The Impact of Decentralization and Cryptocurrencies in Online Advertising

Peer behind the speculative curtain, however, and you find something truly amazing: a transparent, immutable record of peer-to-peer transactions running flawlessly with no one behind the wheel. This protocol, based on blockchain technology (also known as distributed ledger technology or DLT), has the potential to radically reorder systems we take for granted today, especially in online advertising. Most of these disruptions are still years away, but some are already happening right under our noses.

Rewarding consumers, not platforms

The most radical capabilities of bitcoin and the like lie in their ability to facilitate trade between entities who neither know nor trust one another. This is why we rely on Google, Amazon, banks, and myriad other institutions we take for granted. I don’t know you, you don’t know me, but we both know Google and have a certain amount of trust in its capabilities. What if we didn’t need Google, or any organization for that matter? 

If we lived in a post-centralized world, consumer attention could be purchased directly from those consuming the ads. This is hard to wrap your brain around because we’ve only ever known a centralized world but bear with me. In this far off world, Facebook has been replaced by a social media platform that is run by the consensus of its user base, rather than by Zuckerberg and his executive board. If you wanted to advertise to this group, you would program your content and budget (in the form of cryptocurrency) into the platform, and when users consume that content they’re credited a corresponding fee. The reward amount could even operate on a sliding scale to incentivize more targeted demographics. The big difference in this world would be that people would own their data, not corporations, and they could choose to sell their information or keep it private.

Transparency

Contrary to the popular belief that cryptocurrencies are primarily used to obtain illicit goods and services, most blockchain-powered currencies are highly trackable. In theory, you can track a bitcoin’s path through every wallet back to its origin. If the rumors of Google Pay incorporating cryptocurrencies come to fruition, we could enter a new era of transparency in digital advertising. The more crypto-versed among you might be saying wait, aren’t there versions of Bitcoin, such as Monero and Zcash, that are truly private? You’re right! But Google doesn’t have to accept those if they want to promote transparency.

Using cryptocurrency alone wouldn’t be the magic bullet to enable a transparent advertising landscape, but it makes it possible. This is because the ledgers of the financial system would be open for the world to inspect, rather than locked in (sometimes poorly secured) centralized databases. To understand better, check out this blockchain explorer to see which wallets hold the most Bitcoin. The top wallets hold well over $1 billion worth of the digital asset. Imagine if we could do this with Visa or Bank of America accounts and you can see how revolutionary a financial system based on shared ledgers would be.

Powerful AR/VR Ads

If we’re looking ten years down the road, we have to consider how people will be spending their time in the digital universe. More and more time will be spent in augmented reality (AR) and virtual reality (VR) environments, which present their own monetization challenges. Metrics like CPC are rendered useless because there is no mouse and therefore no clicks to track. One solution, already in development, is to track a user’s gaze and trigger advertising content when they look at a certain region.

Technically, cryptocurrencies aren’t needed to do this, but let’s continue our thought experiment about a post-centralized world. Instead of companies paying the VR platform for advertising space, users would be paid directly for their attention. One pioneering project, fittingly called Gaze Coin, is already exploring this possibility. The space is ripe for innovation, as VR ads would be worth their weight in gold since users are completely immersed in the experience. This is a far cry from the fractured and frenzied media landscape the online world has to offer today.

Monetization through mining

Some online ad spaces could be eliminated altogether in a crypto-centric world, and you might have already unknowingly participated in this trend! In order to monetize a visit, some websites are secretly hijacking (or cryptojacking) your CPU to aid in the process of mining for cryptocurrencies. Mining is a bit of a misnomer, as the process is more akin to an energy-intensive lottery than precious metals extraction. With Bitcoin, for example, you can divert your computer’s computational resources to cracking an intentionally difficult math problem. This provides the Bitcoin network with all the security it needs to maintain its ledger, and miners are rewarded with the potential to win 12.5 bitcoins (a reward worth $125,000 at the time of this writing). You would need thousands and thousands of CPUs to accomplish this, but some high-traffic sites could technically pull this off.

This method may prove to be a viable way to generate revenue through site visits, but doing it without the user’s consent is malicious and might even be against the law in the future. Some websites like the notorious p2p pirating website The Pirate Bay have admitted to experimenting with this model, but a flaw in the programming allowed for the hijacking to take over close to 100% of the users’ CPU rather than the intended 20-30%.

While cryptojacking is already here, the vast majority of use cases for cryptocurrencies are still five to ten years out. We are now where the internet was in ‘94/’95. Could we have guessed the impact that the iPhone would have on the world more than a decade before its introduction? What will be the Amazon or the Google of cryptocurrencies? Could we continue down the path of decentralization and do away with big companies altogether? Only time will tell, but the future of money has almost certainly been irrevocably changed by the introduction of cryptocurrencies and the blockchain technology that provides its backbone.