From Bitcoin to Ethereum: How Blockchain Technology Enables New Brand Tactics

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Written by Dan Poulin,
• 10 min read

By now, you’ve certainly read something about how the cryptocurrency Bitcoin is disruptive for financial markets, or how piracy has wrought havoc on the music and entertainment industries. This article isn’t going to be long prose about how the sky is falling, but it will talk about a technology that will redefine the way society functions and bring about the next big industrial revolution. If you indulge me for just a few minutes, you’ll walk away with actionable thoughts on how you can be on the right side of disruption for your brand.

As marketers and entrepreneurs, we are constantly searching for the next big way to drive value from our investments. By now, you likely have one or more initiatives going on to support Digital Transformation within your organization. You are likely expanding your digital assets, whether it be mobile-first web experiences driving traffic and leads to your CRM, a direct-to-consumer engagement for customer retention, or a VR installation designed to put your consumer inside your vision all run on the power of the internet. But the more popular or innovative those assets are, the more they cost to operate and drive traffic to. Servers and the IT staff that maintains them, security auditors, scaling solutions, monitoring along with all of the Software and Platforms (SaaS and PaaS) that encompass the former have a cost that typically increases with your needs. All of those costs stem from one thing: centralization.

Centralization has given us more control over the experience we provide, as well as the valuable data that our businesses run on. If everyone drinks from the same well, they all benefit from our efforts to keep the water clean. Conversely, it makes it very easy for someone to slip by and poison the well. Think of the rising number of security breaches each year that cost brands millions. Wells can also dry up too, like when websites go down from too much traffic. Bad experiences like this mean more than expensive fixes, they erode the most important things consumers look for today in a brand: trust and customer experience. You can spend a decade building your brand and one violation of public trust can result in them never coming back to you for a burrito ever again.

The solution to all these issues is to decentralize. One decentralized technology in particular has arisen from the minds of dreamers and makers that is poised to solve a massive swathe of the problems we face with our digital assets today. Used for the right things, it eliminates entire classes of complications and vulnerabilities, as well as the upfront infrastructure investment. Big minds and deep pockets like IBM, Intel and Microsoft, as well as the World Economic Forum expect this technology to hail a fourth industrial revolution. Whole new ways of doing business are expected to arise, and maybe even the way our society is structured will change as a result. The technology is called blockchain, and here’s how it works.

"Blockchains are at the heart of the fourth industrial revolution."Klaus Schwab, Founder and Executive Chairman for the World Economic Forum

What is a Blockchain?

If you have ever utilized a file sharing protocol such as BitTorrent to download music or for any of the more legitimate uses (Windows 10 uses something similar to distribute updates for example) then you’ve already experienced the distributed aspect of the blockchain. And if you’ve ever ran the finances of a company you’re familiar with another aspect, a ledger. A blockchain is fundamentally a record of transactions and ownership (ledger), distributed for public audit, verification and storage by each participant. It has the peculiar property for a digital record of being unable to be modified. Once a transaction is recorded, it stays for good and can only be built upon by a new transaction. Like a cuneiform tablet from the ancient Sumerians, everything is set in stone.

On top of this, every new transaction is verified by a quorum before being added. It’s as if you were to pause in the middle of a deal and have everyone in the world look over it to weigh in on the validity of the transaction. Computers, of course, are much better at doing this than we are.

Getting to Clarity on a Complex Topic

“That sounds sexy and all,” you say, “but how exactly does that drive better value for my investment?” The answer is simple to grasp: Blockchains enable permanence and uniqueness of digital assets. In a world that is used to everything that exists in code or data being readily duplicable and alterable, that is huge. What once required tight control of a unique ecosystem to preserve is now readily available, and your users provide the computation, storage and the strong security to make it happen.

"Blockchains enable permanence and uniqueness of digital assets." Dan Poulin, Technology Lead at Digital Surgeons

The Beginning: Bitcoin and the New Breed of Blockchain

The most widely known example of a blockchain is the Bitcoin network. Bitcoin has proven that the method works; that we can have digital assets with real worth and a high degree of reliability and safety. But a cryptocurrency is perhaps the most straightforward use of a blockchain, and it is now the most uninteresting. Bitcoin solved the first issue, the issue of permanence and uniqueness of digital assets, but new blockchains such as Ethereum, Chain, IBM’s Fabric, and Intel’s Sawtooth Lake add another layer of sophistication by introducing the concept of a Smart Contract.

A smart contract is a piece of code which determines the rules of how a transaction will take place. This is an important advancement, because it means we can move beyond simple transfers from party A to party B. Smart contracts enable the blockchain itself to store who can own what digital asset, on what terms, and what those assets are. With the combination of value and rules, we can now represent a vast spectrum of business and disrupt innumerable industries. Let’s see how that works in the real world.

With the combination of value and rules, we can now represent a vast spectrum of business and disrupt innumerable industries.Dan Poulin , Technology Lead at Digital Surgeons

Mache Custom & Reebok: Defeating the Counterfeit Market with Ethereum

Recently both Mache Custom and Reebok have released collectible shoe lines taking advantage of blockchain technology. In the market of collectible shoes, counterfeit is rampant and costs the industry trillions. Both brands utilized a product from a silicon valley start-up named Chronicled that has developed a new kind of proof of ownership and authenticity for collectible goods. Its premise is simple — replace the typical printed proof of authenticity with a smart chip. With the help of an app, the key is then permanently tied to you on the Ethereum blockchain. Not only is the smart chip unable to be copied, but the record of ownership is unable to be tampered with.

This has implications beyond collectibles. Have you or someone you know ever purchased a used automobile and forgot to run a Carfax on it, only to learn later that the previous owner damaged it before changing hands? With records of ownership, sale, and even maintenance stored on the blockchain we gain unprecedented transparency in validating the history of a car or other item. Such records can even drive up the value of said car, as you can now solidly prove that it was driven by that famous driver or appeared in that popular movie.

Provably Fair Voting, Sweepstakes and Referral Programs

One of the easiest models for how a smart contract can encode sophisticated transactions takes the form of voting. A smart contract encodes that every account may vote on a question exactly once. Since the tallying exists as verifiable code, based on verifiable, tamper-proof records, the results have a very high reliability. Alternatively to voting, the smart contract can pick a winner at random, making it a sweepstakes.

Taking it a step further, we can imagine a referral system. Participants interact with the smart contract and it handles all of the details of who referred who, who gets paid out what amount. A special type of account (called an Oracle), set by the programmers of the smart contract, can be used to inform the contract of the clearance or validity of a referral.

UjoMusic: Reinventing the Music Industry

Perhaps the quintessential digital asset is the music download. UjoMusic is a startup that aims to change not only how music is paid for, but also how content creators are paid. All of the individuals involved in the creation of a track are associated with the music in a graph recorded on the blockchain. It can be publicly viewed and the information on who will receive what share of payment for what contribution is transparent. Furthermore, samples that make up the track can be purchased individually or in whole. All the while, no middlemen are needed to maintain an eCommerce platform, defend ownership, or decide on payouts to the content creators. Ownership of a song cannot be lost in an attack or outage, so there is no dealing with angry users who legitimately paid but lost access.

Looking to the Future; The Many Industries the Blockchain Will Soon Disrupt

Banking and Finance ✓

Healthcare and Biometrics ✓

Internet of Things ✓

Government ✓

Music & Video ✓

Arts and Entertainment ✓

Legal ✓

Intellectual Property ✓

Manufacturing and Supply Chain ✓

We believe all of these and more are about to be drastically changed by the blockchain revolution. The Fintech industry is abuzz with the possibilities and actively pursuing them already. As technologists and innovators, we see that the blockchain is no fad or framework of the week. We see it as being a foundational technology for the future.

"Enterprise, commerce, and the internet as we know it will be transformed for generations to come."Pete Sena, Founder and Chief Creative Officer at Digital Surgeons

For now, blockchain technology is a new tool for enabling your business' online presence and engagement. It has a different set of strengths and constraints than the websites and apps that the industry has gotten used to. It's a new frontier, an experiment that began in earnest with Bitcoin and which has been brought to a whole new level with the advent of smart contracts. It will continue to play a large part in the way we work online moving forward, so it's worth getting your feet wet now to get an edge on your competition. IBM has already spun up an incubator dedicated to exploring just this, with other tech giants to follow suit. It’s not a matter of if, it’s a matter of when.  

We at Digital Surgeons are incredibly excited by the opportunities that blockchain technology has to change not only how businesses engage online, but also change entire industries and eventually redefine human society.

The first generation of the digital revolution brought us the Internet of information. The second generation — powered by blockchain technology — is bringing us the Internet of value: a new platform to reshape the world of business and transform the old order of human affairs for the better.Don Tapscott, author of Blockchain Revolution

We’re looking for brands and partners with which to explore those possibilities together. Reach out and let’s see if we can reinvent the way you do business.