There are very few technologies that promise to change the way we live, think and act as a society. Soon, revolutionary inventions such as the internal combustion engine and the Internet could be joined by blockchain as some of the most disruptive, life-changing technologies – that is, if it can live up to the promises it makes. Among these, blockchain commits to democratize personal data, thereby making every customer a steward, owner, and broker of his or her data. In times where no data is safe, and numerous reports of personal data and identity thefts from the vaults of corporate data centers abound - giving the customer control and ownership of his personal data looks like a smart move, both for businesses and customers alike. Businesses would appreciate the lower liability of storing and managing personal data, and customers would appreciate the privacy, security, and opportunities to monetize their own data. However, realizing these potential benefits requires overcoming many technological scale issues and changes in the broader ecosystem of digital personalization, media, and targeting.
When we personalize an advertisement, offer or experience (e.g., website layout), there are three essential signals that our algorithms rely on: customer profile, context and the customer’s intent (what the customer wants). Currently, there are many challenges in accurately acquiring detailed customer profile information, such as demographics, preferences, specific tastes for food, shopping and beyond. The data is usually supplied for few data aggregators, and there are often discrepancies in the quality of data across different domains. With blockchain, customers could potentially put their most recent customer profile information on the blockchain along with their shopping behavior. These could be directly accessed from the blockchain by businesses without the worry of tampering or risk of identity theft.
Additionally, the customer could even put his intent on the blockchain and use smart contracts to monetize the intent. For example, if a customer has a plan for buying a car, he can monetize that intent to the highest bidding car dealer or manufacturer.
Blockchain has the looks of a disrupter
For bidders, there is very little guesswork required, and they could avoid broadcasting ads for weeks and weeks. There are also benefits to the buyer since they could avoid being subjected to months of car ads, even after their purchase is complete, as buyers often experience in today's marketplace.
Opportunities for retailers include novel ways of delivering personalized coupons on the blockchain which cannot be duplicated or forged. This lowers the cost of delivery and management of the coupons. Retailers can also offer micro or nano payments in the form of coupons on the blockchain or cryptocurrencies to reward their most exceptional customers. Additionally, retailers can switch from current commercial payment systems to cryptocurrency, which is based on blockchain. These would alleviate some of the tensions between retailers and credit card payment gateway systems regarding commissions and fees. Similarly, customers can monetize their intent and personal data such as preferences on shopping styles, food allergies, cuisine preferences, vacation plans and even what books and movies they like or read. While customers today think twice before sharing any personal information online, blockchain would give them an added assurance that their data cannot be easily tampered with or compromised – perhaps allowing them to warm up to the idea of sharing more of their personal data.
There are also some headwinds in this direction such as scale, investor interest, trust, and regulation. It has yet to be seen whether blockchain can scale up to meet demand, especially considering the billions and even trillions of offers which are in use today. Currently, transactions on blockchain are expensive and take significant computing resources to store and process, which could hinder practicality on a large or massive scale. The second challenge is whether retail businesses are ready to invest in having a dialogue with customers for their data. When confronted with competition from blockchain technology, data aggregators could fight this switch by stepping up and having the conversation with the customer themselves, drastically improving their current data feed. Small and medium-size businesses might perhaps use these enhanced data services instead of directly investing in the blockchain technology. Trusting the customer to tell what is best for them is also fraught with risk. For example, the customers might identify their preferences for healthy food such as salad, but a look at their shopping cart would show pizza or some other indulgence. The regulatory agencies will also need to catch up with blockchain regarding the standards to store personal information. While there are currently standards for storing credit card or medical data, there still needs to be work done to come up with standards for storing personal data on blockchain.
Overall, blockchain has the looks of a disrupter. However, we are not entirely sure that it can deliver on all the promises and potential opportunities. Retailers need to be cautiously optimistic about this disrupter, keep themselves updated and invest in the necessary R&D to look to reap the benefits of early adoption.