We live in an age where innovation is currency.
To be “cutting-edge” is to be ahead of the curve. And that alone can be an incredible competitive advantage. Whenever the hype train brings us a new hot technology, companies around the world rush to leverage it – regardless of whether or not:
a) they actually use (or plan to use) said technology, or
b) the said technology makes sense for the problem they claim to address
You might remember recent cases of “greenwashing,” or marketing that deceptively leverages relatively minor eco-friendly corporate activity to paint the entire organization as environmentally conscious. The Volkswagen emissions scandal is a great example.
And now, we have “blockwashing.”
Oh Great. So What Exactly is Blockwashing?
Blockwashing is when companies and their marketing departments attempt to leverage the hype surrounding blockchain technology as a way to create buzz for their own business. This can take a variety of forms, including instances where:
- The company doesn’t use blockchain technology – full stop
- The company publishes their data on a blockchain, but doesn’t actually use decentralized blockchain mechanics to authenticate information or create transparency
- The company uses blockchain technology, but for a problem that doesn’t require blockchain technology to solve
Blockwashing can certainly create the desired effect. Some might recall the time when simply adding the word “blockchain” to its name caused a company’s shares to surge by 394 percent.
The problem with these cases is they get a lot of attention. But when we inevitably look closer, what might have seemed like a promising use case for blockchain technology turns out to either be at best a misguided attempt at good PR, or at worst a full-blown scam.
Either way, cases of blockwashing have sullied blockchain’s reputation, and obscured the work of legitimate blockchain companies creating real products.
There’s a core question that sits at the center of this whole blockwashing phenomenon: what is real blockchain and what isn’t-so-real?
If we can start here with this question – before we rush to judgement and embrace (or reject) the hype – then we can avoid the scams, and the deserving projects can get their due.
We’ll finally be able to better understand what blockchain can do, and what it can’t.
It starts with education.
Disclaimer: As a company that builds blockchain technology, we obviously have a personal stake in this. We genuinely want to educate you on what blockchain can actually do when it’s used legitimately. We also want to show you what it looks like when blockchain isn’t used legitimately, or isn’t used at all. We hate scams just like you.
If you are interested in a blockchain solution or working with a blockchain-based partner, answering these eight questions will help you shed light on the validity of the project in question.
8 Questions to Ask Your Blockchain Partners
1. Is there a true need for blockchain?
It’s been said that not every problem needs a blockchain solution, nor can blockchain solve every problem. This is absolutely true. When evaluating blockchain-based products, ask yourself what problem they’re attempting to solve. Then put that problem in front of a blockchain expert and ask, “Can this problem be solved with blockchain technology?”
2. How are they using blockchain technology?
Simply writing data to a public blockchain is not a valid or necessary use of blockchain. Instead, you’ve simply created a very expensive database. Companies that use blockchain legitimately are using consensus mechanisms to track and validate data, among other use cases.
3. Do they have clients or test partners?
Who are their clients, and what results have they delivered? Real-world blockchain applications solve real-world problems. A worthwhile partner should have current client contacts available for reference.
4. Where are they marketing their product?
If you only find their presence on ICO/crypto sites and nowhere else, this is a strong indicator that they’re only really marketing to crypto-investors, and not to potential customers. Try to identify who they see as their true end buyer.
5. Are they applying blockchain technology to their own legacy technology?
When the company’s core business is declining, be wary of them trying to market blockchain as a stopgap or flashy new offering. Blockchain isn’t a solution to rebuilding an entire industry, but it can be implemented to solve specific industry problems.
6. Did they raise money through an ICO (Initial Coin Offering)?
Most brands and their agencies avoid working with ICO-backed technology partners, for good reason. Companies that raise funds through an ICO likely don’t have the real market validation or business model to successfully raise via traditional means. This has been written about at length:
- CoinTelegraph: New Study Says 80 Percent of ICOs Conducted in 2017 Were Scams
- The Wall Street Journal: Buyer Beware: Hundreds of Bitcoin Wannabes Show Hallmarks of Fraud
- Bloomberg: SEC Tries to Scam ICO Investors to Show Them How Easy It Is
7. Do they require a token for everything?
While most blockchain-based advertising solutions use a token for some functions, requiring its users to pay in tokens, or trying to tokenize a well-established ecosystem, could be a sign of an unsustainable partner.
8. Do they work with any credible, respected organizations?
Trade groups like the IAB and ARF are working to identify legitimate technology companies, bringing together the “good actors” to collaborate on ad industry standards for blockchain. If a blockchain-based company has withheld itself from such organizations, there could be cause for skepticism.
This is not an exhaustive list of every question you should be asking a potential blockchain partner. But it does highlight many of the ways in which illegitimate blockchain companies try to deceive us.
If you’re interested in blockchain, don’t be afraid to talk to an expert first. Or read our handy 101 into-level guide on the subject. Understand what the technology can and can’t do, and you’ll be better equipped to take advantage of something that could truly change how we do business.