Blockchain technology, used and made prominent by Bitcoin to track its tokens, is the new technological darling of the venture capitalist and ICO (“Initial Coin Offering”) world. The technology is evolving in real-time, which makes it hard to characterize in a single, simple definition. The basic concept is a decentralized ledger of transactions chained together as “blocks” which are protected by cryptography or advanced mathematics to ensure that data transaction records have integrity and can’t be hacked. The ledger is said to be decentralized because it is distributed across multiple computers, making the data unalterable by a single individual or entity.
At the same time blockchain technology is getting more notice, the movement toward permissioned data has picked up speed. Today, opted-in, permissioned data is king. The Facebook/Cambridge Analytical data scandal, along with the EU’s new, robust GDPR framework, has made data privacy the issue of the day…and of tomorrow. It’s an issue that is not going away. In May, Vermont passed a law that requires data brokers to register with the government, inform people on what data is being collected and how to opt out, confirm that their security practices are up to date, and notify authorities of data breaches. More recently, California passed a significant online privacy law that, while not as comprehensive as the GDPR, gives consumers more rights and control over their online personal information.
In our industry, blockchain got a lot of play at IIex in June. Proponents of the technology believe it will allow individuals to better own and monetize their own data, improve data authenticity and provide access to hard-to-reach audiences, such as business professionals.
As with any new technology, there are pluses and minuses. There may be value in the technology to attract difficult-to-recruit panelists and better validate and establish trust. We’re always interested in new techniques for improving the depth, breadth and quality of permissioned, first-party data we provide to our customers.
But it’s hard to say if blockchain will live up to its promise, including in our industry, where several companies are creating data marketplaces using blockchain technology. The recent McKinsey report, Block Chain Beyond the Hype: What is the Strategic Business Value, points out that blockchain “does not have to be a disintermediator to generate value,” and is “particularly valuable in low-trust environments where participants can’t trade directly or lack an intermediary.” In our industry, intermediation by established and proven market research panels generates a high degree of trust between market participants as well as fulfills the requirements posed by the new privacy reality.
It’s interesting to note that while blockchain companies in the research space speak of disintermediating panel owners, they are essentially building panels, recruiting people into a permission-based environment where private currencies are used. However, private currencies can fluctuate wildly in value and, if the point is being able to exchange tokens for rewards such as gift cards…well, we’d have to say that Research Now SSI thought of that many years ago, when we established eRewards, and the eRewards gratuity program. It is still a premier source of high quality consumer data, including hard-to-find business professionals.
Another major challenge for blockchain companies relying on tokens and virtual currencies is driven in part by most people’s reluctance to engage with them. Of the 25M global crypto wallets today, only 8-30% of the total are considered to be active. A large percentage of people find them too complicated, too high risk or too “shadowy.” And, that is a major barrier to achieving the scale required for data to be truly accurate and valuable.
Scale is important when it comes to data. A critical mass of data – such as Research Now SSI’s 60 million panelists – provides better accuracy, better reach and better representation. The speed of transactions, as well as energy and storage capacity requirements of blockchain technology in its current state, all need to improve substantially if it is going to achieve the scale required to produce reliable results.
Panel data – such as that collected, managed and enriched with additional data by Research Now SSI – is permissioned. What’s more, panel data from a global company like Research Now SSI also offers a volume and breadth that is hard to replicate, even by a concatenated string of small data providers.
In addition, blockchain is built on the concept of immutable data, yet the most valuable aspects of research data are the opinions and motivations influencing consumer behavior and purchasing decisions, which are constantly evolving.
When individuals join a panel, terms and conditions define the relationship so that both parties derive mutual value. A lot of the blockchain “buzz” around individuals owning and monetizing their own data is a reaction to walled-garden ecosystems or to providers of sample data who “commoditize” the data with a value proposition based on low cost. Companies such as ours focus on recruiting actively engaged individuals and managing the relationship over time. In exchange, panelists are fairly rewarded by sharing in the value generated by their participation. Panel participants trust the panel owner to protect their data in a secure environment as well as provide future opportunities for monetization. Panel owners manage their data assets with an eye toward quality, validity, consistency and member experience.
Noting that “blockchain is still an immature technology, with a market that is still nascent and a clear recipe for success that has not yet emerged,” two of the McKinsey report conclusions are “that its short-term value will be predominantly in reducing cost before creating transformative business models…and that it is still three to five years away from feasibility at scale, primarily because of the difficulty of resolving the ‘coopetition’ paradox to establish common standards.”
Until blockchain matures and its value is proven, the need for permissioned data from individuals who are incented fairly to participate actively and frequently… in a secure, protected, continuously updated environment…with the added benefits of enormous scale, wide global reach and high quality data…will not go unmet with the availability of robust panels whose value to both panel members and researchers is trusted and well established.
BLOCKCHAIN BEYOND THE HYPE: WHAT IS THE STRATEGIC BUSINESS VALUE; BRANT CARSON, GIULIO ROMANELLI, PATRICIA WALSH, AND ASKHAT ZHUMAEV; MCKINSEY & COMPANY; JUNE 2018.