Blockchain is the latest buzzword in the ad world. To further fuel the fire, Forbes recently reported that 15% of banks and 14% of financial market institutions plan to implement blockchain-based services within the next few years.

But what is blockchain technology and why does it matter to advertisers? First, let’s take a step back and talk about cryptocurrency.

Most people are familiar with cryptocurrency because of Bitcoin. Bitcoin got a lot of hype after early investors made massive stock earnings from the platform.

Cryptocurrency as a whole is defined as a digital currency in which encryption techniques are used to regulate the generation of currency and verify the transfer of funds, and which operates independently of a central bank. Or, simply put, something that allows you to share money peer to peer without going through a bank.

Cryptocurrency is often deemed safer than other online transfers because it “lives as limited entries in a database that no one can change without fulfilling specific conditions.” Meaning, a transaction will not work if the records are not accurate and transparent.

Here are the cryptocurrency basics to help make sense of blockchain’s core function:

● Step 1: A transaction is requested.

● Step 2: The transaction is sent out to peer-to-peer networks made up of computers known as nodes.

● Step 3: This network of nodes validates the transaction.

● Step 4: Once validated, the transaction is joined with other transactions to create a new block of data for the ledger. (A ledger is the computer file for recording and totaling economic transactions.)

● Step 5: The new block is then added to the existing blockchain, which is unchangeable. (This step is a key selling point for preventing hackers! It’s almost impossible to hack once a chain of data is streamed together.)

● Step 6: The transaction is done.

What Is Blockchain and How Does It Work?

Now that you know how cryptocurrency is defined and how it works, it’s simpler to digest the purpose of blockchain. A blockchain is a decentralized ledger, which keeps track of all transactions that go through the peer-to-peer network. In a broader sense, think of a list of people sending money to their friends, as well as the exact amount of the transfer.

Most importantly, it provides a way to verify transactions without a central authority, like a bank. This opens up doors for other verticals, like advertising, to use the technology to transact business without their own central authority.

How Does Blockchain Technology Impact the Ad World?

While it’s up for debate whether the future of cryptocurrency will be sustainable, the technology that runs it can be applied to other forms of transactions regardless. As such, many advertisers are jumping on the chance to leverage blockchain technology to simplify and improve their digital ads.

Blockchain technology offers advertisers the chance to create safer, more effective, and more transparent ads to improve the overall quality of the user experience. Here are just a few ways we may ultimately be able to leverage blockchain to improve our ads:

1. Fighting Ad Fraud
In a previous post, we talked about the multiple types of ad fraud and what advertisers are doing to combat them. One of the most prevalent sources of ad fraud in the modern day mobile ecosystem is bots. Bots like and engage with ads like real people, which gives advertisers false results when gauging their genuine impact. But, given that blockchains keep a transparent record of transactions, this technology could be a big step in stopping malicious bots from interfering.

2. Safety & Trust
Data security has been another trending topic of 2018. Blockchains prevent transactions from moving forward unless they’ve been approved. Advertisers today see this as a great opportunity to better protect user information, for example seamlessly opting out of certain classes of data collection if not pre-authorized by the end-user.

3. Streamline the Buying and Selling of Ads
There’s a lot of cooks in the kitchen when it comes to digital advertising. In fact, the distribution of ads often becomes expensive due to the number of third-parties involved in each individual ad’s development and distribution across global platforms. With blockchain technology, digital advertisers hope that they will be able to eliminate the middleman and buy ads directly to cut costs.

Whether you’ve already hopped on the Bitcoin bandwagon or you’re just a cryptocurrency skeptic, it’s worth investigating the technology that fuels these new platforms to recognize alternative practical uses. For advertisers in particular, it’s crucial to evaluate any form of technology that might impact the way that ads are created, analyzed, and distributed in the future.

In this fast-paced industry, anything that keeps you one step ahead of the competition is a step worth taking.