‘Cryptocurrency has dominated news cycles as of late, with Bitcoin and Ethereum prices tempting some people to call it the new Gold Rush. However, while investors are getting excited about cryptos, marketers are becoming anxious. The truth is, a lot of marketers worry that cryptos will complicate their jobs significantly. To learn more about why that’s possible, we’ll have to look at what makes cryptocurrency so unique.
Blockchain-ging the Game
Almost all cryptocurrencies are based on a technology called blockchain. Blockchain can best be described as an encrypted digital record of transactions. When a cryptocurrency transaction is made, blockchain technology updates this record. However, blockchain differs from other digital ledgers because it is not housed on a single server. Each time a transaction is logged, the blockchain is copied and spread throughout a high number of other machines, creating an anonymous record that is made incredibly reliable by the difficulty it would take to forge a transaction. The ability to use a decentralized network instead of having the entire ledger housed in a single server somewhere makes blockchain extremely secure.
Anonymity: Great for Customers but Challenging for Marketers
At this point, you might be wondering what blockchain has to do with marketing. Here’s the connection: because blockchain is heavily encrypted and totally decentralized, it’s possible for transactions to be anonymous. When given the option, most users prefer to give away as little of their personal information as possible—which means that almost everyone takes advantage of this anonymity. This throws a gigantic monkey-wrench into the plans of marketers who have become accustomed to collecting data on their customers to create targeted campaigns. Simply put: if all of your brand’s customers bought your products or services with cryptocurrency, you would have no idea who they were or how to market effectively to them.
Imagining A Pay-to-Play Marketing Model
Fortunately, cryptocurrency transactions aren’t standard practice in the consumer world yet—or even very common. Even during peak demand periods, Ethereum can only processes about 20 transactions per second—whereas Visa processes approximately 1,667. However, with cryptocurrencies of almost every kind enjoying increased media attention, widespread everyday use may not be far off. One thing marketers can do if that day arrives is begin to pay individual consumers for their personal information instead of paying platforms like Facebook, which make most of their money from data-farming. Customers could opt-in to programs that collect their personal data in exchange for rewards or exclusive deals.
“Paying” each customer for their information could end up being more expensive than simply paying a lump sum to a social media platform, but there’s an upshot to this model. Any customer who is eager to be rewarded by your company probably has a vested interest in your products or services. As such, the information you collect from them may be much more useful in determining your ideal customer than the information your brand is currently collecting. Current information is likely to be diluted somewhat by the number of people who are one-time customers or who have low levels of brand loyalty.
This is the lesson at the end of the day: the more you learn about cryptocurrencies now, the more prepared you will be to adapt when they force you to change your marketing strategies. Stay ahead of the curve by researching cryptos thoroughly, and ensure that your company will be among the early adopters who benefit from the shift.