After weaving itself into cryptocurrencies, blockchain technology is now all the rage, as the decentralized data trust system is being extended to a multitude of services and applications. Among those areas is advertising.
Still, the concept of blockchain itself is tough to get a grip on. To help cut through the clutter, Adam Helfgott, CEO and project lead of MAD Network and CEO of ad-tech startup MadHive, spoke to B&C about what it is, what it means to the industry and how this somewhat difficult concept might make some things easier. An edited transcript follows.
Blockchain is a techno-term that’s not so easy to grasp. How do you describe blockchain to someone unfamiliar with it, or in order to get their head in the right area?
The simplest answer we have today is that a blockchain is simply a network with a memory. That sounds weird, but it’s actually what it is. It’s a set of computers in a decentralized network, like BitTorrent or back in the day like Kazaa or the original Spotify or Skype, that were all peer-to-peer based applications that stored the memory on each individual node’s computer.
In this case, a blockchain is simply the memory itself that’s in the network, and all of the nodes can access that memory with confidence that they know the information they are reading everyone else can read as well.
When you say memory, are you talking about storage?
What are use cases of a memory? Who did what first, like a time stamp, or a permission of something — what users can access something? Or what set of actions should take place when certain other things happen?
Those ideas, instead of being stored on a computer in a centralized platform like a web server … that information is in the network itself, that can be accessed by any member of that network, and no member of that network has access to edit that information. They have access to understand and read that.
The one and only feature that blockchain provides is peer-to-peer value transfer without a central authority.
So who has authority on a blockchain?
The original programmers that created the code that created the blockchain.
How is blockchain, as a technology, becoming part of the advertising industry, TV and digital? What problems are we solving with it?
When you hear the word blockchain … I like to replace the word with a piece of technology that we all might have heard of in the past, which is a word like transistor. If I’m hearing: How does the transistor change the way advertising works, we might say the transistor provides a system that can build these things called computers that will allow humans to read messages onscreen. It’s a piece of underlying technology that actually is quite meaningless unless it’s created in the context of a design somehow.
Blockchain technology on its own, when applied to existing designs, is kind of like what would I do if I stuck a transistor inside a mechanical clock. That doesn’t make the clock a digital clock because it’s got a transistor inside of it. There has to be a whole new design to make a digital clock that replicates the behaviors of an analog clock.
There’s been a lot of talk about taking this blockchain ledger and sticking it on top of an existing network design called OpenRTB [Open Real-Time Bidding] that is a centralized model, kind of like the mechanical clock. We maybe get some reconciliation like one of those smart contracts, which is essentially a bunch of if-then statements inside this network with a memory; I can automatically collate disparate sources of data and get real-time reporting from ad servers to my third-party verifier. I could probably accomplish that with other tools as well, but the true innovation blockchain will allow is the main feature of that peer-to-peer value transfer between counterparties.
But who are the counterparties in advertising? It’s the true buyer and the true seller, which is actually the consumer who, whether knowingly or not, is trading their attention for some piece of content or for some [other] value. There’s a value transfer happening between the advertiser and the consumer.
The reason why people are so excited about it is it’s like having the transistor again. It provides this new tool that can paint the new future. But the infrastructure we’re all working on today hasn’t been created with blockchains in mind.
What is the status of this? Has it happened, is it happening, will it happen?
It definitely will happen, but the only application that blockchain has enabled, which is pretty amazing and innovating, is the funding of new ideas, of reshaping the architecture. There’s been close to $20 billion raised in financing for new companies to reshape the architecture of the fabric of our day-to-day lives to use blockchain technology for peer-to-peer value transfer between counterparties.
There are a lot of good ideas out there. There are a lot of weird ideas out there. And who knows which ones will win. But there is no denying that there’s billions of dollars in the hands of really eager, smart entrepreneurs to make it work. But we can’t fool ourselves into thinking that this technology is here and now today. The infrastructure isn’t there.
If ‘A’ is the kernel of the idea and ‘Z’ is commercial implementation nailed up, ready to go, where along the alphabet are we?
I would say we’re at about the letter ‘J.’ For Mad-Hive … I was just in Korea last week meeting with LG [Electronics] and Samsung CTOs about putting our software that we haven’t finished building yet inside the television set so that LG can get paid every time it runs a machine learning model to decide who the consumer is. That’s part of the shaping of the landscape here.