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Economists’ Take on Why It Is (Or Isn’t) Worth Investing After the Bitcoin Dip

 This article was originally published on  concentral.com    Compared to January 2018, cryptocurrency prices have been down somewhat in recent months. The so-called bitcoin dip has created some skepticism amongst some investors. Is this just a short-term hiccup or part of a larger trend?  With constant media coverage about prices “near zero,” many investors are asking themselves, “Is investing in bitcoin worth it?” In this article, we’ll look at a few different stories related to what economists and academics  have to say  about investing in cryptocurrencies. We’ll also try to get a better understanding of what impacts these evaluations.  Can Economists Accurately Predict Cryptocurrency Prices?  Economists play an important role in predicting the future of the global economy. They have traditionally been instrumental in helping governments, businesses, and individuals make decisions that impact the world. Now, many economists are beginning to research and predict what the future of cryptocurrency and  blockchain financial services  will look like.   In the cryptocurrency market, there are a number of factors that go into determining the market outlook. For many economists (as well as investors), price volatility due to technical limitations, regulations, and market adoption has made it quite difficult to predict price changes.  For example, in January 2018, Yale University economics professor  Robert Shiller  said, “[bitcoin] might totally collapse and be forgotten, and I think that’s a good likely outcome, but it could linger on for a good long time, it could be here in 100 years.”   While this prediction is far from certain, it is indicative of how many economists view the cryptocurrency market. We also see that increased pessimism seems to follow recent market trends. 

This article was originally published on concentral.com 

Compared to January 2018, cryptocurrency prices have been down somewhat in recent months. The so-called bitcoin dip has created some skepticism amongst some investors. Is this just a short-term hiccup or part of a larger trend?

With constant media coverage about prices “near zero,” many investors are asking themselves, “Is investing in bitcoin worth it?” In this article, we’ll look at a few different stories related to what economists and academics have to say about investing in cryptocurrencies. We’ll also try to get a better understanding of what impacts these evaluations.

Can Economists Accurately Predict Cryptocurrency Prices?

Economists play an important role in predicting the future of the global economy. They have traditionally been instrumental in helping governments, businesses, and individuals make decisions that impact the world. Now, many economists are beginning to research and predict what the future of cryptocurrency and blockchain financial services will look like. 

In the cryptocurrency market, there are a number of factors that go into determining the market outlook. For many economists (as well as investors), price volatility due to technical limitations, regulations, and market adoption has made it quite difficult to predict price changes.

For example, in January 2018, Yale University economics professor Robert Shiller said, “[bitcoin] might totally collapse and be forgotten, and I think that’s a good likely outcome, but it could linger on for a good long time, it could be here in 100 years.” 

While this prediction is far from certain, it is indicative of how many economists view the cryptocurrency market. We also see that increased pessimism seems to follow recent market trends. 

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What Are Economists Saying After January 2018?

Flash-forward past the January all-time high price point for many cryptocurrencies, and there are many new reports and quotes from economists that look at cryptocurrency in a negative light. What’s important to understand is that some are backed by research. For example, two economists stated in July 2018 that the price per Bitcoin should only be around $20, instead of the $7,000 mark (price in mid-July 2018). 

This number takes a few different factors into consideration like the current supply of Bitcoin in circulation and its daily usage in transactions. According to these two economists, the use of Bitcoin would need to increase 1000x in order for its actual price to equal its current value.

Back in March 2018, Harvard economist Kenneth Rogoff said, “Basically, if you take away the possibility of money laundering and tax evasion, [Bitcoin’s] actual uses as a transaction vehicle are very small.” Rogoff also said that the price of Bitcoin is more likely to be $100 rather than $100,000.

A Matter of Perspective: Bitcoin Bubble or Bitcoin Dip?

One of the biggest questions to ask is whether we are currently in a bitcoin bubble or merely in a bitcoin dip. Many economists and financial experts looked at the price fall that took place in January 2018 as a sign of the big bubble burst. Others, like the above example, look at it as just part of a larger bubble. Still, it’s easier to say that prices will collapse to “near zero” when they’ve been consistently down.

On the other hand, it’s possible to also see the price declines in 2018 as merely a bitcoin dip. It’s important to also share the work being done by economists that is pro-cryptocurrency.

Economist and Mathematician Now Working in the Field of Cryptocurrency 

Myron Scholes

While many economists have denounced all cryptocurrencies as unstable and volatile, Myron Scholes and other big names in traditional finance are taking the opposite stance. Myron Scholes is an economics Nobel laureate who created the Black-Scholes formula, the most well-known model for pricing options and derivatives. 

Now, Scholes is getting involved in the world of cryptocurrency with the launch of a new stablecoin, Saga. Since stablecoin prices are intended to be stable, it’s not important that investors invest during a bitcoin dip or a bull market.

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Even though investors can’t expect to make large profits from investments in stablecoins, these projects help the overall cryptocurrency market mitigate price volatility issues.

Additionally, Scholes’ decision to work on a cryptocurrency project represents the possibility that economists, who have mostly lived in a fiat economy, are starting to work on the creation of a new cryptocurrency economy. Scholes and other crypto economists are beginning to work on innovative projects that solve many of the issues with traditional finance and centralized banking systems.

Charles Hoskinson

Charles Hoskinson is an example of a mathematician/technologist who believes in the development of cryptocurrencies. While Scholes started to work on cryptocurrency projects in 2018, Hoskinson has been working on big-name projects for a few years. Hoskinson, one of the eight original co-founders of Ethereum and the founder of Cardano, is one of the biggest names in cryptocurrency. 

According to Hoskinson’s LinkedIn, he studied analytic number theory, mathematics, and cryptocurrency. He has worked on complex mathematical problems such as the Goldbach Conjecture. Hoskinson’s story is proof that someone starting out in academia can make a career transition towards entrepreneurship and have a significant impact on cryptocurrency. 

 

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Conclusion: Will More Economists Support Cryptocurrencies in the Future?

When considering that many economists are skeptical of cryptocurrencies in 2018, we need to dissect why this has been the case. It’s important to understand whether or not economists invest in cryptocurrencies. Regardless if one invests in the bitcoin dip or not, it’s essential for any researcher to view the market as objectively as possible. 

First, price volatility and general market unpredictability do make investment risky. Anyone can say that prices will rise and fall. However, economists generally try to be more precise with numbers that are backed by extensive data and research. The reality is that it is difficult to predict if or when solid data will exist to make the cryptocurrency market more predictable for economists. 

Lastly, it’s possible that some economists make decisions based on what the current market is doing rather than where the market can go in the future. If we continue to see advances in user adoption, usability, scalability, and more, it’s possible that more economists, mathematicians, and others in academia will become optimistic about why cryptocurrencies are worth investing in.

How to Get into a Bitcoin Business that Works

This article was original published by David Hamilton on coincentral.com the 19th of July 2018.

Blockchain technology is expanding at an astonishing rate. This technology is creating a prosperous environment for entrepreneurs seeking to start a Bitcoin business. It has been an exciting ride for BTC investors, and over the last nine years, considerable growth has occurred in the crypto space. Today, there are numerous Bitcoin business opportunities to consider.

Homework Time

Your quest for the perfect BTC business should start with research. Bitcoin business opportunities are everywhere, but it is important to remember that not all countries are pro-bitcoin. China allowed only one BTC ATM to operate until banning ICOs in the country last year. Today, that BTC ATM sits in the lobby of the headquarters of BTCC, decorated like a Christmas tree, with no BTC available.

Lawyer Time

To avoid losing your investment, you should consult your local legislation before choosing a particular business model. Countries vary on their crypto legalities. To avoid a worst-case scenario, such as getting thrown in jail and having all of your crypto confiscated, you need to consult with your local government. A lawyer can make this part of the process easier. 

Some lawyers specialize in cryptocurrency related manners, such as Lee Schneider from the prestigious law firm McDermott Will & Emery. Mr. Schneider explained how his practice is now solely dedicated to blockchain technology in a recent interview with theinformation.com. He’s not alone either. There are a growing number of law firms turning to the budding crypto market in search of new clientele.

Consider Your Funding

Your available funding will play a crucial role in determining what business model best fits your criteria. Not all Bitcoin businesses cost the same. There are various low cost start up BTC businesses, such as BTC ATMs and merchandise. You can start either of these businesses for under $20,000.  

There are also BTC businesses that require very large investments. You will need significant capital if you are considering opening a sizable mining operation. ASIC mining rigs are expensive to purchase and operate. You could very easily spend a significant amount of your funding on mining rigs alone.

For example, the current industry standard is the Antminer s9. These units cost $698. A large size mining operation could easily consist of one hundred Antminer s9s. Many large mining farms even include thousands of mining rigs. A mining farm of this size would require a $700,000 investment before any other costs involved with the business, such as location, staffing, and installation.   

Bitcoin Lending Services

Bitcoin lending specializes in providing startup capital. These services can bolster your funding significantly when used correctly. Bitcoin lending services can be a great way for you to start a Bitcoin business without spending all of your hard earned crypto. One example of a Bitcoin lending platform is Unchained Capital

Unchained Capital will lend you USD and allow you to use your Bitcoin or Ethereum as collateral. Users are permitted to borrow up to 50 percent of the value of their crypto collateral. And, the loans are available for three-month and two-year terms. The downside is that you’re looking at a ten to fourteen percent interest rate on your loan. But, you may find that your potential business can accommodate for these interest rates and still produce a sizable profit. 

Popular Bitcoin Businesses to Consider

There are a number of popular types of BTC businesses flourishing across the globe. You will find that some of these are better suited to your location than others. There is no one-size-fits-all when discussing Bitcoin businesses. Only research will help you to determine the best investment options. Let’s take a moment to look at a couple of the most popular BTC business models seen today. 

BTC ATM

Bitcoin ATMs are starting to become more popular. These devices allow users to purchase, send, and sell BTC anonymously. The cost for this anonymity comes in the form of transaction fees that are much higher than online alternatives such as Coinbase. A BTC ATM can provide you with a significant income if placed in the right location. You will want to verify their legality in your country before purchasing a unit.

The advantage of a BTC ATM is that it is an automated business system, which only requires you to keep the machines hot wallet stocked with BTC. The downside is that price fluctuations can affect the value of the BTC in your hot wallet. In many countries, such as the US, your BTC ATM will only be permitted to sell BTC to users. Selling BTC directly for fiat without KYC compliance is illegal in the US because of the fiat currency laws. Customers can buy all the BTC they want from your machines, but they will have to go somewhere else to sell it.

BTC Remittance

Bitcoin remittance firms are booming across the globe. Remittance firms send money internationally. Nations such as India and South Africa rely heavily on remittance payments. BTC remittance firms can provide these clients with a cost-effective alternative to the traditional process of sending money internationally. Crypto remittance services provide clients with instant transactions and reduced rates. A crypto remittance company can be a smart Bitcoin business to consider if you live in an area where remittance payments are a key component of the local economy.

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Mining Operations

BTC mining is still profitable thanks to the development of high-powered mining rigs and mining pools. Mining pools combine the processing power of every user on the network. The added leveraged hash power gives mining pools the ability to increase the effectiveness of all the miners involved. The miners split their profits earned according to their hash contributions. 

Today, Application Specific Integrated Chips (ASIC) mining rigs are the best option for mining BTC. These chips are thousands of times more effective at calculating BTC’s Hash-256 algorithm than GPUs or CPUs. ASIC rigs are going to take up a considerable amount of your investment, though.

You will also need to consider your operating costs. Regions with inexpensive or renewable energy options are better suited for mining operations. You may find that you’re not making a profit if you set up a mining operation in an area with high electricity costs. There are less than four million BTC to be mined. This scarcity should help to drive the demand for BTC up, and its price should increase accordingly. The last BTC is estimated to be mined by 2140.

Bitcoin Business Opportunities

It’s exciting to see how blockchain technology is providing the world with a plethora of new business opportunities. Many people in the crypto space believe the decentralized market will continue to see growth for many years to come. By opening a Bitcoin business now, you are positioning yourself wisely in this digital economic revolution.

The 7 Biggest Bitcoin Mistakes of All Time

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This article was originally published on coincentral.com the 29th of June 2018.

It was once said, a dumb person doesn’t learn from their mistakes, a smart person learns from their mistakes, and a genius learns from other people’s mistakes. This age-old saying rings ever true in the crypto market. Nobody’s perfect, and your Bitcoin mistakes can end up costing you big time. There are no refunds or take-backs on the BTC blockchain.  

Everyone makes mistakes. In terms of cryptocurrency, they can range greatly in their repercussions. In many instances, a Bitcoin mistake is small enough to recover from, but that’s not always the case. As you’re about to learn, even a small typo can end up costing millions of dollars when you’re dealing with BTC. Here are seven of the biggest Bitcoin mistakes ever made.

Mt. Gox Incidents

The now infamous Mt. Gox story reflects the importance of working with a team of accomplished developers on your project. Initially, Mark Karpeles saw great success working as the only developer for what had grown into the largest BTC exchange in the world. Unfortunately for him, his luck quickly changed after a hacker was able to infiltrate the auditing system of the exchange and slash the price of BTC down to pennies. Consequently, the price of BTC plummeted for months following this incident.

That same year saw the demise of Mt. Gox but not until after it was revealed that another mysterious hacker reportedly made off with $340 million in BTC. The shadowy intruder had been siphoning crypto from the platform, unnoticed, for years. To make matters even worse, the Mt. Gox system interpreted the hack as deposits. This caused the system to then begin crediting individuals with free crypto. One wallet received 40,000 in extra BTC. Ultimately, there was a total of 850,000 BTC lost in the incidents, which resulted in the bankruptcy of the exchange.

Mt. Gox from the Grave

It turns out that the ghost of Mt. Gox wasn’t done plaguing the market, and, in 2014, Mt. Gox struck again. This incident was far more innocent but still resulted in major losses for one individual. The losses occurred when an unknown crypto investor accidentally sent 800 BTC to the exchange’s wallet. In a heartfelt Reddit post the individual explains:

“messed up big time. I sent this address 800 bitcoin:

113MmkyjjH6zS9VMvbwrhBNoMe6upzdvNC.”

As it turns out, the address was already stored in the investor’s wallet because they had sent Mt. Gox BTC in the past. The Reddit community came to the aid of the individual and helped him to track the mysterious address to the now-defunct Mt. Gox, but he was never able to retrieve his crypto. All of this has further fueled the aura of bad luck surrounding this infamous exchange. 

Send Me Over Your Private Keys Real Quick

What would you do if someone sent you an email claiming to be your friend and asking for your private keys? It would probably be a good idea to verify that person’s identity before sending the requested information. Unfortunately, not everyone has the same level of common sense when dealing with the protection of their crypto.  

The firm Canadian Bitcoins lost 149 BTC last year when an unnamed individual sent a simple request for access to the server. When he contacted the company’s data center, the hacker claimed to be Canadian Bitcoin’s CEO, James Grant. At that time, the company’s data was being migrated to a new provider, Rogers Data Centre. All it took was one email, and the new data firm sent over the information.

Would You Like Some Mastercoin? 

The platform Fyfe was billed as the decentralized version of the internet. This project had seen extensive development over the last eight years, and this year saw the launch of their second stage ICO. Interested parties could invest in the platform by using either BTC or Mastercoin. The latter turned out to be a huge mistake. Mastercoin is a little-known altcoin that lost huge amounts of market value since the ICO date.  

Maidsafe, the firm behind the Fyfe project succeeded in raising millions, but, since most of the crypto gathered was Mastercoin, the firm’s funds have now since dwindled. Till this day, no one can explain why or how Mastercoin became involved in this ICO but one thing is for sure, Maidsafe learned an expensive lesson about accepting unknown and obscure altcoins. 

Never Complain About Fees

Bitcoin fees have been the subject of discussion in the crypto community ever since scalability issues began to emerge in 2016. At the peak of hysteria and volume, BTC users were paying substantial fees for their transfers. None of that compares to what one UK resident did in September 2013: accidentally input 80 BTC as his transaction fee.

To add insult to injury, the individual only wanted to send 0.01 BTC to the address in question. This mistake is more common than you would imagine. A similar incident occurred in July of 2013 when another BTC investor accidentally input 30 BTC as their transaction fee. Talk about inspiration to double check your transaction before pressing send.

Trashcoin

The decentralized nature of BTC makes it crucially important that you maintain control over your private keys. You can lose access to your BTC forever if you lose these all-important codes. That’s exactly what happened to Wales native James Howells when he accidentally threw out a hard drive that contained the private keys to 7,500 BTC.

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Mr. Howell mined BTC from 2009 – 2013. It was in 2013 that his laptop suddenly quit working and he was forced to discard it. In an interview with Telegraph, he explains how he accidentally placed the hard drive (HD) in the rubbish during a spring cleaning. The story made international headlines, and James even offered the landfill a reward if they were able to locate the HD. Considering that these coins hold a market value of $48,975,000 today, it would have been much cheaper for James to have purchased the landfill.

Lessons Learned

In the end, all of these incidents could have been avoided had the individuals involved chosen to follow a stricter protocol when dealing with their crypto. The immutable and unalterable nature of blockchain technology makes it perfect for most financial tasks. However, these same strengths can also become weaknesses when combined with human error and lackadaisical business practices.

Why Blockchain Asset Tracking Is Not Just for the Super-Rich

this article was originally published on coincentral.com the 24th of June 2018.

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An Aboriginal community in rural Australia.

A diamond dealer in Antwerp, Belgium.

A used car salesman in the UK.

A pharmaceutical company headquartered in Switzerland.

What could they possibly all have in common?

The answer is the far-reaching benefits of blockchain asset tracking.

One of the most fundamental features of blockchain is its ability to store value – essentially, to create a digital asset. What started off with Bitcoin has now grown into an ever-expanding list of use cases. Some are more tenuous than others.

Those blockchain use cases likely to weather the test of time are the ones that best exploit the most basic functions of the blockchain. Asset tracking, using the ability of blockchain to create stored value and create an immutable record of ownership for that value, is one of those use cases. This article will look more closely at the application of blockchain asset tracking in some different scenarios.

Cases for Blockchain Asset Tracking

Land Registries

There are plenty of opportunities for blockchain within real estate management, mostly based around reducing or eliminating the role of the numerous middlemen. Reduced friction and quicker sales of real estate are clear benefits for day-to-day property trading. Additionally, blockchain-based land registries can create efficiencies within local governments, reducing the spend of tax dollars.

However, the benefits of tracking real estate assets on the blockchain could also have significant benefits for indigenous groups. It would create a legal means by which anyone can prove their land ownership. Land rights are an ongoing struggle for aboriginal people across the world, including developed countries such as Canada.

Indigen is a blockchain platform aimed at protecting rights and property of indigenous groups around the world. The platform token will serve as a donation currency. The company will direct a portion of mined coins to help poor indigenous populations across the globe. Blockchain asset tracking of land occupied by indigenous people is one of the aims of the project.

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Supply Chains

Walmart is one example of a big company which has already recognized the potential for blockchain in its supply chain. Supply chains are traditionally highly fragmented. Many companies cannot identify precisely how much product they have in any given place at any one moment in time. This results in inefficiencies, and wasted product due to spoilage or theft.

Some industries have worse problems than losing product. The pharmaceutical industry, for example, is one that suffers from counterfeit products entering the supply chain, usually between manufacturer and consumer.

Governments across the developing world are now clamping down on this. However, it is the developing world that bears the brunt. In Africa, some reports say that up to 70% of drugs sold are counterfeit.

Blockchain asset tracking can combat counterfeits entering the market. Digital tags can track and trace products throughout the entire supply chain until they reach the consumer’s hands. The tag can contain all necessary attributes. In the case of drugs, it could include the ingredients, date /place of manufacturer and quality control checks. It can update in real time with the route the product has taken through the supply chain.

Vehicle Trading

Car crime has been around as long as the car. From stolen vehicles and parts to getaway cars used in heists to “cut-and-shuts” where two halves of different vehicles (that have usually been written off due to accidents) are dangerously welded together and passed off as one car.

This goes alongside some of the unethical or illegal practices adopted by used car dealerships like “bait-and-switch” and manipulation of the odometer to reduce the mileage shown on the clock. Buying a car, particularly a used one can be fraught with issues. The buyer has no choice but to trust that the papers presented with the vehicle are genuine.

However, blockchain asset tracking could make the process of buying a used car far more secure. With a blockchain-based record of each vehicle including its parts, maintenance, accident and ownership history, buyers could place far greater trust in the process. They would know that their new car is a genuine model with a clean maintenance history.

Further, AI technology could determine a fair and consistent value for each vehicle, reducing the incidence of used car traders overpricing vehicles.

Gemstone Tracking

The gemstone industry is worth $23bn annually, with diamonds responsible for the most significant proportion of that. However, conflict or “blood” diamonds are a problem that continues to plague gemstone traders. Rough diamonds are sold in conflict zones such as Angola or the Central African Republic. They are smuggled out of the country, cut and polished up and passed off as legitimate.

Many governments in the developing world have passed legislation to prevent the sale of conflict diamonds within their jurisdictions. Therefore, jewelers and traders have an interest in making sure that they are not purchasing blood diamonds.

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De Beers, is the worlds biggest producer of diamonds, is now looking to blockchain asset tracking to stop blood diamonds from entering the market. The company reported in May that they had successfully trialed blockchain to track ten gems from the mine to cutter and polisher, and then to the jeweler for sale. De Beers plans to make the system available across the entire diamond industry, to eliminate the illegal trade of blood diamonds.

Further Considerations

Two other common elements feature across all of this. They are instant transfers and tokenization of assets.

Instant Transfers

Assets registers on the blockchain will be transferable between parties at the push of a button – and without the need for intermediaries. Smart contracts could also feature – holding funds in escrow until full payment is made. On receipt of payment, the new ownership would be effected immediately. This could cover ownership rights of a car, a piece of real estate, a gemstone, or a consignment of pharmaceuticals between the parties to the smart contract.

Tokenization of Assets

The creation of security tokens representing fractional ownership of physical assets offers exciting possibilities. Some tangible assets that could appreciate over time, such as real estate, are too costly for one individual or even family to afford to invest in an entire unit.

For example, someone wanting to invest in a gemstone has to choose a stone of a size that is within their budget. But the bigger the jewel, the higher the value per carat. What if you could invest in a fraction of a large, highly valuable gemstone? Tokenization makes that possible.

The world is only just starting to explore the art of the possible for blockchain asset tracking. This article has outlined just a few of the opportunities that are opening up. It is beginning to become believable that within the next ten or twenty years, blockchain will be the only foolproof means of proving ownership and recording value.

Blockchain Affiliate Marketing: Boosting Profits for Publishers

This article was originally published the 13-6-2018. on coincentral.com

Blockchain affiliate marketing platforms are some of the latest to exploit new technology to solve old problems. More than 80% of online brands and publishers now use affiliate marketing, and yet it accounts for only 5% of the spend on digital marketing globally. Why would this be the case?

Well, like so many other industries, affiliate marketing is dependent on intermediaries. In this case, the middlemen are the affiliate networks. However, there are now several companies releasing blockchain affiliate marketing platforms that do what blockchain does so well. It will eliminate the middleman – and the fees that they take for their service.

What Is Affiliate Marketing?

For the uninitiated, affiliate marketing is a way for brands to promote their products online. How it works is that a website (the publisher) will put a link on their site promoting a particular product or service from a brand (the merchant). When a customer clicks on that link and makes a purchase, the publisher gets a commission from the sale.

It’s popular because it creates a win-win scenario for merchants and publishers alike. The merchant is paying out commission only based on sales performance, unlike many other kinds of advertising. Once the links are set up, the publisher can earn passive income from their website.

Some very well-known sites started off life in this way – take Skyscanner for example. The high-profile success of many affiliate marketers is another way that gig-economy millennials can try to generate some side income.

What Is an Affiliate Network?

For a brand to launch an affiliate program at any scale, it must create a means for publishers to install tracking cookies and have a secure login area independently of the online shop for publishers to track sales. All of this creates barriers to entry for merchants. Enter the middleman – the affiliate network. CJ Affiliate and Clickbank are two of the biggest.

These big players aggregate both publishers and merchants to connect them to one another, in the same way, that Uber connects a rider with a driver. For the provision of this service, the affiliate networks generally charge between 10% and 25% of the commission paid. It’s a pretty payment for what is a mostly passive service. Given that affiliate publishers are also dependent on services such as PayPal to receive their earnings, what they earn at the end can be subject to even costlier deductions.

One of the best-known use cases for blockchain is to eliminate the need for a middleman – in the case of Bitcoin, it removes the need for a bank or clearing house. In the case of affiliate marketing, some savvy startups are now seeing that it can eliminate the need for the affiliate network.

How Do Blockchain Affiliate Marketing Networks Operate?

There are several new players in the market, and each of them has a slightly different model in place. However, smart contracts are the standard feature. In the case of Ethereum-based platforms Hoquand RefToken, blockchain creates smart contracts automatically upon the generation of a lead or sale. One new player, Attrace, is developing a custom blockchain that will generate a smart contract each time a user clicks an affiliate link.

Smart contracts will also be able to govern the terms of the affiliate sales agreement between publisher and merchant. So, for example, the percentage or amount of affiliate commission to be paid, and perhaps the timing of the payment, are controlled by the smart contract.

The smart contract will be able to automatically attribute the sale, and execute the payment of the affiliate earnings by deducting digital funds from the merchant and paying over to the publisher. The commission can be paid in cryptocurrency. Or in the case of Attrace; it plans to offer an option for receiving earnings in fiat currency. Payouts in fiat would potentially lower the barriers to using such a blockchain affiliate marketing network for publishers who have not yet adopted cryptocurrencies.

Why Make the Switch to Blockchain Affiliate Marketing Solutions?

All of the blockchain affiliate marketing networks can promote themselves on a substantial reduction in fees over the traditional affiliate networks – in some cases as much as 95%.

However, there are other issues that blockchain-based solutions can solve in addition to saving fees.

Reduce Fraud and Disputes: One of the most reported issues from both merchants and publishers. Publishers complain that their sales may be under-reported, and their earnings withheld. Blockchain provides a permanent record of transactions. A record like this means less likelihood of disputes over whether a sale was successful. Particularly if click-tracking becomes the norm, this will significantly increase transparency.  Merchants and publishers can see which clicks resulted in both sales and non-sales.

Speed: Currently, it can take weeks or sometimes even months for publishers to receive their payments. In some cases, it takes as long for sales to even register on the affiliate network platform. It is also common for affiliate networks to impose minimum payment thresholds. Therefore, publishers can wait a long time to get paid. Blockchain allows payment to be made in real time, or the payment schedule can be automated with smart contracts.

Increased Value Creation Between Merchant and Publisher: The traditional affiliate networks stand between publisher and merchant. This means that the two parties never have the opportunity for a direct discussion about creating more value in the relationship. For example, transparency of which kind of links or ads perform best, or how best to market new products.

Even if a publisher is the number one best source of sales for a particular merchant, they have no opportunity to differentiate as the affiliate network sits between and can mask the value offered by different publishers. For example, one publisher may generate a small number of lifetime customers that may be worth more for the client than a more substantial volume of one-time clients.

Decrease Barriers to Entry for Smaller Merchants: The traditional affiliate networks care about generating commission. So they usually demand that merchants pay a minimum threshold to qualify for their platforms. Blockchain-based services can afford to operate without imposing such limits.

These new players entering the blockchain affiliate network game clearly believe that this is an industry with much potential. In addition to innovative content marketing solutions like Steem, there are still new ways that blockchain can enhance existing content marketplaces.