Did you know that blockchain technology was invented to be the public transaction ledger for the first-ever cryptocurrency, bitcoin? And that it was invented in 2008 — just 10 years ago — by a still-unidentified person (or group of persons) using the pseudonym Satoshi Nakamoto? If you didn’t, you’re not alone.
Even though cryptocurrency and blockchains have been around since 2009, they weren’t household terms until 2017’s bitcoin price run, during which they exploded in popularity. People who had never even heard of cryptocurrency were suddenly purchasing and trading bitcoin. Now, they’re buzzwords heard in the halls of venture capitalists, startup incubators, tech companies, and others. So while the long-term implications of that 2017 run are unknown, cryptocurrency and blockchain technology are already making an impact in affiliate and performance marketing.
In this blog post, we’ll review the facts about cryptocurrency, how it’s used, and crypto trends we’re seeing in affiliate marketing and the tech world at large.
What Is Cryptocurrency?
A cryptocurrency is a decentralized digital currency not regulated by any national government, as with the dollar or euro. It’s designed to be more secure than cash because it’s impossible to physically lose. Presumably, it’s also impossible to be stolen or faked due to its strong encryption, or the way it’s verified through cryptography, and its public history, or its distributed record in a blockchain.
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. – Wikipedia
As the digital world continues to conquer parts of the physical, some experts predict coins and paper money will become history. That would leave the market primed for digital (and virtual) forms of currency.
The most popular cryptocurrency is currently bitcoin, although more than 1,600 other cryptocurrencies now exist. Bitcoin became popular in 2018 after the price skyrocketed to over $20,000 per bitcoin, attracting traders, investors, the media, and the general public. Most cryptocurrencies are extremely volatile, however, and today bitcoin is worth around $6,000.
How Is Cryptocurrency Used?
When you purchase cryptocurrency, you are given a digital key with the address of that currency, which you can use to validate or approve transactions. Buyers can purchase bitcoin and store them in cryptographic wallets. Similar to the stock market, the value of cryptocurrency fluctuates as people purchase and sell it.
Emerging Trends in Affiliate Marketing
As marketers, we find cryptocurrency particularly interesting when it comes to affiliate programs and performance-based marketing. Here are a few of the emerging trends we’re seeing:
Crypto-Based Affiliate Programs
Cryptocurrency isn’t fully accepted on advertising platforms like Facebook and Google, so affiliate marketers are taking it upon themselves to spread the good word. New crypto trading platforms with affiliate programs are popping up all the time.
Binance, for example, is a trading platform that launched in 2017 and became the biggest trading platform for cryptocurrency in terms of traffic. They pay 20-40% lifetime trading commission fees for each new customer referred. Apparently, a few people have taken advantage of the program to become millionaires. Other popular affiliate programs include Coinbase, CoinPayments, Changelly, LedgerWallet, and Purse. (Head over to this recent post for more on crypto-based affiliate programs and our predictions for the industry.)
Access to New Audiences and Funding
Not everyone has access to banks. But anyone who has access to the internet can feasibly also access cryptocurrency. That accessibility is already giving rise to startups being funded by cryptocurrency, allowing new companies to emerge from crowdfunding, and providing the opportunity to people around the world who might not otherwise have investors.
Lower Fees and Processing Times for Networks
Most processing companies charge at least a few percentage points in fees, since one company completes the transaction process and can claim credit for doing so. With digital currencies, no one entity owns the process or transaction record, which means cryptocurrencies are often exchanged for little or no transaction fees. (Fees are mainly set by how much network capacity is available for the transaction, but the currency holder can also set a higher fee if desired.)
By reducing processing time and putting more money in the hands of publishers, bitcoin and the like could cause a ripple effect of more supply opportunities across the entire industry.
Faster, Safer, More Transparent Transactions
Proponents advocate that digital currencies make buying and selling safer for everyone, because cryptography ensures all financial transfers are secured, and the creation of additional units is controlled. In theory, this means each party involved in an exchange is working off of the same unbiased information; both sides have no reason to doubt accuracy or authenticity.
In addition, payments made via cryptocurrency can’t be canceled or reversed for fraudulent purposes, which protects sellers, publishers, and affiliates alike.
Paying with credit cards or debit cards requires entering sensitive information that can be stolen. But cryptocurrency can be sent directly to the recipient with no other information other than the amount sent. This has proven to be both a good thing (more security and less fraud) and a potentially bad thing (more anonymity and the growth of black markets). Which side will win out? We’ll have to wait and see.
In Crypto We Trust
Ultimately, like any new technology, it remains to be seen whether cryptocurrency is embraced by the world, or fails to reach critical mass. We’d love to hear from you — do you see cryptocurrency making long-standing change in the affiliate marketing industry? How have you seen it take hold already?
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Becky is the Senior Content Marketing Manager at TUNE. Before TUNE, she led a variety of marketing and communications projects at San Francisco startups. Becky received her bachelor's degree in English from Wake Forest University. You can find her waxing poetic about the South and exploring her new home from her headquarters in Seattle's Belltown neighborhood.