This morning SocialFlow made the public announcement of its Universal Attention Token, or UAT. But I won’t use this post to talk about the specifics of the offering (see our announcement, check out our website, and read our white paper).
Instead, I’d like to address the question “Why Blockchain?” It’s a fair one, because it seems like every company out there has added two slides on blockchain to its Powerpoint presentations (and IBM, never to be outdone, is spending tens of millions in advertising to make blockchain “relatable”, sort of the way they’ve done with Watson and Artificial Intelligence).
So Why Blockchain for the UAT?
Everything we’re proposing to do with the Universal Attention Token could be done with a database. So why complicate things by extending it to blockchain?
The simple answer is that there’s precious little trust in the current digital advertising ecosystem, and blockchain systems are well-suited for transactions in systems that lack trust. A properly designed blockchain solution is a step in the right direction and will facilitate transactions without requiring trust. And hopefully, over time it will actually help build trust.
The 2018 Version of the “Bound Ledger”
The idea of a creating a permanent record of important data is hardly a new one. Those familiar with the history of banking, accounting, and legal professions have no doubt seen physical ledgers that incorporate a number of security features: (a) they are bound, with numbered pages so that entire sheets cannot be easily added or removed; (b) entries are made using indelible ink, so that entries cannot be not be deleted or easily altered; and, (c) the entries are made in sequential order, so that it is obvious if entries are inserted after the fact. The approach was a good one and served society well for centuries.
Of course someone could enter a false record, using indelible ink, properly sequenced, in a bound ledger. But fraud at the time of data entry is a small subset of fraud relating to events from the past. And steps that minimize fraud relating to events from the past are important, even if they don’t prevent someone from entering a fraudulent record today. The perfect is not the enemy of the good.
This is directly relevant to what we’re doing: by adding blockchain to the Universal Attention Token, we are effectively making it impossible for anyone — including SocialFlow — to alter historical data. Once it’s written, it’s immutable. And that has important implications to the advertising ecosystem, on topics ranging from click fraud, to viewability, to reporting discrepancies.
“But Blockchain is Slow and Inefficient”
We’re not trying to build a blockchain system that records every click in real-time. That would be a daunting engineering challenge, and completely unnecessary at this stage. Instead, we’re batching transactions. So instead of writing a transaction to the blockchain once every ~0.03 seconds (that’s how often we process clicks), we’re writing once every ~10 minutes.
To appreciate how big a difference that is, consider that it’s about the same ratio as the time it takes to blink your eyes (~0.33 seconds) to the time it takes to watch the movie Casablanca (102 minutes). It’s a massive difference in scale.
Encrypted Data, With Audit Rights
Our blockchain records will be distributed and available on many different Stellar nodes around the world. But the data is all encrypted — it’s not publicly readable unless you have the record’s private key. As we write the settlement records to the blockchain, we think it’s important to use those private keys to provide audit rights to Advertisers (to see how many real humans interacted with their advertising experiences), to Publishers (to see how many people clicked on and interacted with their stories), and to Users themselves (to see how their attention was directed and accounted for). Parties in the system will only be able to audit their own data, so privacy is protected.
Moving Towards Decentralization
Stellar has developed a consensus protocol that offers the advantages associated with a distributed (aka, decentralized) ledger. The blockchain has many verified nodes, and while you might be able to enter a fraudulent record in a physical bank ledger, to do so on the blockchain you’d need to enter the same exact record at the same exact time on dozens of server, using high grade encryption. That’s a practical impossibility using today’s computing standards.
SocialFlow will write the UAT records to the Stellar blockchain at ~10 minute intervals, and we’ll provide audit rights to Publishers, Users, and Advertisers, as described above. This is a much more transparent, distributed, and trustworthy approach then most anything else in the ad tech ecosystem today.
We don’t believe that blockchain is a magic bullet, or that it will solve all the problems in the ad tech ecosystem. But we see great value in creating a distributed immutable ledger that protects privacy but that can also be audited by each of the parties in the digital advertising ecosystem.
I should note that all of what I’ve written here applies to the Utility function of our Universal Attention Token. We are of course conducting a capital raise with a Security Token, and the “Why blockchain?” answer to that question is quite simple: Blockchain and ERC20 tokens give us a much better path to liquidity, by having the tokens listed on Security Token exchanges.