As defined by the (WEF), “Blockchain technology allows parties to transfer assets to each other in a secure way without intermediaries. It enables transparency, immutable records, and autonomous execution of business rules.”
Investments in the blockchain are on the rise. Banks, private businesses, and even governments are investing in the technology. The WEF predicts that smart contracts alone on the blockchain could equal of the global GDP by 2027. As with any new technology, it’s important to note the value of the data that comes with it. And arguably the most valuable data involved with blockchain technology is that of virtual currency use.
Over the past few years, and with the development of bitcoin, the use of virtual currencies is gaining momentum around the world. However, the currencies remain unpredictable and only partially understood, even by experts. To create clarity, organizations interested in the blockchain, and more specifically bitcoin, are beginning to use big data to provide insights into the virtual currency’s future performance. The IDC recently reported that global IT spending is in the trillions and big data revenues will grow to more than by 2020. By 2027, the value of big data as a service is predicted to be between , and managing virtual currency on the blockchain could account for a significant portion of that revenue.
Many of the best ways to realize the full potential of the virtual currency, and alleviate some of the risks involved, may be by harnessing its big data. As the blockchain is essentially a ledger that every bitcoin transaction must pass through for verification by the millions of other peer-to-peer users, the insights to be collected from that ledger are potentially endless. And even though there is no identifying information in a transaction on the blockchain itself (the blockchain only knows the two wallets that exchanged the currency and the amount), all transactions are public and each user’s activities are visible to everyone on the blockchain.
of the total big data market by 2030, producing up to in annual revenue. To put this into perspective, this potential revenue that of what Visa, Mastercard, and PayPal currently generate combined.
Big data analytics will be crucial in tracking these activities and helping organizations using the blockchain make more informed decisions. , a cryptocurrency that is more decentralized than bitcoin, proposes reinventing bitcoin mining into big data mining. Its outlines the development of an incentive system to support a broad system of node managers at a time when bitcoin usage is on the rise and the number of nodes are declining.
Data intelligence services are emerging to help financial institutions, governments, and all kinds of organizations delve into who they might be interacting with on the blockchain and uncover “hidden” patterns.
: “Using social data to predict consumer behavior is nothing new, and many traders have been looking to include social metrics into their trading algorithms. However, because there are so many factors involved in pricing most financial instruments, it can be extremely difficult to predict how markets will change.”
Fortunately, bitcoin users and social media users tend to align quite well, and it may be beneficial to use them both for data analysis, :
- Bitcoin traders tend to be in the same demographic as social media users, and so their attitudes, opinions, and sentiment towards bitcoin are well documented.
- The value of bitcoins is determined almost solely by market demand because the number of coins on the market is predictable and are not tied to any physical goods.
- Bitcoin is predominantly traded by individuals rather than large institutions.
- Events that affect bitcoin value are disseminated first and foremost on social media.
Data analysts are now mining for insights into key cryptocurrency trends. This, in turn, helps organizations uncover powerful demographic information and link bitcoin’s performance to world events.
Uncovering new forms of data monetization
According to , CTO of Dell EMC Services, blockchain technology also “has the potential to democratize the sharing and monetization of data and analytics by removing the middleman from facilitating transactions.” In the business world, this gives consumers stronger negotiating powers over companies. It allows consumers to control who has access to their data through the blockchain. They could then demand pricing discounts in exchange for revealing data on their personal consumptions of a company’s product or service.
Schmarzo also how the blockchain may lead to new forms of data monetization because it has the following big data ramifications:
- All parties involved in a transaction have access to the same data. This accelerates data acquisition, sharing, the quality of data and data analytics.
- A detailed register of all transactions is kept in a single “file” or blockchain. This provides a complete overview of a transaction from start to finish, eliminating the needs for multiple systems.
- Individuals can manage and control their personal data without the need for a third-party intermediary or centralized repository.
Ultimately, the blockchain could become a key enabler of data monetization by creating new marketplaces where companies and individuals can share, sell, and offer their data and analytical insights directly with each other.
Spearheaded by the large scale adoption of bitcoin, blockchain technologies are gaining ground throughout the business and financial worlds. The fast and secure transactions it facilitates could potentially revolutionize traditional data systems. According to a survey by , one-third of decision makers trust their company’s data. But with blockchain technologies, this trust can be considerably strengthened, and real applications will become much more commonplace.
This article is published as part of the IDG Contributor Network.