huge, but the risks are real. And unless you convert your media business into a technology company like Bezos did with The Washington Post, you can’t possible ride this wave of innovation alone.
It’s time to put aside self-interests and collaborate with other media companies and trusted technology partners to help bring to fruition what computing pioneer, Alan Kay, said in 1971, "The best way to predict the future is to invent it."