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Blockchain and cryptocurrencies are almost everywhere when it comes to discussing technology. You must have noticed the dramatic pace of discussions around blockchain technology growing exponentially in recent times. Now, cryptocurrencies and blockchain technology are no more exclusive terms limited to the lingo of tech professionals. As a matter of fact, anyone can learn about blockchain and its exceptional value advantages. Now, it is important to think of ways to explain blockchain to a child before you can move ahead in your learning journey.

The radical growth in popularity of blockchain technology has made it possible that your child may ask you about Bitcoin. If ever the situation arises, you must know the right approach to explain blockchain to your children. The following post helps you figure out some interesting ways to explain the concept of blockchain to children.

Why Should You Learn How to Explain Blockchain to a Child?

The first thing that must be revolving around your mind right now must have focused on why a child would need blockchain explained to them. You cannot burden a child with the technical jargon and complex terms associated with the domain of blockchain technology. However, you cannot undermine how blockchain will develop as the technology of the future. Therefore, you would basically prepare a child for the future by explaining blockchain technology to them in simple terms. 

Another significant reason for learning how to explain blockchain technology to children is that everyone is not an expert in blockchain. The growing adoption of blockchain technology in diverse use cases across multiple industries has fuelled the interest of senior objectives in the applications of blockchain technology. 

On the other hand, blockchain professionals can convey the actual value of blockchain technology to executives and business leaders only in simple terms. The importance of blockchain simple explanation in such cases is more than you could imagine. For example, senior executives, leaders, and decision-makers could understand blockchain-based projects easily, thereby removing the setbacks for project approval. 

Definition of Blockchain Technology

The foremost highlight in the ways to explain blockchain technology to a child would focus on the definition of blockchain. In addition, the answers for “How do you explain blockchain to a child?” would also focus on maintaining simplicity. The simplest definition of blockchain suggests that it is a decentralized public ledger that helps in recording all transactions throughout multiple computers. 

One of the biggest highlights of blockchain technology is that the network does not have any central point. How? All the information on the blockchain has been stored across different computers simultaneously, thereby creating difficulties for compromising a single computer or stealing data. However, the definition might be a bit confusing for children as they might wonder about the reasons for recording transactions across multiple computers. What is the special thing about not having a central point in blockchain?

Background of Blockchain

The simple definition of blockchain might still feature some complicated annotations for children. You would obviously encounter multiple responses to “What is blockchain in one sentence?” for explaining the term to children. Now, it is important to explain how blockchain came into existence. Let us assume the example of Yap Island, a small island in the Caroline Islands group in the western Pacific Ocean. 

Around 3000 years ago, somewhere around 1000 BCE, the inhabitants of the island used human-sized currency, known as Rae Stones. The Rae Stones weigh almost 8000 pounds and reach a height of almost 12 ft. It would have been a lot difficult to move such humongous units of currency upon exchanging them for goods. 

How did everyone manage to run an economy without the facility for trading money physically? Everyone kept a memory of the trade, and transactions had to be announced to the rest of the tribe. All the other members of the tribe maintained a mental ledger of the transaction, thereby showcasing decentralization. You may assume the simple example as an assumption for blockchain explained in detail. However, you would look for alternatives in which you would solve the problem of difficulties in physical trade today. How will the system look like? 

The Trouble with Centralization

If you want to solve the problem of managing an economy without physical trade, then you would need banks. Banks or other centralized financial institutions would keep records about the ownership of Rae Stones in the Yap Island example. The banker would monitor all the transactions and offer verification regarding credibility of certain transactions. 

You must also try to explain blockchain technology based on the essential requirements of the centralized authority. The central authority or the banker must provide security for the ledger to avoid any unwarranted modifications. In addition, the banker must be readily available at all times to ensure transactions between users. On top of it, the banker must have credibility and professionalism to avoid accidental mistakes. 

On the contrary, blockchain simple explanation for kids suggests how blockchain removes the centralized authority. You don’t have to worry about the credibility of the banker in the case of blockchain technology. With blockchain, it doesn’t matter whether one user in the network is not trustworthy or a particular user compromises the network. Transactions will happen on the blockchain and will be recorded even if one specific person is not available in the network. How?

Working of Blockchain

The simple answer for “What is blockchain in one sentence?” points to the example of Yap Island once again. You can find a lot of similarities between the working of blockchain technology and the old transactions on Yap Island. Just like announcing a transaction to the tribe, every transaction on blockchain must be sent across the whole network. The “nodes” or computers in the network must document the transaction details on their copy of the distributed ledger. 

You can think of the ledger as an account of all transactions on the blockchain. The computers on the network would compare the ledgers and determine the authenticity of transactions. Therefore, a transaction on a blockchain network is valid only if the majority verifies the truth of the transaction. On top of it, the incorrect ledgers would be updated with the correct data from majority of the nodes.

• Transaction on Blockchain

Suppose John wants to send 1 Bitcoin to Jessie from his crypto wallet, which contains 10 Bitcoin now. The first step starts when John initiates the transaction by sending it to the network. All the servers on the network record the transaction, with possibility of some nodes registering the wrong information. 

In the next step, all the nodes would compare their data and identify whether their copy of the transaction matches with the majority. If anyone has a wrong copy of the transaction data, they can receive a copy of right data from the majority. Finally, all the servers agree on the transaction details, thereby ensuring addition of the transaction to blocks. 

• Decentralization on Blockchain

The simple explanation for recording transactions on blockchain networks shows an interesting example of how decentralization works. On the other hand, the example shows the basic approach for a blockchain transaction. However, you would need an interactive example to explain blockchain to a child by showcasing the importance of decentralization. 

Think of a scenario where a 7-year-old kid Michael wants a video game for Christmas and writes a letter to Santa asking the same. However, Michael does not know how to send the letter to Santa and asks his father to deliver the letter. Now, Michael’s father reads the letter before mailing it to Santa. Michael’s father doesn’t like him wasting his time on video games. 

So, he changes the content of Michael’s letter and writes the names of a few books for his school. When Michael receives his Christmas gift, he is heartbroken that Santa did not give him a video game. You can notice that the intermediary or middleman, i.e., Michael’s father, disrupted the intended outcome of the transaction by Michael.

Let us assume that Michael uses a North Pole blockchain network that has Santa, his elves, kids from all over the world, and their parents as participants. Michael can send his letter asking for a video game on the blockchain network, and everyone on the network can see his request. When Michael’s father notices the request and tries to modify it, the rest of the network disagrees with his proposal. Therefore, the final transaction recorded on the blockchain is that of Michael’s letter for a video game. The blockchain ensures that Michael can get his transaction completed the way he wants to. Think of the same model applied to financial transactions and other use cases. 

Blockchain and Money

If your child asks you about blockchain, then you are most likely to come across the need to explain cryptocurrencies. The concerns of “How do you explain blockchain to a child?” would also reflect on how blockchain and money and related to each other. Children would grow to find blockchain as one of the integral elements behind cryptocurrencies, one of the modern investment tools. 

As a matter of fact, it is important to highlight the example of Bitcoin as the first use case of blockchain technology. You can showcase how Bitcoin uses blockchain technology to establish a peer-to-peer electronic cash system. As described in the basic designs of blockchain explained clearly, all the nodes or miners on the Bitcoin blockchain network document the transfers of Bitcoin. However, blockchain is not all about cryptocurrencies. 

Other Uses of Blockchain

The next notable highlight you need to explain blockchain technology to children is an outline of its other use cases. You have to teach children that blockchain technology serves as a distributed ledger that can help in recording almost any type of information. A blockchain network could record weather data, stock prices, details of votes, and healthcare information comprehensively in detail. Blockchain can also help in documenting supply chain information, thereby enabling better efficiency in tracing products. As you can notice, blockchain has many plausible applications beyond the domain of cryptocurrencies. 

Significance of Blockchain

The final and most essential aspect of an introduction to blockchain technology for children would focus on its practical necessity. Children must learn about the practical advantages of blockchain technology when applied in real-world use cases. The outline of blockchain explained for children must focus on the way blockchain ensures accurate and timely transactions. It is important to remove the bottlenecks in supply chains alongside ensuring product quality. 

Blockchain technology helps in documenting the data regarding product status throughout multiple phases of the supply chain. Imagine the range of benefits you can have by tracking how fresh the vegetables on the supermarket shelves are. The removal of bottlenecks from supply chain in terms of approval and necessary checks makes the process faster. Therefore, you can have better chances of delivery of essential goods and services without any limitations. 

Most important of all, blockchain can also serve an important role in the future by supporting the verification of information authenticity. The credibility of information is one of the critical problems in the present times. On the other hand, proper use of blockchain technology can help in verifying which information is true or false. In addition, you will also come across many other innovative uses of blockchain for the world in the future. 

The global blockchain market could achieve a total value of almost $137.59 billion by 2030. Seems like quite an impressive market your boss would like to learn about, isn’t it? However, you need some interesting tricks up your sleeve to explain blockchain to your boss, who is completely new to the technology. Apparently, you don’t need any fancy resources to make your blockchain pitch seem interesting to your boss. 

On the contrary, you can follow an organized structure for defining blockchain concepts to your boss. The following post offers a detailed overview of different concepts in blockchain explained clearly in simple words. You can use the element of simplicity in your explanations to communicate the true potential of blockchain to your boss. The post will also help you figure out the best ideas for pitching blockchain technology to your boss.

Definition of Blockchain

The first thing you need to explain blockchain to your boss is a simple definition for blockchain. You need a blockchain simple explanation in a way that your boss could understand from their perspective. Is the technical definition not enough? Not in all cases. You need an example with which your boss can identify what exactly a blockchain is and how it works. For the technical definition, a blockchain is a decentralized and distributed ledger responsible for recording the provenance of digital assets. The design of the blockchain makes it impossible to modify data registered on the blockchain. 

Now, let us explain blockchain technology with a simple example for your boss. Ask your boss to imagine that they are the “node” or the computer with a file of transactions, known as the “ledger”. At the same time, two other government accounts also have the same file of transactions, therefore making the system distributed. 

When your boss, i.e. the node, makes any transaction, their computer would send an email to each accountant about the transaction. Both the accountants compete with each other to verify whether you can afford the transaction. The first accountant who would successfully check and validate the transaction with their logic would receive the reward. The other accountant would check the proof and update his file with the new transaction. 

In this example, the network, including your boss and the two accountants, shows the perfect outline of blockchain technology. The answer to “What is blockchain in one sentence?” paints it as a decentralized, immutable database of transactions in a network. However, blockchain technology involves many other crucial concepts beyond this simple explanation. 

For example, you can notice how the two accountants competed with each other to discover Proof of Work in return for rewards. The process is referred to as mining and has considerable significance in the world of blockchain. You have to work on simplifying these concepts as far as possible for your boss. 

Working of Blockchain

The best way to explain blockchain to your boss would also focus on the working of blockchain. Blockchain basically includes three critical components such as blocks, miners and nodes. You can explain each component to your boss to help them familiarize with how blockchain works in the following ways. 

• Blocks

As the name implies, every blockchain has been created with multiple blocks. The three important elements in a block define its role in the blockchain. First of all, you have the data in the block, followed by the hash, or a 256-bit number associated with the nonce. It is important to note that the hash must be small and start with multiple zeroes. The nonce is a 32-bit whole number generated randomly upon creation of the block. The outline of blockchain explained in simple terms must also highlight the fact that the nonce is responsible for generating the hash value. 

• Nodes

The next critical requirement while you explain blockchain technology to your boss focuses on an understanding of nodes. Nodes are the integral components in the working of blockchain as they set the platform for decentralization. The most striking highlight of blockchain technology refers to decentralization, which implies that any computer or organization could not exercise sole ownership over the chain. 

On the contrary, the control of the blockchain network is vested in the distributed ledger spread across different nodes connected in the network. Nodes could be any type of electronic device which help in maintaining copies of blockchain and ensuring functionality of the network. 

The outline of a blockchain simple explanation of nodes also shows that it is impossible to get any transaction through the chain without passing through nodes. Every node features a distinct alphanumeric identification number for showcasing its transactions.

• Miners

The role of miners in a blockchain network is also one of the key highlights when you explain blockchain to your boss in simple terms. Miners are responsible for creating new blocks on the chain through mining. All blocks have their unique hash and nonce, along with references to the hash of the previous blocks. Therefore, miners must use special tools for solving complex mathematical problems to determine the nonce capable of creating a valid hash. 

Miners have to compete with each other to figure out the right nonce-hash combination from around 4 billion possible combinations. Mining is more like a safety measure based on math which makes it difficult to modify blockchain technology for different possible reasons. Upon successful mining of a block, all the nodes on the blockchain accept the change, and the miner receives financial rewards. 

Blockchain Applications

You cannot complete a blockchain pitch to your boss with answers to “What is blockchain in one sentence?” only. The use cases of blockchain will also be one of the important highlights you need to draw the limelight on the potential of blockchain. You can obviously rely on cryptocurrencies as the best example of practical use cases of blockchain technology. 

• Cryptocurrencies

Cryptocurrencies leverage blockchain technology for the cryptography and public ledger system, thereby ensuring documentation and security of online transactions. How do cryptocurrencies work?

Cryptocurrencies are basically digital assets using blockchain technology for recording and securing all transactions. For example, Bitcoin can serve as digital currency you could pay for purchasing homes or cars. As of now, there are almost 6700 cryptocurrencies spread throughout the world. 

The total market cap of cryptocurrencies amounts to almost $1.6 trillion. Big companies have been advocating for the idea of blockchain-based digital currency payments in recent times. At the same time, cryptocurrencies introduced the benefit of security from blockchain technology alongside reducing the need for central intermediaries. 

However, you should not miss the potential setbacks of cryptocurrencies while you explain blockchain technology to your boss. Cryptocurrencies don’t operate in a highly regulated market and generally incur damages due to volatility. On the other hand, the growth of cryptocurrencies showcases tangible proof of the rise of blockchain beyond the chasm of hype. 

• Ethereum, dApps and Tokens

The second most popular blockchain network, Ethereum blockchain, is also an important highlight among blockchain basics for your boss. The founder of Ethereum, Vitalik Buterin, introduced a platform with the traditional functionality of blockchain along with the added advantage of writing and executing computer code. 

Therefore, Ethereum has evolved as one of the most preferred platforms for developers to create advanced decentralized and interoperable applications. Decentralized applications or dApps have successfully introduced the benefits of transparency and security for different areas. Another important highlight in applications of blockchain explained to your boss would be a focus on tokens. 

Tokens are one of the revolutionary interventions in the blockchain space. Ethereum programmers could create tokens for representing any type of digital asset and track its provenance. At the same time, tokens can also serve unique functionalities according to specific instructions programmed in smart contracts.  

The discussion on applications of blockchain technology could span various industries. For example, the distributed ledger technology could help in tracking fraud in the domain of finance and secure sharing of patient medical records. Similarly, blockchain can also help in safeguarding the intellectual property rights of a specific business easily. 

Best Practices for Pitching Blockchain Technology to Your Boss

The job of explaining blockchain technology to your boss can be quite challenging. However, new technology like blockchain can serve promising value improvements for your business. Therefore, an effective pitch can help you communicate your views effectively. Here are some important tips you must keep in mind before you pitch blockchain technology to your boss. 

• Think from the Perspective of Your Boss

Before you try to find “What is blockchain in one sentence?” you must find out why your boss needs to learn about blockchain technology. Put yourself in the seat of your boss and think about whether your business actually needs blockchain. Identify the problems which blockchain could solve for your boss. Create a list of the business benefits of blockchain technology for your boss, which can hold their attention to your pitch. 

• Simplicity is the Answer

You can opt for detailed presentations with a timeline of blockchain technology and infographics to explain blockchain technology to your boss. However, cluttering your pitch with excessive information and unwanted technical jargon can distract your boss. Remember that you would have limited time to get your boss hooked on the concept of blockchain. 

Make sure that you use your time wisely by presenting simple explanations for blockchain technology. For example, if you are explaining blocks, tell your boss about what they contain and what they do. However, a deep dive into hashing mechanisms might not be reasonable in a beginner’s pitch. 

• Preparation Can Work Wonders

The most trusted best practice for presenting a blockchain simple explanation to your boss would turn the focus on preparation. You must get your facts right and an outline of your pitch. You must include a few simple stories and examples in your pitch to improve its impact on your boss. 

For example, you can try incorporating analogies between blockchain concepts and everyday activities in your office. In addition, you must pay attention to the design of the presentation such that it can serve as an effective guide for your boss. Most important of all, practice your pitch with friends and colleagues before you explain it to your boss.

The growth of modern ecommerce platforms with mobile functionalities has been one of the important highlights in B2C commerce. The arrival of ecommerce changed many conventional organizational structures and transformed the value creation process comprehensively. At the same time, applications of new technologies such as blockchain in marketing have been changing the traditional dynamics of brand marketing. The internet provides many opportunities for marketers to help them create new online marketplaces and enter new spheres in their existing markets. However, the introduction of blockchain has brought some significant changes in the way people and businesses use the internet. 

In such cases, an overview of the impact of blockchain technology on marketing would help you familiarize with how blockchain will transform marketing now and in the future. The following post offers you an outline of the potential impact of blockchain technology on the marketing activities of an organization or brand.

Importance of Marketing  

If you want to know the importance of blockchain for marketing, then you must know about the significance of customer-centric marketing. The competitive B2C markets in the present times call for organizations to reach out to customers. At the same time, customers must have the necessary skills to communicate the value for a consumer from their goods or services. The communication methods followed by organizations have been changing gradually from one industry to another over the course of time. 

However, the primary objectives and risks pertaining to consumer engagement would remain the same for marketing in any era. The need for a blockchain marketing strategy seems evident for organizations thriving in an era of transformation of the internet into a decentralized web. As the internet expanded over the course of history and new technologies emerged gradually, the influence on the traditional marketing mix became quite clear. 

Modern technologies have created the need to emphasize on the elements of security, transparency, trust, and privacy. Consumer concerns regarding privacy have been growing considerably in the past few years. Where does blockchain come into the picture? Can it resolve these challenges?

Role of Blockchain in Marketing

Blockchain technology has created substantial hype alongside showcasing proof of its value through proven use cases in different sectors. For example, blockchain has found some notable use cases in the industries of finance, healthcare, real estate, and supply chain management. Therefore, marketing is obviously not an exception in the potential use cases of blockchain. Most of you wondering about answers to “How is blockchain used in marketing?” could figure out the same in the traits of blockchain technology. Let us take a look at the different features of blockchain which make it a suitable fit for blockchain. 

How is Blockchain Suitable for Marketing?

The global financial crisis in 2008 shattered the foundations of trust in the traditional banking system. During this time, the arrival of the peer-to-peer electronic cash system, Bitcoin, showed the use of cryptographic mechanisms for processing financial transactions. The cryptographic mechanisms underlying Bitcoin include hashing, consensus mechanisms, asymmetric encryption, and time-stamping. 

Bitcoin resolved the problem of double-spending while setting a new precedent for carrying out financial transactions and exchanging value in online environments. Furthermore, the effect of blockchain in marketing would also focus on how the working of blockchain focuses on verifying the validity of transactions. It is impossible to tamper with the public transaction records on blockchain as all the transactions as sequentially arranged in the blocks with timestamps. 

The applications of blockchain for marketing would introduce prolific changes in interactions between a customer and businesses. Blockchain brings the value of multiple technologies and, most important of all, a distributed ledger of transactions carried out by parties involved in the blockchain network. The basic objective of blockchain technology focuses primarily on authentication of assets with the flexibility for application in other business activities. 

Effect of Blockchain on Marketing

Blockchain technology is highly disruptive in nature, and its impact on the market is not under wraps. Most recently, blockchain technology has successfully introduced massive waves of change with value advantages in use cases such as asset management and tracking alongside regulatory compliance. 

Blockchain technology has offered new avenues of productivity, albeit in the initial stages for different sectors. However, the lack of research on potential of a blockchain marketing strategy can create notable ambiguities pertaining to the significance of blockchain technology for marketing.

Here are some of the important ways in which blockchain could influence marketing for organizations. 

• More Emphasis on Decentralization

The internet provided the initial push for decentralization and offered drastic changes in the distribution of products and services by companies. New digital intermediaries replaced the traditional intermediaries by offering a wide range of services and solutions for modern commerce. 

Some of the examples of services by new ecommerce intermediaries include trust provision, online search capabilities, communication, information brokering, and advertising. In addition, social networks such as Facebook, Instagram, and Twitter offer new ways for brands to reach their customers. The existing digital intermediaries seem to be doing the job of marketing a business to its target audience. 

However, the centralized digital intermediaries can lock your data in their control, which increases the need for a business to depend more on them. On top of it, managing your communication channels alongside concerns about monetizing customer data also create doubts regarding the existing digital technologies for marketing.      

Blockchain could offer an ideal solution to all these concerns effectively with a tool that supports businesses and customers moving around the challenges of intermediaries. Therefore, the answer to “How is blockchain used in marketing?” would reflect on the capabilities of decentralization. 

Brands could improve customer targeting alongside enhancing service responsiveness and expanding their advertising campaigns. The interactive and ubiquitous features of blockchain help marketers in communicating advertising content to customers. The applications of blockchain technology in decentralized marketing could help in removing the activities which don’t add any value to the marketing process. 

Brands could also offer incentives for customers in the form of loyalty programs, thereby improving the prospects for strengthening the direct relationship between consumers and brands. At the same time, decentralization with blockchain technology could offer a new model for better consumer engagement and collaboration. 

• Fighting against Click Fraud

The lack of examples of blockchain in marketing industry can be one of the most important reasons for limited investigation in this field. Communication is an important tool for customers to know about the latest products, services, and other updates. However, the importance of an online business also comes under question owing to the multiple scandals and fraud campaigns. 

With the popularity of online sponsored search in the business models for various search engines, click fraud has emerged as a notable setback for online advertising. Click fraud has become quite popular due to automated digital marketing and better methods for target marketing. It is actually an intentional act where an organization or an individual attempts to influence the advertising budget of a competitor. 

The necessity of blockchain in marketing is clearly evident in the ability to fight against click fraud. As a matter of fact, the severity of click fraud can show how it can be a major threat to digital marketing. It can account for additional costs for marketers in the amount of $44 billion by 2022. 

Blockchain can reduce specific risks associated with click fraud through a trustworthy digital marketing environment for brands and customers. Blockchain-based marketing would focus on encouraging participants in the marketing sector to work in an open and shared environment, with every individual serving their roles with integrity and honesty.

One of the instances for using blockchain technology in fighting click fraud would refer to the resolution of information asymmetry concerns. The collaborative operations would help in improving control and supervision over publishers through detailed analysis of credibility, historical information, and qualifications. 

One of the examples of blockchain in marketing for dealing with click fraud refers to adChain platform. The platform works as a transformative protocol in the field of marketing technology with innovative facilities for marketers, such as real-time lead tracking and campaign audits. The adChain protocol also leverages the immutability of blockchain to prevent pay-per-click providers from accessing the benefits of fraudulent traffic and ad clicks. 

• Improved Transparency and Trust in Marketing Environments

Blockchain offers the benefits of decentralization as the answer to the control of digital intermediaries over the marketing process and decisions of a business. At the same time, it is also important to note how consumer confidence in brands has been dwindling at unparalleled rates. 

If you want to build a blockchain marketing strategy, then you must understand that the quality of the technical infrastructure determines the level of trust of consumers in the marketing campaign of a brand. Blockchain can help to fuel trust and transparency in the domain of online marketing by allowing consumers and brands to work in a transparent and secure ecosystem. 

The most striking highlight of blockchain technology refers to the advantage of trust by design as the trust protocol underlying blockchain provides assurance regarding the honesty and integrity in behavior of the brand and marketing professionals.

A credible blockchain marketing agency would work towards the creation of consumer-centric transparency, particularly in scenarios where consumers have to share their personally identifiable information or PII. 

In addition, blockchain can also improve trust and transparency by fighting against malicious marketing for counterfeit products, which affect the intellectual property or IP rights pertaining to original manufacturers. Furthermore, the improved visibility and ability to verification of compliance obligations alongside end-to-end product traceability could also deliver better transparency into how a business works.

• Better Security for Digital Marketing      

Blockchain has been developed on the foundations of cryptographic mechanisms for ensuring security. The discussion on a blockchain marketing strategy would focus on security threats as the circumstances, conditions, or events, which pose formidable risks for marketing campaigns and systems. 

Before adding the element of information security in their marketing campaigns, businesses must work on developing a strong technological infrastructure to resolve the existing loopholes alongside improving the trust of consumers in the digital marketing landscape. Blockchain technology could provide exclusive benefits for consumers and brands with decentralized and distributed data storage. 

In addition, you can also capitalize on the functionalities of different security mechanisms such as access control, asymmetric encryption, and digital signatures. These security mechanisms can help in safeguarding the processes for storing, transferring, and retrieving massive volumes of consumer information. 

Blockchain technology offers a new method for decentralization and self-organization of a business ecosystem with effective synchronization and integration of marketing-related information among network members. The information can include product listings, marketing plans, pricing policies, market research and analysis outputs, discounts and promotional benefits, and advertisements. 

Consumers could make the most of blockchain in marketing with access to a single source of truth about the values, traits, and offerings of a brand. Most important of all, the lack of a single point of failure also provides better assurance of security for digital marketing campaigns. 

• Reducing Privacy Concerns in Marketing

The work of a blockchain marketing agency is not limited to ensuring security, trust, and transparency in the marketing process. Privacy is one of the critical issues which affects the decisions of an individual about using a specific online technology service. Research has proved that customers are concerned about anonymity and confidentiality of their online transactions. 

The increased risks of manipulating users into divulging their PII have been responsible for increasing concerns regarding privacy. On top of it, you can also notice how new data collection and data mining technologies can help brands in identifying, tracking, and collecting consumer data. However, blockchain technology can help in resolving various issues pertaining to privacy in digital marketing. 

One of the notable examples of blockchain in marketing for privacy would refer to anonymity of users in a transaction. Transactions on blockchain are not associated with real identities, and configuration in controlling access of network members to block information can help in improving privacy. 

While transactions are verified by the whole network, no one knows about the details of parties involved in the transaction. At the same time, the use of blockchain for marketing also sheds light on the possibilities for consumers to use transactional history to develop more control over PII in digital marketing initiatives. 

The transaction history on blockchain could provide better and more robust analytics with privacy protection for users. Consumers of a specific brand could also explore the opportunities for trading their PII with brands securely in return for services or incentives. 

Blockchain has offered a decentralized environment in which you can deal with services on a peer-to-peer basis. The users determine the rules on blockchain, and the governance of blockchain environments depends on the supply and demand dynamics. Blockchain presents a formidable improvement over the traditional top-down decision-making model followed by different centralized solutions. Similar to the new design of blockchain applications, the funding for blockchain projects must also follow some innovative approaches. 

If you have an idea for a new blockchain project or startup, then you need a clear impression of the effective methods to raise funds for the project. Considering the volatility of cryptocurrencies and limited awareness about blockchain, blockchain startup funding can be quite challenging. The following discussion helps you identify some of the best methods to obtain funding for your blockchain project. In addition, you can also identify the specific implications associated with each funding method.

Funding for Blockchain Startups and Projects

The interesting thing about blockchain project funding is that you can choose the conventional methods used for funding startups. At the same time, concerns regarding the new thought processes for raising funds for blockchain startups have also become quite prominent in recent times. How? Assume that a project receives funds in the form of cryptocurrency at a specific point of time or the desired liquidity for bootstrapping their multi-faceted applications. 

In these cases, the project or the startup must develop a risk management plan. Why? What would the startup do if the value of the cryptocurrency they received in funding fluctuated? A risk management plan is essential for a startup to safeguard its operations against the rapid fluctuations in the value of cryptocurrencies. 

At the same time, the storage concerns of funding for crypto project and startups would also be considerably different from that of fiat funds. You are vulnerable to risks of hacks in the case of hot wallets or exchanges. On the other hand, hardware wallets or paper wallets can introduce a diverse range of infrastructure management challenges for the project team. Therefore, you have to tread carefully while seeking funds for blockchain projects or startups.

Methods for Funding Blockchain Projects

You can find the standard concepts for startup funding in the case of funding for blockchain projects, such as crowdfunding, venture capital funding, and angel investments. All of these methods serve as valid methods for helping startup founders raise the capital required to get their business running. 

Interestingly, some of the traditional funding methods for blockchain projects have successfully adapted to the blockchain domain. At the same time, it is also important to notice the blockchain-centric funding methods such as DAOs or Decentralized Autonomous Organizations. Let us take a look at the top funding methods for your blockchain project or startup.

1. Angel Investors

As the name implies, angel investors are one of the first answers to “How blockchain projects are funded?”, particularly for startups. The approaches followed by angel investors for funding blockchain projects have become quite popular in recent years. As a matter of fact, a report suggests that blockchain angel investors have been quite active in recent years with constantly growing deal count. 

Generally, angel investors work by using their own funds for startups. Therefore, they always look for projects or startups with high-risk and high-reward facilities. However, you must look for certain important factors in your search for blockchain startup funding opportunities with angel investors, such as,

• Reach Out to Angel Investors

You can use different resources for finding angel investors, such as websites or professional networking. It is important that you identify the angel investors who might be interested in blockchain startups and projects. Make sure that you reach out to them with a plausible introduction to yourself and your project. 

• Match their Expectations

Set the perfect foundation for building your 1-on-1 relationship with the angel investor and make sure that your expectations match. You must be prepared to answer the questions of the angel investor clearly. At the same time, you must not hesitate to ask the amount of blockchain project funding you can expect from them. 

• Maintain Flexibility

The most important aspect while dealing with an angel investor for funding your blockchain startup is flexibility. You must remember that dealing with angel investors would be different than working with an organization. Remember that you have to adapt your interactions through different stages, starting from your introduction to the investment for your crypto startup.

2. Crowdfunding

One of the common methods to obtain funding for crypto project refers to crowdfunding. The funding methods for blockchain projects and startups can use common choices like crowdfunding with a unique twist. For example, crowdfunding campaigns for blockchain projects can include incentive schemes for investors. Blockchain projects can promise incentives in the form of native governance or utility tokens of the project, or non-fungible tokens. 

The facility of unique digital assets to the investors in your project can help in generating scarcity, thereby increasing funding. Decentralized Autonomous Organizations or DAOs have emerged as a notable example of crowdfunding for blockchain startups and projects. However, the success of crowdfunding method to obtain funding for blockchain projects depends on the following factors.

• Identifying the Crowdfunding Model

Incentive-based crowdfunding is obviously an effective and the most prominent crowdfunding model for the blockchain landscape. At the same time, you must also take note of the other crowdfunding models, such as debt-based and equity-based crowdfunding. 

• Community Engagement

If you look at it closely, crowdfunding is a community effort, and how effectively you can communicate your vision to the community. Communities are an integral aspect of the domain of decentralized blockchain technology as they fuel engagement and hype across different stages of a project. The approaches for engaging your community would differ in the case of blockchain startup funding with a focus on direct communication and organic marketing. 

• Product Specifications

Provide a clear and precise specification of the final solution you want to deliver with your blockchain project or startup. Crowdfunding initiatives bring the expectations of multiple investors to the table. Therefore, you must ensure complete transparency regarding your project and its value for the community to avoid any misunderstandings.

3. Investment Funds

Another formidable source for blockchain project funding is evident in investment funds. The exponential growth of the blockchain industry also accompanies the underlying impact of strong growth in hedge fund and venture capital investments. As of now, over 800 blockchain investment funds are operational and cater to the financing needs of multiple blockchain projects and startups. Interestingly, the amount of assets under the management of investment funds has registered an explosive growth rate. 

The value of the assets under the control of investment funds increased to more than $21 billion in 2020 from the $190 million estimated in 2016. Therefore, you can explore a broad range of opportunities for growing your blockchain startup through investment funds. Simultaneously, you need to reflect on the following factors while choosing investment funds to obtain funding for your blockchain startup.

• Recognize the Investors

The key to finding the ideal source of funding for blockchain projects rests directly in identifying potential investors for your project. You can evaluate an investment fund by taking a look at its existing portfolio. One glimpse at the portfolio of an investment fund could help you figure out whether they would be interested in your project or startup. 

In addition, you need to identify the development stage of your project to find suitable investors with a relevant track record in funding through different rounds. You must also focus on whether the investment fund has an active interest in blockchain technology and startups. Does your blockchain project or startup fit the theme of the investment fund?

• Reach the Investment Fund

You need to introduce yourself and your idea for the blockchain project in an effective way to the investment fund. Make sure that you present a strong case for convincing the fund to invest in your project. Investment funds rely on references for identifying valuable business opportunities. Therefore, any individual you know can introduce you to an investment fund, thereby improving your credibility. 

• Move through the Stages

The answer to “How are blockchain projects funded?” in the case of investment funds would refer to a clear course of action through the different stages of investment. Investment funds feature a corporate structure where startup founders have to go through multiple approvals before receiving the funds. You can have better chances of success with consistency in your business pitch while maintaining confidence in your interactions. 

• Familiarize with Term Sheets

The easiest way to understand funding for crypto project through investment funds would be to learn about term sheets. Term sheets are critical documents to obtain startup funding from investment funds as they document all the critical details of a deal. The term sheet would feature the investment amount, ownership structure of your blockchain startup or project, and project valuation.

4. Incubators and Accelerators

You can also try your luck at funding blockchain startups through blockchain incubators and accelerators. The best thing about incubators and accelerators for blockchain startup funding is the fact that they don’t focus solely on raising capital. As a matter of fact, the funding from incubators and accelerators is only a fraction of the benefits they offer for your blockchain startup or project. 

Blockchain accelerators or incubators offer basic mentoring for startups which helps you navigate the challenges of the blockchain industry. Furthermore, they also offer networking opportunities to help you discover new ways to drive the growth of your startup. For example, they can introduce you to investors who might be interested in your project. Here are some important factors you need to take into account while choosing blockchain accelerators or incubators for funding your blockchain startup.

• Research Thoroughly

Check the details of the blockchain incubator or accelerator and find whether it is the right fit for your project. Incubators are an ideal choice for startups that have an idea, while accelerators can help startups that have developed a definitive structure for their ideas. 

• Preparation for Full Potential

You must prepare comprehensively with a vision for growing your business with the philosophy of the incubator or accelerator. Learn how to take advantage of the opportunities to learn new skills, and develop promising business and investor relationships and networking.

The scale of the technological revolution has been surpassing many traditional margins with the proliferation of Industry 4.0. Now, the whole world is preparing to familiarize with the use of autonomous and intelligent systems based on machine learning and data. However, one of the significant elements in the world of digital services points to digital identity. 

Digital identity basically refers to the digital representation of information pertaining to a particular individual, organization, or group. Is the digital identity blockchain technology equation feasible? Blockchain is like the new kid on the block with all the tools to make digital identity management more interesting, secure, and flexible. 

At the same time, it is new in the market of digital identity technologies. Therefore, it is important to learn more about the impact of blockchain technology on digital identity and how transformative it can be. The following post offers a detailed outline of the impact of blockchain on digital identity and helps you verify whether blockchain is a reliable bet when it comes to digital identity. 

What is Digital Identity, and Why is it Important?

Before reflecting on new approaches to digital identity using blockchain, it is important to reflect on the significance of digital identity itself. Why should you worry about introducing blockchain technology in the domain of digital identity? The notion of digital identity has been generalized to assumptions that digital identity includes only the information about personal data available online to all individuals. If you thought that your digital identity includes only your social media profiles, your email addresses, and your physical address, then you are wrong. 

Your digital identity encompasses everything you have on the web, including images, shopping preferences, website usage behavior, and bank account information. However, the existing representation of digital identity varies across different platforms, including banking systems, social media platforms, and telecom networks. Digital identity features the best offline and online identity of an individual. 

The answer to “what is digital identity in blockchain” would also develop on the foundations of the importance of digital identity. It is essential for ensuring accuracy during the course of speeding up the process for customer on-boarding. At the same time, digital identity is also crucial for preventing any money laundering or fraudulent activity. Digital identity management could help in streamlining and standardizing citizen services offered by nations. 

The significance of digital identity is evident in the facility of social transformation projects alongside ensuring economic improvements for different communities through citizen welfare measures. One of the examples of such applications of digital identity refers to the National Digital Identity or NDI system in the Smart Nation initiative in Singapore. The NDI system would help citizens secure access to e-governance services. 

Existing State of Digital Identity

The concept of digital identity works in different ways for companies, individuals, and IoT devices. You must learn about the existing state of digital identity before reflecting on digital identity blockchain projects and their performance. Here is an overview of how digital identity works for different groups.

• Organizations 

Organizations have to deal with formidable challenges in digital identity management as they procure sensitive information regarding users. These companies store the user data along with routine business data. At the same time, the organizations have to comply with privacy-centric regulations. On the other hand, companies are barely able to use the data locked in highly safeguarded data vaults. As a result, organizations could not make the most of the full potential of their digital identity management capabilities. 

• Individuals 

The concept of digital identity using blockchain has gained momentum only after considering the way individuals use digital identity today. Identity is one of the critical and mandatory elements for ensuring functionalities of a society and its economy. With a proper method for self-identification and ownership of assets, digital identity could foster growth in societies as well as global markets. 

On the other hand, physical forms of identification are not available to everyone. Almost 1.1 billion people all over the world do not have any way of claiming ownership over their identity. Seems like a huge problem in a time when blockchain technology can transform digital identity, isn’t it?        

• IoT Devices 

Identity is not a troublesome concept for companies and individuals but also for IoT devices. The world will have more than 10 billion devices connected to the internet in 2020, and the number might grow to 22 billion by 2025. How is digital identity blockchain relevant for IoT devices? Majority of IoT technologies don’t employ suitable identity and access management capabilities. At the same time, security takes one step back as a tradeoff for implementing basic management capabilities in IoT devices. 

Problems for Digital Identity

Why do you need blockchain for digital identity? The existing state of digital identity and the concerns of companies, individuals, and IoT devices have been clearly evident. At the same time, it is important to notice how digital identity blockchain projects can help in resolving many existing identity issues. 

The notable identity issues resolved by blockchain identity management systems include inaccessibility and data security. Blockchain technology also helps in fighting against the problem of fraudulent identities as an additional advantage. Here is an overview of the problems for digital identity, which set the need for blockchain in digital identity. 

• Data Security

One of the most common highlights in the identity information stored on centralized government databases would point at the setbacks in security. The databases run on legacy software and feature multiple single points of failure. Therefore, the massive centralized systems featuring the personally identifiable information or PII of multiple user accounts are notable highlights for hackers. 

According to a recent survey, personally identifiable information accounted for a major share of the targeted data in the case of breaches. As a matter of fact, compromises in consumer data records resulted in an approximate cost of over $654 billion for businesses in 2018. 

• Inaccessibility to Digital Identity

The need for digital identity blockchain solutions also draws profoundly on how digital identity is still inaccessible to many. Around 1.1 billion people worldwide do not have any proof of identity. Generally, traditional identification systems come with the burden of complicated paperwork processes, limited access, and a lack of knowledge regarding personal identity and expenses. Therefore, people are not able to have an identity of their own.

Identity is a crucial necessity for accessing banking services and other social services such as applying for jobs or accessing other government services. Blockchain-based identity can gain momentum as majority of people without access to digital identity can access mobile phones. As a result, it can help in promoting blockchain-based identity solutions on mobile phones with better resolution of the needs of citizens. 

• Identity Fraud

The digital identity landscape needs more blockchain digital identity companies to revolutionize the way users can capitalize on digital identity. Users could juggle different identities with the usernames and passwords for the websites. In such cases, users don’t have a standardized approach for using the data generated on one platform in applications on another platform. 

On top of it, the limited association of digital and physical identities also enables better flexibility for creating fake identities. However, blockchain digital identity projects could leverage the technological advancements in cryptography to fight these issues. Blockchain can help in developing new identity management systems with digital identity frameworks featuring decentralized identifiers.

What is Digital Identity in Blockchain?

Blockchain can resolve the pressing concerns for identity management with promising improvements. However, many of you must have doubts regarding the role of blockchain in digital identity. How does digital identity work on a blockchain? Let us assume the example of the working of decentralized digital identities on Ethereum to find the answer. 

The definition of digital identity using blockchain technology on Ethereum focuses on the important components such as identity management, decentralized identifiers, and embedded encryption. Users have to sign up for a self-sovereign identity and data platform for creating and registering a decentralized identifier or DID. The process involves creation of a public-private key pair, and users can store the public keys on-chain or rotate their storage to avoid security risks. 

The decentralized identifier or DID is an important concept in explaining the use of digital identity blockchain solutions. It is actually a pseudo-anonymous identifier for a specific object, person, or company, and a private key secures the DID. Individuals who own the private key can prove ownership or control over a specific identity. One person could have multiple DIDs, which can restrict the extent of tracking throughout multiple activities in everyday life. 

For example, you can have a DID for credit reporting app, and a DID for your gaming account. Decentralized identifiers also feature a collection of attestations or verifiable credentials which verify the specific traits of the DID. Generally, the issuers of the verifiable credentials sign the credentials cryptographically. Owners of DIDs could store the credentials on their own without depending on a single service provider. 

Cryptography helps in securing decentralized identities, which is particularly easier with the security offered by private-public key pairs. The public key can help in verification of identity, while the private key helps in decrypting the message associated with the identity. You can understand “what is digital identity in blockchain” by identifying how decentralized identities are implemented in real use cases. Users could provide a QR code to the identifier to prove their identity in order to access specific services. The identifier would verify the proof of ownership of the credential and check whether it is related to the concerned DID. 

Effectiveness of Blockchain for Digital Identity

The developments in technologies for safeguarding digital identities have brought in many candidates, including robotic process automation and machine learning. At the same time, new solutions turn out costly and less efficient when implemented in centralized digital identity management systems. 

Rather than assigning the control of identity data to centralized parties, blockchain digital identity projects can provide an ideal answer to problems in digital identity management now. How does blockchain serve as an effective answer to the problems in identity management? The working of digital identity in a blockchain with decentralized identifiers reflected briefly on the advantages posed by blockchain for digital identity. At the same time, you can find the following value advantages of blockchain for digital identity management solutions. 

• Security

Security is one of the foremost highlights for the growth of blockchain digital identity companies in the future. Blockchain features the elements of maintaining data in an immutable and encrypted manner. It also offers the benefit of security through cryptography in maintaining digital identity data. As a result, blockchain can help in ensuring that the digital identity is secure and easily traceable. Furthermore, blockchain-based digital identity systems take away the problems of vulnerability due to password protection. 

• Privacy 

The next important value benefit of blockchain-based digital identity refers to privacy, as regulators are fuelling debates on safeguarding the personal and sensitive information of citizens. The efficiency of blockchain encryption alongside the facility of digital signatures ensures effective “Privacy and Design.” On top of it, digital signatures associated with all transactions can help in making them immune to modifications. 

• Integrity

The blockchain-based digital identity system would provide flexibility for maintaining records of every identity throughout all the nodes across the network. Irrespective of the distribution of data across peer-to-peer networks, the continuous verification of the identity and updates make it trustworthy. 

You can also learn about the importance of “what is digital identity in blockchain” by identifying how blockchain network does not follow a single point of failure. Therefore, hackers would have to go through difficult processes to compromise the integrity of digital identity data. 

• Trust 

The advantages of blockchain-based digital identity systems also emphasize plausible improvements in trust. Blockchain-based systems maintain the communication metadata in a distributed ledger, and consensus mechanisms help in verifying data authenticity across multiple nodes. Decentralization also offers another promising highlight for digital identities, especially with usage of national identifiers throughout multiple agencies. 

• Simplicity

The foremost benefit of digital identity blockchain solutions would also reflect on the element of simplicity. Blockchain frameworks should have the capability of simplifying the processes associated with each stakeholder. The blockchain-based identity management frameworks can set clear roles for identity issuers, identity owners, and identity verifiers. 

Examples of Blockchain-based Digital Identity

The examples of blockchain digital identity companies also serve as notable highlights in the guides on blockchain-based digital identity. One of the popular examples of a decentralized digital identity platform refers to BanQu, which focuses on Self-Sovereign digital identity. The platform would help farmers in creating a unique digital profile for connecting with peers, governments, payment companies, banks, and aid organizations. Other popular examples of digital identity based on blockchain would also refer to ID2020, a global alliance throughout public, non-government, private, and government organizations. 

Final Words

Digital identity increasingly becomes a part of the social and economic well-being of people all over the world. It is essential for an individual as it enables their right to vote, access education, and participate in banking services. However, the problems in identity management with existing systems show the need for reforms. Interestingly, blockchain digital identity projects serve the ideal foundation for transforming digital identity management for the future. 

Blockchain can help in creating decentralized identifiers alongside the facility for associating digital identity with verifiable credentials. Therefore, you can incorporate your digital identities across different platforms into one digital identity under your control and ownership. Learn more about blockchain-based digital identity and its practical implications.