What if I told you we’re only at the beginning stages of a financial revolution? You’ve heard of digital currencies like Bitcoin, Ethereum and Litecoin…in fact there’s well over 1,000 coins out there as of today and ICO’s are popping up everyday. There’s so much out there explaining how Bitcoin is a bubble and will bust. I’m not here to disagree with that but I can tell you that Blockchain is here to stay. Blockchain, the technology behind Bitcoin is one of the most accurate and secure systems ever created.
What is BlockChain
A blockchain is a ledger that keeps records of digital transactions. Instead of having a central administrator, like a bank or the government, blockchain organizes data in batches called blocks. These data batches use cryptographic validation to link themselves together. In other words, each block identifies and references the previous block by a hash value, forming an unbroken chain. Blockchain solves two of the most challenging problems of digital transactions: controlling the information and avoiding duplication. When a purchase is carried out, the ledger records it and sends it out to the entire network. Computers all over the world then compete to confirm the operation by solving complex math equations. The first to figure out the answer and validate the block receives a reward in Bitcoins (this process is called mining.) The validated block is time stamped and added to a chain in chronological order. The entire chain is continually updated so that it’s always an accurate representation of who owns what at any given time. Key factors are it’s GLOBAL, IRREVERSIBLE, LOW FEES, PRIVATE, SECURE and OPEN. Ingredients for a future global economy.
The Year of Cryptocurrenies
2017 has been a landmark year for blockchain, bitcoin, and cryptocurrencies at large, as more and more individuals, investors, companies, banks, and governments are beginning to recognize its importance. So, what then is cryptocurrency? In layman’s terms, cryptocurrency is digital money. Just as you have physical money in Dollars, Yen, Euros, or Pounds, cryptocurrencies are digital versions of these currencies. Starting out as Bitcoin in 2008, the basic idea behind them was to create a peer-2-peer, decentralized and encrypted way of sending digital money. Remember Blockchain has pushed this forward in the last 2 years because transactions are irreversible, secured, fast, global, and do not require permissions.
Unlike hard currencies that need to be printed, cryptocurrencies are created by solving complex mathematical algorithms using computers, in a process called mining. In other to count as money and have a certain value, cryptocurrencies are limited in supply, meaning they have a market cap. Each currency claims to solve a different problem and attempts to offer a more robust solution to a particular audience. Some top cryptocurrencies include Bitcoin (which is the first, and still maintains the largest market cap and share), Ethereum, Bitcoin Cash, Ripple, Dash, Monero, and Litecoin. The truth is that blockchain technology and cryptocurrencies can be used for virtually anything, from payment merchants, to insurance policies, and even affiliate marketing. Now, let’s explore how companies can use blockchain in affiliate marketing.
What is Affiliate Marketing
Affiliate marketing consists of three core players; advertisers, publishers, and an affiliate network. Advertisers are in need of internet traffic and operate on a “Cost Per Action (CPA)” model. Publishers have the required internet traffic and monetize it for commissions. An affiliate network serves as an ecosystem to facilitate interaction between advertisers and publishers. However, affiliate marketing is often saddled with fraud, tracking, and data loss challenges. And this is where blockchain technology can come in handy.
The most obvious use of cryptocurrencies in affiliate marketing comes as a replacing to standard money. Instead of receiving payments in hard currency, marketers can opt to be paid in digital currencies which is faster, and simpler. In addition to being a faster medium of payment, blockchain technology may help curb fraud and data loss problems in the digital marketing industry.
To solve fraud and tracking challenges, smart contract can be used in place of traditional tracking pixels. These contracts and data cannot be lost because they are stored on all computers in the network. Also, because of the nature of blockchain technology, they are literally not hackable and 100% accurate.
Although blockchain is still a relatively new technology, interest is fast growing and it may find application in several industries of business. How soon? This is a question no one can really answer. But with growing global interest, soon may be 2-5 years from now.
Check out my interview with crytocurrency investor Ian Balina.
Why Bitcoin, Etherium and Cryptocurrencies (free ebook)
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