The great reversal – blockchain putting data and trust back into consumer hands
Blockchain technology might just be the missing piece of the online trust puzzle. Smart brand stewards should get used to a new power dynamic right now, says Steve Sammartino.
This article originally appeared in The Trust Issue, our June/July 2018 issue of Marketing magazine.
For a large part of the past 100 years, the biggest brands in the world were all pervasive, out to be seen everywhere – mass produced cars, flagship fast food joints and sugar in a can. They were things we could touch, hold, understand and experience at a level where we knew the inputs and outputs. While imperfect, they iterated what they made and built trust over time through responding to consumer demands.
The market created a collective understanding of what was acceptable behaviour.
Over the last two decades, a new cadre of dominant brands emerged. Digital denizens, these brand heroes became the world’s most valuable corporations. What they offered had such incredible utility, very few of us stopped to ask questions about what the ingredients were, or what came out of their exhaust pipes.
Probably because we could neither see nor understand it. In the same period, our perceptions of the new tech giants moved from pure admiration, to absolute suspicion. Virtual monopolists, with walled gardens we can’t escape, businesses where opting out isn’t an economic option – if brands are built on trust, then Houston, we have a problem.
You’ve probably noticed that over time people flow into and out of your life. We meet people at school, university, work, sporting clubs, even our local cafe. People and institutions we rely on form a social fabric that sews together our ability to depend on one another. While there’s rarely an intention to drop someone from our lives, those with whom we are close and have good intentions to keep in touch with eventually fall way.
Once we leave that company, graduate from university, quit that sport and move out of that suburb – the people we connected with seem to evaporate. Even with those relationships we try to maintain, reality often wins out.
There’s actually some science behind it. Social researcher Robin Dunbar contended that we can’t have meaningful relationships with more than about 150 people at any one time in our lives. This became known as Dunbar’s number, and his research suggested that there’s an actual cognitive limit to the number of stable relationships we can maintain. There is a link between the size of the neocortex and its processing capacity, which in turn limits the size of our functional groups. It’s an evolutionary design that, in short, only kept alive those with a healthy suspicion of strangers.
After industrialisation, brands helped us get beyond the human restrictions of Dunbar’s number. We once knew the reputations of local traders, but as business industrialised and spread geographically, we needed proxies for trust, trust that could not be established personally or locally. Brands became that proxy.
Trust doesn’t scale without rules and consequences for those who break them. As our economy grew beyond where our relationships could stretch, we built a set of terms and conditions that consumers understood, enforced by government and embraced by brands. Regulations became a quasi-incentive scheme for corporations to play by the rules. Rules we configured to create a fair marketplace for humans and corporations worked so well in the industrial phase that we forgot that this stuff isn’t designed by corporations, but by us, and a government serving us.
In a physical world it is obvious when trust is abused – unregulated food, transport, energy and finance have consequences we find swiftly and regulate to avoid future problems. The regulation itself becomes a fulcrum for brands to build trust.
But now we’ve got a problem, because those governing don’t understand the new tools, let alone the breadth of their economic and social externalities. It’s hard to set up rules to protect society against things no one can see. Functional capitalism requires more regulation than the average libertarian will have us believe.
Look at any sporting code and we’ll see how the rules facilitate competition and opportunity. Rules even invent new roles (read revenue) on and off field within sporting ecosystems. The same can be said for thoughtful regulation. Workplace health and safety – as a rudimentary example – requires humane working hours, reconfigured workplaces, safeguards on machines and all manner of systems that make work not only safer, but often more efficient and profitable.
Unfortunately, the greatest wealth event in human history (the internet), has resulted in a serious concentration of new wealth. The same people have little incentive for a more transparent, open and regulated marketplace as that would only reduce barriers to entry and increase competition. What should be our most trusted non-human relationships, the intermediaries and big tech companies we transact through, put simply, can’t be trusted. It turns out we need a new layer to bypass both Dunbar’s number and lagging regulation to rebuild trust.
Luckily, markets are wonderful things. They tend to coalesce with technology to find solutions when we fail to design them ourselves.
Right now, we are at the early stages of such a phase, which will become the ‘Blockchain Era’. While blockchain technology won’t bring world peace and solve every other global issue we face, it certainly is the missing piece to the internet we always dreamed of. One where we deal with and trust each other on a global scale. If the internet can ever become a truly democratised technology, a peer-to-peer marketplace where we all have an equal chance of benefiting from its power, then we can’t have centralised forces seeking economic rents through data control.
In a great reversal, our data will become copyrighted content we control and rent to corporations. For this to happen, we need a force we can trust in a world where technology will always outpace our protective institutions.
That force is cryptography.
Fortunately, we don’t need to understand deep nerd maths to understand why blockchain matters. Blockchain technology will enable us to develop distributed trust, without the need for a centralised third party to verify transactions. Where intermediaries now stand, blockchains soon will. Wherever we send information so it can be passed onto another party, that data will eventually be locked into something we can trust more than we ever could brands – we hold the key to a cryptographic black box. And we’ll be the ultimate arbiters of who gets to see what and why in our personal digital warehouses.
Right now, blockchains are like the internet of 1993 – hard to conceptualise, facing problems of both understanding and user interface.
But in 10 years time when these problems are solved, we’ll wonder how we ever trusted third parties with our data and privacy. In the interim, a massive opportunity for brands resides in pure transparency. Imagine a set of terms and conditions written by an ‘end user’ not a corporate lawyer. Terms written in a way a human can read quickly and understand immediately. A digital world where brands don’t harvest our data, but respect it and hand it back to its rightful owners, us.
While this seems like an counter-economic decision for anyone in the business of data accumulation, it’s an inevitable reality that smart brand stewards should start getting used to now.
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Image credit: Thought Catalog