Blockchain
WHAT IS BLOCKCHAIN? Blockchain is a technological solution most commonly linked with cryptocurrencies such as Bitcoin. Blockchain has been described as the “backbone” of the currency and generates an evolving chain of cryptographic data that is, it is claimed, impossible to replicate. It works as a public ledger of any and all Bitcoin transactions that have ever happened and the chain, collectively, grows as more ‘blocks’ of transactions are added to it (hence the name). Each block is added in chronological order so that all transactions are recorded in the sequence in which they happened. When a ‘block’ is completed, a whole new block is generated, so it effectively works like a time-specific filing cabinet that can only be accessed by certain (approved) parties. Investopedia provides a succinct summary of how it all works: Each node (computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions) gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network. The blockchain has complete information about the addresses and their balances right from the genesis block to the most recently completed block. The transactions themselves are embedded into the blockchain and any transactions within that chain must be approved through a private ‘key’ or ‘seed’. It is estimated that a new block is appended to the blockchain every 10 minutes. This is the bit that its advocates are most excited about – in that it offers privacy and security on an unprecedented level. It is no coincidence that chatter about blockchain has grown in the wake of major data breaches at powerful companies and organisations (notably government agencies and financial institutions). Blockchain’s critics argue that its drawbacks are, because it is creating a new block every 10 minutes, that it will incrementally require more and more storage space and this could compromise just how quickly and completely it synchronises data around each activity within it. The real selling points of this system, however, are that it is both transparent and considerably more secure against hacks than other online data and financial systems. The fact that its ledgers are spread across (potentially) thousands of computers means that a hack is deemed to be “near impossible.”
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CONSUMER SAFEGUARDS AND FRAUD PREVENTION IN TICKETING Ticketing is undoubtedly the part of the live industry that has been most affected by digital and, so it follows, it is the division where blockchain could, in 2015, most immediately apply. Online ticketing, mobile ticketing, the secondary market: they all run on the diesel of digital and have brought convenience to both the industry and the consumer. They have also created new problems for both sides in the exchange. Alongside being the founder and president of PledgeMusic, the D2F platform for artists, Benji Rogers is an advocate for blockchain. He feels that it offers the music industry, across the board, a series of solutions for long-standing and growing problems. It is in ticketing, he feels, that blockchain can most swiftly come into its own. “The thing I find fascinating is the idea that you can have a verified transaction and you can verify identities; this is extremely appealing to me,” he says. “In one sense, a Bitcoin transaction is digital cash, so my initial thought in terms of the live industry is if you were to send a ticket which referenced a blockchain transaction it would be very hard to replicate that ticket as it is anchored across a whole network. There is safety in that. There is also an identity to it as you can only send it to the person who receives it and [as a result] there is a seamless transfer of information.” A huge area of concern for the live industry is the unofficial online selling of tickets, with many examples of unscrupulous individuals punting multiple snide versions of the same digital ticket, meaning only one person can gain entry and everyone else who subsequently shows up with a ticket they bought in good faith is locked out. “Because of the way blockchain works, you couldn’t have a second transaction,” says Rogers of the security possibilities here. “It just wouldn’t verify in the network. Once [the ticket] is used, there is no going back. You can reference it at every point of source it came through. It could be used for ticket verification in a way that would mean that no machine would print another one.” This is a powerful solution to a real problem that economist Chris Carey, founder of Media Insight Consulting (and former global insight director at both Universal and EMI), also feels could function incredibly well for the live sector. “It could work for the reselling of tickets, enabling the legitimate resale of tickets by having a clear chain,” he suggests. “So you have events that take place and they are monitored, regulated and transparent, [which means that] you can have that sort of activity taking place. Or you could use it to disable that and tighten security if you have a one-off, immutable event.” Carey also proposes that this could dramatically alter the economics of the secondary market, tracking every sale of a ticket through multiple purchasers and delivering a cut of the margin in each transaction back to the artists. “Say a ticket has been sold seven times, could an artist get paid on each sale rather than just the final sale?” he asks. “So tracking [the ticket] through its journey could actually create revenue at different steps. There is an argument to say that if you can monitor transactions through technology, the artist could get a share of the upside at every step of the way.” How does he see that working in practice? “If a ticket sells
IQ Magazine November 2015