Believe it or not, trading your data for concert tickets or a five-star meal is possible – today
Last Updated on by Segun Ayo
It’s quickly becoming a very poorly-kept secret: the real currency online is data. Companies like Google, Amazon, Netflix, and Facebook make billions by collecting and/or selling your data, and use that consumer data to serve you ads that encourage you to buy their products. But with recent high-profile data breaches and the increased scrutiny on Facebook in light of the Cambridge Analytica scandal, governments and businesses are scrambling for ways to both better protect consumer data and compensate users for their fair share of the profits. And the public has started to take note, following Netflix’s The Great Hack documentary and #OwnYourData movements. With consumers becoming better educated about the situation out of necessity, they are beginning to ask how they can take control of their data – and monetize it as well.
The invisible fuel that powers the internet
While this provides enormous value for companies at each link in the chain, the users themselves are remarkably absent, often unaware of the profits being made from their data. Not only do they miss out on these benefits, they also end up with another unforeseen expense — all the extra stuff they’re convinced to purchase from the ads following them around the internet. We give out our data for free, and it ends up costing us instead.
Blockchain: bringing balance to the data economy
With blockchain, data can be encrypted, giving users control over who can access their consumer data and which types of data are available. Each time the data changes hands, the transaction is recorded, allowing consumers to know which companies access their consumer data and how often. Revenue can be shared among those whose information is being accessed via smart contract, either on a subscription or per-use basis. This permission-based system empowers consumers by making them the ultimate gatekeepers over their data, in a way few companies have been willing to implement.
While this certainly sounds promising, the problems with blockchain-powered solutions have been adoption and scale. While cryptocurrencies presently have a market cap of over $200B, a mere 11% of Americans have used them. Moreover, thanks to fluctuating prices and a steep learning curve, even fewer merchants accept them. Without large volumes of users and activity, the data and business insights gleaned from them are less valuable.
To solve this problem, I would argue we need a simple way to onboard millions of users to blockchain, so that merchants both want the data available on the blockchain and are incentivized to adopt and accept cryptocurrency as a means of payment.
Making consumer data rewarding
One way that everyone can understand are rewards programs. A user signs up for a credit card or a brand loyalty program and earns points for qualifying purchases that can be redeemed for exclusive benefits such as free products or cash back. Since the beginning of these programs with the Diner’s Club in the 50s, they’ve proven to be an effective way for companies to encourage repeat business and make customers feel special. Studies show that the average U.S. household is signed up for as many as 29 loyalty programs, with nearly $5 trillion in points circulating globally and enrollment increasing year over year. Clearly, these programs appeal to consumers.
That said, customers may not know that in addition to brands profiting from your increased business, they also make your purchasing data available to other companies wanting to know what you buy, how often, and where. Therein lies the problem: you may earn a few points for buying that second coffee, but you get nothing when a cafe pays to know what percentage of my monthly caffeine budget is spent at the same place, or how likely I am to click on an ad for a discount at the new spot in town. Shouldn’t that earn something as well?
One promising example of how to solve the above problem that I’ve uncovered is the TAP Network, the first prominent use of blockchain to compensate users for their data. The platform allows millions of users to directly monetize their data and earn rewards for purchases at over 250,000 top brands and retail partners in its network. Users link their credit or debit cards to the secure app, and give permission to TAP to view their encrypted, anonymized purchase data. When data is accessed by merchants in the network, up to 70% of the revenue is shared with users in the form of TAP Dollars, and can be redeemed at top hotels, restaurants, and retail brands such as Marriott, Starbucks, and Amazon.
Real rewards, real adoption
With the largest merchant network in all of blockchain and partners across travel, dining, entertainment, and retail, platforms like TAP Network will provide consumers with legitimate means to cash in on their data in a secure and transparent way. And with 15% back on qualifying purchases and up to 70% off top hotels around the world, the rewards add up. I can easily envision a world where brands will white-label the rewards platform (which TAP Network allows) to provide universal rewards and exclusive perks to their customers. For example, Warner Music Group, a lead investor in TAP Network, will launch Warner VIP Rewards to its 38+ million subscribers later this year and offer one-of-a-kind experiences with top artists.
TAP also gives users the ability to spend different cryptocurrencies at any of the merchants in the network, which can easily be converted into dollars. By incorporating blockchain into rewards programs that consumers recognize and trust, TAP can demonstrate the benefits of the technology and substantially increase familiarity and rates of adoption.
Plugging the consumer into the data ecosystem
Over the past few years, we’ve become increasingly more aware of the extent to which our data is tracked, available, and used for massive profits. So much information has exchanged hands – and often with sloppy custodial practices – that it’s hard to imagine a scenario where consumers are in total control of their entire digital footprint. Blockchain can better protect information moving forward, but what is already out there is much more difficult to clean up. By giving consumers the ability to choose when, how, and how much data is shared and sharing with them the profits from its use, it starts to shift the digital economy toward one where companies build fair data compensation for the user into the ecosystem as a matter of good practice, and where transparency in data transactions is the default rather than the exception.
Empowered consumers tend to make better decisions with their money, take better care of themselves, and support the companies that do right by them. If that isn’t a reward in and of itself, I don’t know what is.
This post is part of our contributor series. The views expressed are the author’s own and not necessarily shared by TNW.
Published December 17, 2019 — 17:32 UTC