If blockchain is the infrastructure that underpins Bitcoin and other cryptocurrencies, cryptography is the infrastructure that underpins blockchain.
Touted as the be-all-end-all solution for advertising’s ills, blockchain has generated tons of hype over the last few years, reaching a fever pitch in 2017 when the price of a single bitcoin skyrocketed to nearly $20k. Cryptography, blockchain’s older cousin, got very little attention.
But that might just be a good thing. Since then, most of the misinformation and snake oil salesmen have been weeded out, creating space for blockchain–and cryptography–to create real solutions to real problems.
We sat down with Christiana Cacciapuoti, Executive Director at AdLedger, to chat about a few of the most popular words on the industry’s ever-growing buzzword Bingo card.
GAVIN DUNAWAY: What actually is a blockchain?
Christiana Cacciapuoti: The concept of blockchain was invented in late 2008 when the person (or group of people) using the pseudonym Satoshi Nakamoto published the Bitcoin whitepaper. At its core, a blockchain is simply a few pieces of cryptography combined in a novel way to create an immutable, distributed ledger that enables peer-to-peer transactions.
That sounds super complicated, but when you break it down it’s easier to understand.
“Decentralized” means that the ledger is stored on many different computers. This is why a blockchain is more secure–a bad actor would have to hack into many different locations instead of just one. Immutable means that once the data is written to the blockchain, no one can edit or delete it.
“Peer-to-peer transactions” means that moving something of value–whether that something is money, data, or an ad impression–from one party to another without a middleman is now possible.
To dive deeper into the topic, check out our 20-page report that breaks down the technical concepts of blockchain, available at AdLedger.org.
GD: Ok, I think I get it. Then what is cryptography?
CC: Cryptography is the art of disguising information so that only the intended receiver can understand it.
The earliest examples of cryptography in practice are thousands of years old. Julius Caesar used a “Caesar cipher” to communicate with his generals by scrambling letters of the alphabet. Because only his generals had the key that explained the scramble–for example, A might mean Z, B might mean Y and so on–his letters were safer should they fall into the wrong hands.
Today, although they may not know it, the average consumer uses cryptography every day. Text messages and emails are encrypted so that their contents can’t be stolen as they traverse the web. The little green lock to the left of the URL when you enter your credit card details on your favorite eCommerce site means that your sensitive data is safe from fraudsters who could otherwise steal it from the browser.
GD: So why is this stuff relevant to ad tech?
CC: When you boil it down, the core problems cryptography is solving are identity validation and data verification. Blockchain’s big value prop is the ability to facilitate transactions without a middle man.
If you’ve been around the industry for the past few years to hear CMOs on conference stages talking about the unacceptably murky supply chain, the disappearing ad dollar, and the proliferation of ad fraud, it doesn’t take a ton of imagination to see the value. The right implementations of blockchain and cryptography could address all three of those problems and many others.
GD: Sounds amazing, but if it has the potential to solve all our problems, why isn’t everyone implementing it already?
CC: Great question! The short answer is that blockchain and cryptography are very complex, and require a fundamental re-thinking of the existing systems.
One of the late-night shows described blockchain as, “everything you don’t understand about finance and everything you don’t understand about computer science combined.” I’d argue that cryptography could be described as everything you don’t understand about math and computer science combined.
They are extraordinarily technically complicated, which makes finding the right engineers to build systems that involve them very difficult.
Blockchain and cryptography are also, contrary to popular belief, not themselves a standalone product. They are just underlying technical infrastructure, wildly successful or utterly useless depending completely on how they are implemented. Think of them like you would a software programming language. Many apps are programmed using JavaScript, for example, but Candy Crush is being played by half the riders of any given subway car I’m on while other apps are much less popular. A major consequence of this fact that blockchain and cryptography are infrastructural tools is that they won’t deliver on their exciting potential if they are just slapped on top of an existing product or process. They require foundational re-thinking.
This means that old ways of doing things, legacy workflows, and maybe even companies could need to change and adapt.
These challenges mean that great work is going to take time, but rest assured that there are some really smart people (including the ones at AdLedger and our member companies!) making sure that this exciting future is coming into fruition as fast as possible.
GD: Where does AdLedger come in?
CC: I mentioned earlier that blockchains and cryptography will only deliver on their most exciting promises if we implement them correctly. That’s why AdLedger exists. We’re a nonprofit working to build rules and standards for how to implement innovative new technology into media and advertising in the most intelligent, efficient, and ethical ways possible.
Since we were founded a little over a year ago, education has been a huge priority. We’ve released a bunch of research (download everything for free on adledger.org), spoken at events around the world including the UN, Cannes Lions, and many others–even held our own conference.
We’ve also been heads down creating and testing an exciting open-source toolset based on blockchain and cryptography. You’ll hear more about those in the next quarter.