How Blockchain threatens traditional third parties (part 1)

by Lumai Mubanga

Traditional third parties have been around for a long time and have been rendering a service to their customers according to their niche. This relationship though has been thriving on the ticket of trust. As long as customers continue to trust them, their delivery of good and service from point A to point B is guaranteed as long as service delivery continues to be efficient and economical.

However, that has not always been the case. Trust levels have sometimes been broken due to data breaches, as well as human and system errors. In some cases, there have been such inefficiencies and abnormal costs incurred by the customer which leaves them disappointed.

The level of trust that Blockchain has so far displayed has begun to erode and threatened the very existence of some third party entities. Some of these include big names like content distributors Facebook and YouTube, energy distributors; cloud computing companies and others. How have some traditional third parties “failed” their clients, leading to Blockchain debut as the custodian of trust?

Content distributors

Content distributors have dominated the distribution of content on the Internet, raking in millions of dollars. This is usually at the expense of the real content creators. Facebook is one of the largest content distributors worldwide. Using well-designed Apps, videos, live events, and paid for advertisements, Facebook has been a much-preferred “middleman”. Compared to what Facebook makes, content creators make significant low amounts. For example, according to NASDAQ, “the market cap for Facebook has more than doubled since the end of 2016 with the company valued at roughly $720 billion as of August 2020.” Which content creator can be close to that?

How mistrust started

In the 2016 US Presidential elections, social media played a pivotal role to help determine the election outcomes in the US. For example, the infamous Facebook-Cambridge Analytica data scandal is known to have breached personal user data. It is claimed that user data was collected without their consent and later manipulated and used for political advertising. Many users were not happy that their personal data was exposed to statistical manipulation that “ultimately provided assistance and analytics to the 2016 presidential campaign”. Although Facebook was fined,  there was no proof that Facebook nor Cambridge Analytica had misused user data. That one event could have convinced some users that third party content distributors could not be trusted 100% to keep their data private.

Change of trust

Blockchain technology is built on trustless principles that have won the trust of many. The trustless trust implies that “Entries in the blockchain ledger are permanent and visible, with encryption technology and protocols effectively replacing third-party intermediaries.” A blockchain-based platform called flixxo is already positioning itself to take over content distribution in a different way. The business model is simple: Allow the users to fund the project of running content while at the same time, benefit from it. In short, the users will pay cryptocurrency to upload content onto the platform. Afterwards, they earn Flixxo tokens as a reward. This model allows content creators to benefit as much as the host.

This new threat to traditional third party content providers is blockchain’s assault. Only time will tell how serious a threat it will prove to be.