Blockchain. It’s hard to see beyond the sensational headlines of bitcoin volatility and hear anything over the noise of the polarising perspectives in this space. And because of that, you’d be forgiven for dismissing the underlying blockchain technology as a passing fad.

Then there are the environmental challenges of the more energy-heavy consensus mechanisms like proof-of-work. And the scalability and security challenges, not to mention the political and social barriers associated with blockchain technology.

However, blockchain has the potential to be a GPT (General Purpose Technology). What the hell is that I hear you say? Think electricity or the internet. These are technological leaps that affect the entire economic system and have a far-reaching impact on society. Yes, that means the lives of every brand’s customers, users and consumers. And that’s why brands need to consider its impact and use.

Best foot forward

As full mix marketers, we should imagine how technology can influence our categories and impact all the classic marketing Ps. Blockchain has the potential to influence the price you charge, channel of distribution, how you promote your brand and even how you design your product.

So, welcome to the Block(chain) Party. No really. Let’s bring key blockchain concepts to life by looking at the life of an everyday person. We’ll call her Sarah. And Sarah is off to a party.

When you go to a party, you want to bring your style and footwear is a way to make a statement. Which brings us to Sarah’s sneakers. The transformation of the humble sporting shoe into a high-end fashion collectible has been dramatic, with estimates of the secondary resale sneaker market sitting at USD $10 billion. Whether it’s for the fashion, the stories behind famous shoes or trading, it’s now part of pop-culture.

Sarah discovered StockX when she was shopping for her party attire. A marketplace to buy and sell limited edition sneakers (brand new, never been worn). This involves sellers sending their shoes into StockX for authentication then onto buyers who collect them, resell them, hold them as an investment…some like Sarah actually wear them!

StockX launched Vault NFTs where customers invest in NFTs tied to the physical products. The Ethereum blockchain technology allows the trader to own the physical shoe along with the NFT which it is tied to. The NFT acts as a certificate of ownership to an authenticated product kept in storage at Vault NFT. For a sneaker fanatic like Sarah who also likes to trade sneakers, this is ideal. She doesn’t have to wait until her sneakers are delivered, she can leave them in storage, trade them immediately through the NFT and she doesn’t have to pay for multiple shipping legs.

The technology creates efficiencies by reducing transaction fees, lowering logistics costs and confirms authenticity. Blockchain technology allows ‘costless verification’ (Catalini, 2017) as it records every transaction as an immutable record. In this context, Vault NFTs use of the blockchain as a competitive advantage when targeting tech savvy, commercially focused sneaker fans looking to save time and money. And with Nike acquiring RTFKT Studios (known for developing NFT collectables like sneakers), extending the utility of the product into the digital space will continue, especially with brands looking to the Metaverse.

The good stuff

Ok, what about a drink at the party? Sarah’s poison is premium tequila. In the premium alcohol supply chain, the authenticity of the product and its origin are crucial – after all, Sarah wants her tipple to be from Jalisco to know she is drinking the real thing.   

In this example, the blockchain creates trust in the supply chain of Sarah’s tequila. Digital signatures are used and every transaction in the supply chain is recorded. Transactions are transparent and every participant captures the same copy of the chain in an immutable record. And, with the use of smart contracts, actions can be automatically triggered when certain criteria are met (e.g. payment made when stock is received). The integrity of the data in the blockchain makes it tamper proof as well as being faster, cheaper and more efficient.

A fascinating example is the OTACA tequila brand. It unifies near field communication (NFC) and blockchain technology to deliver supply chain efficiency and an engaging consumer experience.  The NFC tag is integrated into smart packaging to help bridge the gap between the physical product and the on-chain record guaranteeing the bottle is authentic. It gives customers (B2B and consumer) the ability to engage, track and importantly verify the transactions at each stage. And Sarah can use her phone to tap the tag and access a custom digital experience learning about the history of the founders and can even place another order.

More equal rights

Okay, we have the outfit and a drink in hand. Now Sarah needs some music.

Sarah is passionate about music and feels uncomfortable with a streaming service model that captures most of the revenue from each transaction (often 80 per cent). Each transaction is verified by the streaming platform creating inefficiencies (cost, time) and it becomes a single point of failure. The world of labels, managers, studios, distributors etc. add to the number of intermediaries and the lack of transparency regarding where fans’ money goes.

The use of blockchain technology could create a more, (but not totally), decentralised music sharing platform, providing artists with visibility of where money goes. An ecosystem could be created where tokens could be rewarded to artists based on listening stats. And transactions could be executed with smart contracts making regular payments when certain criteria are met (e.g. a certain number of streams achieved). This increases efficiency for a streaming platform and continues to attract participants to the network.

A more direct relationship between the artist and the audience is also an opportunity for a brand. Rewarding artists more generously for their work could attract artists away from other platforms to a new brand experience. Admittedly this isn’t the complete decentralisation championed by blockchain purists but does reshape the intermediaries in that category. Recently, artist and producer Justin Blau a.k.a 3LAU launched Royal to democratise access to music ownership. I’m sure Sarah would approve. 

Sarah’s story shows the experimentation and innovation of blockchain in categories far beyond finance. Places where your consumers and maybe even your competitors are playing. Like the infamous internet deniers in the 90s, you may be a blockchain naysayer. Unlike the internet deniers, we have the chance to avoid their fate by exploring the impact for our brands now.

So, c’mon. Join the party. It’s one you don’t want to be (fashionably) late for.