You may think that you don’t use the blockchain, but your business is likely reliant on one of its core components.
Unassumingly named ‘merkle trees’, this algorithm allows code changes made by distributed teams of programmers using git to be efficiently and reliably validated and coordinated. Without this, software development would be much more difficult. Yet, when most people think about blockchain, improving team coordination isn’t often the first thing that comes to mind.
The most well-known product built upon the blockchain, of course, is Bitcoin. Although there’s a lot of uncertainty about its long-term value, with many finance experts quick to discredit the digital currency as a store of wealth due to its volatility, the technology underpinning Bitcoin is where its real value is held. After all, the same benefits it already offers to developers can be applied much more widely.
The real value in blockchain technology
Since Bitcoin has stolen the show when people talk about blockchain technology, you would be forgiven for assuming they’re one and the same. The blockchain, however, is essentially a digitised and distributed method for recording data and reaching consensus on which version of a database is correct. It’s simpler to describe as a ledger, but it would be more accurate to compare it to a court of law.
The benefit is that it creates an unchangeable record of transactions for any form of data that would see value in a historical ledger and a public mechanism for conveyancing. New records introduced are secured via cryptography, and ownership of assets is publicly trackable as the ledger is updated.
What’s important to note, particularly for the future of video, is it’s distributed. This means many computers around the world have a record of the complete blockchain. Any time a new record is added, those computers, more commonly referred to as ‘nodes’, compete to validate the transaction and earn a reward. However, it’s equally important to consider that anyone can run one of these nodes – even hackers who want to insert or modify data.
As a result, the fact that the blockchain enables consensus to be reached in a hostile environment like this is the key. Much like with DRM (digital rights management), it is assumed some of the nodes are untrustworthy. Because of this ‘trustless’ attitude, and the incentives baked into the algorithm, the result is a system that’s both reliable and resilient. And it’s how the blockchain achieves this, without every node having to flood the internet by talking to every other node, which makes blockchain technology destined to sit at the very core of highly-scalable and secure infrastructure in the future.
But what about all that electricity?
Bitcoin is notorious for consuming continental-scale amounts of electricity. The fault lies in its inherent ‘proof of work’ consensus algorithm, which in Bitcoin’s case is a brute-force mathematical race to solve a computational puzzle, akin to guessing which butterfly caused a tornado in the famous ‘butterfly effect’ metaphor. The winning node gets a chance to publish the next block and claim a prize, commonly known as ‘mining’.
However, the blockchain does not need to use ‘proof of work’ to function. The OTT and broadcast industry, for example, and by its very nature, has access to other data that’s suitable as alternative ‘proof of’ algorithms. We have investigated more exotic versions that complement the requirements of the broadcast industry and found that other approaches, such as ‘proof of attention’ and ‘proof of popularity’, require comparatively minor amounts of computation. The most surprising outcome is that these alternatives often also result in expanded economic incentives and new sources of revenue for players within the OTT value chain.
Building the streaming services of the future
This is where blockchain technology holds the most potential for the broadcast industry. The scale at which these services operate, and the types of data they move around, is inherently complementary to the blockchain. Immediate possible applications range from reducing the cost of content distribution, improving the efficiency of applications, and live streaming.
How we think of ‘servers’ and ‘clients’ will undergo massive change through this technology, and, in the future, new streaming services and direct-to-consumer offerings could well be underpinned by the blockchain. It won’t be platforms looking to challenge Netflix or other staples of the streaming space, but it could be those overhauling corners of the market that are not currently served by these players.
It’s a shift that’s been a long time coming. We’ve seen moves from players like HBO, Disney, and Dish/Sling TV claw back control and go direct to the consumer in a different way, yet the blockchain stands to make this shift more practical for any size of the content owner. From niche providers to those offering international media, it represents an entirely new and decentralised approach to distribution and monetisation. However, it’s important to remember that despite the blockchain being able to optimise back-end necessities and open up new economic opportunities, any video platform built on this technology will still depend on an intuitive UI and considerations like data-driven personalisation to attract new users and grow. Whatever new blockchain-powered solutions emerge the most important component is, and will always be, the one that’s facing the customer – the framework upon which a great user experience can be built.
A bright future ahead
Despite the widespread use of blockchain by the broadcast sector still being some way off, it’s undoubtedly dragging the industry towards innovation and opportunity. With the potential to tackle longstanding issues – such as cost of infrastructure, transactions, rights management, and revenue share through distribution – as well as creating entirely new sources of revenue, there’s no doubt that blockchain will soon help mold the future of the industry for the better.
Interested in hearing leading global brands discuss subjects like this in person? Find out more at the Blockchain Expo World Series, Global, Europe and North America.