Blockchain At Heart of Personal Data Monetization Service
Tired of giving your valuable personal data to Google or Facebook? Plenty of people are, and now a company called Algebraix Data is building a Blockchain-based network that will allow people to sell their personal data to advertisers in exchange for crypto currency.
The story of the rise of big data is, in large part, the story of how the big Web firms in Silicon Valley built new technologies to collect, store, and analyze huge amounts of data, and in turn created new business models to exploit those insights. Services from Google and Facebook (and Twitter, LinkedIn, Yahoo etc.) may ostensibly be “free” to users. But the companies extract their fees in other ways – by gathering data about you and essentially selling it to advertisers for the purpose of serving highly targeted ads.
Plenty of people don’t like this business model. But there are plenty more who aren’t aware that it exists. And because the services provided by Web giants are compelling –even addicting, some say – there hasn’t been much resistance. Next May’s introduction of the GDPR will force the Web giants to be more transparent and upfront about how they use people’s data – but only for citizens of the European Union.
Now a company in Austin, Texas, is looking to use emerging technologies like the Blockchain to turn these data-driven business models on their sides. Algebraix Data CEO Charlie Silver, a veteran of the first dot-com boom, recently explained to Datanami how his new system will work:
“We’re allowing users to own their data by creating a personal secure vault where individuals can store their data, and if they choose to share it, they get compensated with tokens to view ads,” Silver says. “So instead of advertising on Facebook to target specific types of users, advertisers can target those users precisely the same way, if not better, by offering them compensation directly.”
It’s a new business model for Algebraix, which spent several years developing something that it calls “the algebra of data.” This technology, which was spearheaded by Indiana math professor Gary Sherman, was originally created to speed up big data processing on cloud platforms or parallel clusters running Hadoop and Spark.
Now Silver and company are looking to apply their mathematical techniques to workloads running on the Blockchain, the peer-to-peer transactional ledger that provides the technological foundation for cryptocurrencies.
It’s all about scaling, Silver says. “We’re applying data algebra to the Blockchain because we will have hundreds of millions of users, hopefully billions of users, on our platform, monetizing their personal data,” he says. “In order for that network to work, scalability and performance are going to be huge issues, and that’s where our technology plays a role.”
The concept is still taking shape at Algebraix, which intends to launch a demonstration of the new network next March at the South by Southwest conference in Austin, Texas. At that time, Algebraix will also hold an initial coin offering (ICO) to raise funding for the project.
If all goes as planned, customers will be compensated in a cryptocurrency, called ALX coin, that’s generated by Algebraix. The company will generate profit in part through appreciation of ALX coin. Considering how quickly Bitcoin has gone up in value, this could be a lucrative business for Algebraix.
“We like this business a lot better” than big data analytics, says Silver. “It’s a lot more exciting. We think the Blockchain is going to be the next huge wave of disruptions, very similar to where we were at in the ’90s.”
The new business, dubbed the Personal Secure Vault on the Algebraix platform, will live on the Internet, but be completely separate from the familiar World Wide Web. Alebraix intends to build its user base by offering streaming TV and movie services. As the user base grows, advertisers will be able to offer ads directly to users based on their demographics and interests, as expressed in the data, thereby bypassing Facebook, et al.
Silver didn’t want to speculate on how much money participants could make, before saying it could be upwards of $2,000 per year. “You’ll get paid more based on how much data you’re willing to share,” he says. “The more data you’ll share, the more you’ll be valuable to certain types of advertisers.”
The Blockchain is a required piece of technology because it provides an unalterable record of transactions, as maintained in a distributed, resilient peer-to-peer network composed primarily of participant’s smart phones.
“It’s all about trust,” Silver says. “There’s no more opaqueness to commerce. It’s totally visible and it creates this reinforcement of integrity and keeping your end of the bargain, because if you don’t, you’re in big trouble for everybody to see.”
Silver sees Blockchain disrupting all sorts of industries, particularly those in financial services that spend billions ensuring the sanctity of transactions. When that trust is confirmed in a distributed P2P Blockchain network, the need for those business models disappears. But above all, he sees Blockchain giving people control over their data.
It comes down to property rights. Do you own your own data, or does Facebook own it? “We say you own it,” Silver says. “Individuals own their own data. We’re saying data is property, and we believe in property rights. And the big companies that have exploited users’ data have no respect for property rights, in this regard.”