The data economy is absolutely huge — estimated to be worth about $3 trillion.
It’s growing fast, too — the amount of data produced is set to double every two years. And this data includes user data, the information we share on social media, from our smartphones, and in search engines.
Smart use of this personal data has allowed companies like Facebook and Google to completely dominate the online advertising industry, where they control around three quarters of the U.S. market.
But their reign is looking less secure these days. Recent scandals have led to a growing mistrust of how big companies use our data, and things could slowly be changing.
The growth of blockchain technology in particular could mark a big shift in the way we manage data, and several new companies could be worth a watch as things change.
To better understand why the data economy needs to change, and why there’s such an appetite for a new way of doing things, let’s look at what’s wrong with the current setup.
The current (flawed) data landscape
Right now, Facebook and Google dominate so much because they have a monopoly over their users’ data.
They essentially own the data generated by users on their platforms, which means they can work with advertisers and companies to help them better understand their customers and improve their marketing efforts, among other things.
But it’s an imperfect system. Because companies can’t build direct relationships with users — they have to go through a middleman — the result is impersonal relationships and ineffective, mistargeted ads.
These tech giants can be poor custodians of our data, too. The Cambridge Analytica scandal was a clear case of this: Facebook allowed a third party political consulting firm to access user data which they then used to their own ends. The users themselves had no say in this.
As a result of this scandal and other revelations, trust in this model is at a low. 94% of people in one survey reported being concerned about their data. And 57% said they were more concerned following the Cambridge Analytica story.
This model clearly isn’t working for everyone. In fact, it seems like the only ones who really benefit are the tech giant middlemen. Companies that focus on making a shift to a fairer system could be the wave of the future,
And that makes them worthy of attention, since this is an enormously valuable industry.
Blockchain’s solution to the current problems
O2OPay is one company that’s leading the charge against this unfair data system. They want to move power away from centralized middlemen and give users the power to share their own data and be rewarded for their important role in companies’ growth.
In their platform, users are paid when they share their data, in tokens that can be exchanged in the physical world. They get to own their data and decide who can access it.
O2OPay also want to improve the way data is shared with companies. They want to integrate offline data like subscriptions, location, and demographic information, and also online data like social media activity and searches.
This way, it’s possible to build a much more complete and useful profile of a user, bringing more value to the companies that purchase it. This is more reliable than the often-one-dimensional data provided by centralized platforms like social media sites.
Another company that is pioneering the data monetization and ownership is Datum.
The startup has built a decentralized marketplace where users can share their data and sell it to whomever is interested in it. When data is sold, users are rewarded in tokens based on the quality and type of data they offer.
A decentralize marketplace of data can ensure users are compensated for their data and not tech moguls, and privacy issue are completely ignored since it’s the users who consciously decide whether or when to sell their data.
It’s also more secure — blockchain allows users to share their data more safely because it’s immutable and transparent. It’s possible to track data and be quickly aware of any misuse.
This is a serious opportunity, not just for the users who can get a better deal and monetize their own data, but also for new companies who can capitalize on this shift in public opinion and build a new way of doing things.
For investors, it’s an area worth keeping up to date with. Online advertising is a massive industry, and with the increasing importance of data it looks set to become ever more important.
New companies and ICOs that offer a more secure, fair, and reliable way to handle users’ data could represent a truly exciting new industry.