With everything happening in the economy, alternative currencies have been a popular topic in recent times.
A great deal of money is being printed, and cryptocurrencies such as Bitcoin and new ones such as dogecoin are coming into the limelight.
So we thought of exploring how exactly Bitcoin and cryptocurrency affect digital marketing and how they can, in turn, impact your business.
In this blog, we will discuss a few ways Bitcoin can impact digital marketing and small businesses in the future.
However, before we get on to the effects, let’s first take a quick look at what Bitcoin and cryptocurrency are.
What Is Cryptocurrency?
Cryptocurrency refers to a virtual or digital currency secured by cryptography, making it almost next to impossible to forge or double spend.
Many cryptocurrencies are decentralized networks based on blockchain technology which is an open, distributed ledger that records transactions between two parties efficiently in code.
To simplify things a bit, think of these as a virtual bank account distributed across thousands of computers worldwide.
Each transaction is recorded in a “block,” which is then linked together on a “chain” of past cryptocurrency transactions.
An even easier way to understand this is to think that you have a book where you record each transaction, i.e., where you spend your money every day.
While every page in that book resembles a block, the entire book comprising all of those pages resembles a blockchain.
Blockchain is what enables all cryptocurrency users to have a copy of these records of transactions.
In essence, this computer code automatically logs every transaction as it takes place. And then, it will move on to update the blockchain with the new information.
So mainly, one of the greatest advantages of blockchain is that it ensures each transaction is accurately recorded.
Hence, allowing everyone to see what’s happening exactly.
Another defining characteristic of cryptocurrencies is that typically no central authority issues them, meaning they are immune to government interference or manipulation theoretically.
Bitcoin was the first-ever cryptocurrency created based on blockchain and continues to be the most popular one among all others.
Let’s take a deeper dive into what bitcoin is before going any further.
What Is Bitcoin?
Bitcoin is a cryptocurrency created in 2009 whose creator remains unknown to this date.
Nevertheless, the majority of the hype that comes with Bitcoin currently is appreciation and trading it.
This is partly because of Bitcoin’s price shooting up towards the end of 2017 and a massive increase in 2020.
Although, that’s what makes Bitcoin so exciting.
People can hold it like a stock hoping that the price will rise.
Considering that we all know cash loses value as inflation increases.
As a matter of fact, the value of a single Bitcoin has increased by more than $50,000 within the previous year itself.
That’s pretty insane, isn’t it?
Some SMBs might also like Bitcoin better as there are no credit card processing fees linked with them, which is contrary to other payment methods that most SMBs need to accept.
Now, if you are fascinated by this, the chances are that you’re thinking about how to get Bitcoin.
There are numerous marketplaces known as “Bitcoin exchanges” where most people buy and sell their Bitcoins. So all you need to do is open Google, look up some popular websites or Bitcoin exchanges and pick one to buy or sell Bitcoin.
However, given all the attention and popularity Bitcoin has been enjoying in the past few years, many stock exchanges have started expanding their offerings for cryptocurrencies.
This is to enable the traders to use their platforms for buying and selling. Many popular websites have begun allowing people to buy and sell cryptocurrencies on their app directly.
People have also started trading Bitcoins by using mobile applications or their computers. This process is similar to how people would use apps like Apple Pay to transfer cash digitally.
But while there are many benefits associated with using cryptocurrencies such as Bitcoin, there are also a few major risks involved that you should consider first.
Wallets that live in the cloud have been hacked historically, for example.
On the other hand, wallets that live on your computer can get accidentally deleted or attacked by viruses and other unwanted programs.
In simple words, if you are considering getting cryptocurrencies such as Bitcoin, you will surely want to be cautious.
Understanding the Relationship Between Bitcoin and Social Media
Now that we understand cryptocurrency and Bitcoin better, by and large, we can proceed to discuss the relationship between Bitcoin and social media.
Currently, a vast majority of adults get news from social media platforms. If truth be told, social media has directly resulted in the immense popularity and growth of cryptocurrency.
With cryptocurrency trending on the top social networking sites, it is no surprise that Bitcoin has become the focus of public attention today.
As a matter of fact, social media giant Facebook has plans for cryptocurrency for the growth of its business.
With that being said, social media influences cryptocurrency right now and not the other way round.
For instance, when a cryptocurrency exchange known as Bitfinex was hacked recently, Bitcoin’s value decreased by 20%.
Once this news started doing rounds on social media, that company’s credibility began diminishing.
Social media can also impact cryptocurrency inversely. That’s because as the hype continues increasing over Bitcoin, people and businesses will increasingly become interested and eventually invest in it.
One of the main differences between the stock market and Bitcoin is that, unlike the stock market, Bitcoin is not regulated in the same manner.
This means Bitcoin will not be much affected by the decisions of the Government.
What Would Blockchain Technology Look Like for Marketing?
Now that we all know how social media influences cryptocurrency, the real question is – how can cryptocurrency impact social media marketing trends?
First things first, it is crucial to understand where things stand right now.
To understand it better, let’s take YouTube, for example.
You must have watched videos on YouTube and sometimes come across ads on those videos. In this situation, these are the current roles:
- You are the audience.
- The channel (whose video you are watching) is the publisher.
- The sponsored ad comes from the advertiser.
- YouTube is the platform.
In this example mentioned above, there are four parties – audience, publisher, advertiser, and platform.
Here the advertiser pays a commission to the publisher to leverage their audience. But the publisher is not the only party getting paid here.
The advertiser needs to pay for that ad space via the platform, which means in this example, YouTube is the one making the most money.
However, if blockchain technology were incorporated into social media, this would seem a lot different than what it is now.
It would be incredibly advantageous to the consumers while having a fair share of pros and cons for advertisers.
With the implementation of blockchain technology, the most significant change would be the access that marketers have to consumer’s privacy.
Marketers would have to depend on collecting data from prospects and consumers directly to build a digital marketing campaign. They would also be required to customize their user experience to make sure it is tailored to all the particular things that their target audience is searching for.
While all the best marketers are already doing that, the fact that blockchain technology could let users voluntarily choose the type of content and ads they want to see is where it “literally” shakes things up.
But before we get in-depth of all the pros and cons we would have for marketers and consumers, let’s check out an example with display ads to see the kind of change blockchain technology would bring for social media.
Even though marketers can gain excellent results from display ads, sometimes they can be pretty costly and complicated to manage.
In addition to this, the amount of ad space or inventory of ad space is controlled by platforms such as Google and Facebook.
On the other side, where the users are, display ads can feel quite intrusive, bothersome and they can also drain your phone’s battery quickly while consuming bandwidth.
However, in no way this implies that display ads don’t have any pros.
One advantage could be a marketer successfully highlighting a product that the consumer has been looking for, but the disadvantages weigh pretty heavily.
All that being said, there’s a way digital marketing infused with cryptocurrency could mitigate those issues – by using the BAT (Basic Attention Token).
The BAT is a blockchain-based digital advertising token built on Ethereum.
Its goal is to build an ad exchange that connects advertisers, users, and publishers in a decentralized way.
The Basic Attention Token also serves as an excellent way to monetize user attention and discard any useless expenses associated with ad networks. It also allows for all the involved parties to get fairly compensated.
That’s because the users get paid for their attention, the advertisers receive a better return on investment (ROI), and the publishers also earn a decent share of the total ad revenue.
Curious what this looks like up and running?
It all begins with advertisers.
Advertisers can use the BAT to purchase ads. It can be any type of ad, starting from push notifications to landing pages.
Next, users get to choose whether they even want to see ads in the first place.
If they decide to opt-in to see ads, they will be rewarded with BAT for their attention.
Moreover, users can also choose what types of ads they want to view, providing advertisers with even more accurate user data.
However, this information will be kept anonymous in the sense that the name of the specific user won’t be displayed to the advertisers.
Such setup will also let consumers know more about the brands they “really” like and are interested in communicating with.
And that’s because they can control what ads they will see. Users get rewarded a piece of the BAT that the advertiser used to buy the ad space.
The publishers form the last party involved in this process.
Just like they do currently, the publishers will still receive the highest compensation compared to others. That’s because they get paid by the advertisers as well as the consumers.
Under this system, the publishers will get a larger share of ad spend than the consumers.
Publishers can also effortlessly merge premium features by charging consumers BAT in exchange for premium subscriptions and content.
Now you probably are wondering why this has not happened yet? Because clearly, it sounds like a win-win for everybody involved in the process.
Even though everyone wins here financially, there are a few major changes that can play havoc with the current flow and the relationships between users, advertisers, and publishers.
Effect of Cryptocurrency on Digital Marketing
Considering all the things we have discussed above, the real question that we are left with is – how will cryptocurrency affect digital marketing?
When you look at all the information that digital marketers have today, many decisions are made when building and optimizing ad campaigns.
This directly comes from the user data we have. And this data is great because it enables marketers to display ads to the target audiences they pick and gives them the opportunity to convert anyone into a paying customer.
But if the blockchain power of cryptocurrency can transfer the power in the users’ hands, then we could see the audience size decreasing.
Let’s take a look at an example to understand this better.
You might be able to generate a highly targeted audience with Facebook Ads and reach about 10 million consumers.
If you can convert 2% of that audience, it would be 2,00,000 customers. However, if the audience size diminishes by 10%, for example, suddenly you will only be reaching 1 million customers and convert 20,000 customers only.
Needless to say, this would make digital marketing even more challenging and competitive at the same time.
Wrapping It Up
While we have numerous thoughts on how cryptocurrency could change the digital marketing industry, these are only theories at the end of the day. That is to say, there is no surety that cryptocurrency will have any significant impact on digital marketing and, in turn, affect your business.
So, for now, we can only wait till that happens. But if it does, you will want to be prepared for the changes, right?