Blockchain Technology and Digital Platform Payments: A Primer

One of the major applications that blockchain technology has promised since its inception is secure digital transactions. This is the fundamental basis of virtually all cryptocurrencies and remains the absolute largest reason why people develop and implement blockchain into their organizations.

Because of this, digital platforms like Pinmo, which use online payments for their business structure are taking a huge interest in this extremely useful part of blockchain functionality. Yes, the traditional model for payments between different platforms and their users and clients is still largely based on fiat financial protocols but the promise of blockchain security with decentralized, open-source cryptocurrency payments holds a tremendous amount of appeal. The motives for this are numerous.

Before we get to those motives, we first need to give a basic breakdown of how the mechanism of a blockchain works:

Instead of a single centralized mechanism for managing payments and recording information that accurately decides specific payouts, blockchain technology offers a mechanism by which all transactions (these could be exchanges of any kind of information but here we’re focusing on payment-related information) are recorded in sequential form inside all the different nodes across a distributed ledger network. A single transaction or sequence of transactions makes up what is called a block and each block is identified with a cryptographic hash function (a sort of tamper-proof mathematical identifier).

That block is then validated into the existing sequence of blocks and their own hash identifiers as a sequential addition to those before it. It is then distributed through the entire particular blockchain network being used by a given platform. Because of this sequential cryptographic validation process and its distribution through an entire network. Each transaction in the chain can be verified by date, details and other factors without being in any way falsifiable. This is literally why this powerful technology is called the blockchain, because it’s a chain of cryptographically distinct blocks that immutably connect together.

Once you understand these basics, the fundamental usability of the blockchain for secure digital payment management becomes clearer. Let’s look at Pinmo as an example:

In the case of the Pinmo platform, the distributed ledger infrastructure of blockchain technology is used for two different but related things: First of all it’s applied to the creation and validation of Pinmo’s own cryptocurrency, the Pinmo token. This token is used to pay users of Pinmo for their social media sharing.

Secondly, these blockchain blocks are also used to cryptographically record all social media ad campaign activity performed by these Pinmo users so that their activity can be measured and the users accurately paid from advertiser campaign budgets. By the same stroke, advertisers who use Pinmo can analyze the blockchain used by the platform to verify that their ads are being shared by users, how they’re being shared and how they’re converting as well.

In other words, in the case of this particular platform, blockchain technology is used not only to deliver secure cryptocurrency payments to users and handle advertiser marketing budgets, it’s also one of the tools used to track all of the performance metrics that are relevant to payments.

The Pinmo token used for these digital payments and the ad activity verification described are both based off the same open-source blockchain architecture, which has been custom implemented for the platform’s ad campaign management, token distribution and social sharing needs.

Similar digital payments protocols exist in many other types of online applications and platforms due to the sheer security and flexibility of the blockchain. Because this technology is essentially tamper-proof for recording digital payment data, it also delivers a fantastically secure analytics tracking tool that feeds back into the payment tracking aspects of the same block creation protocol.

How Pinmo Uses Blockchain and AI to Eliminate Bots & Fake Account Losses

In 2017 alone, online marketers lost over $7 billion to bot fraud and fake account-related advertising. A large part of these losses were attributable to website advertising and search ads but a not insignificant percentage belonged to the social media landscape. Clearly this isn’t a minor or uncommon problem. The big question that everyone from social media platforms on down focuses on is how to fight it.

As far as the social media platforms themselves are concerned, there are even accusations that giants like Facebook, Instagram, Google and others deliberately don’t do enough to deal with these advertising fraud issues because they earn money either way. While we tend to believe that the social networks are doing their earnest best to keep their advertising customers from suffering the harm caused by ad fraud, the fact remains that real economic losses are being generated, and that the efforts of these networks aren’t fully effective at stopping fraud losses.

It’s understandable that fraud continues to exist. The sheer number of social media user accounts on the big networks combined with inefficient methods of catching fake accounts and bots create a situation in which at least a part of any advertisers spending gets wasted on exposure to fake activity they still get billed for.

Exacerbating the difficulties social media has with fake ad filtering is the fact that some of the agents behind these types of ad fraud on today’s internet can become extremely sophisticated. This was demonstrated in 2016 when advertising security firms detected an ad fraud bot called Methbot, operated by a group of Russian hackers who had dubbed themselves AFK13. The scale of this one single operation? Traffic from over 570,000 fake viewers was directed to over 300 million advertisements to generate fake clicks. Because these were mostly video ads being promoted to falsified versions of major websites, the CPM on them averaged out at $13.04. This was a cost billed straight to online advertisers in a fraud that netted the hackers behind Methbot roughly $5 million dollars per day while it was operating.

Methbot was very smartly designed in a way that let it mimic real human users to a remarkable degree of detail. Existing ad platform mechanisms, both algorithmic and manual that analyze ad sharing and clicking activity for their customers could have a very difficult time detecting click fraud of such a sophisticated nature. Yet this type of activity continues to exist.

This is where the combination of technologies used by a digital marketing platform like Pinmo steps into the picture.

Pinmo also uses AI analytics and other security mechanisms like 2-factor authentication to verify that all of the users participating in the sharing of its clients’ digital advertisements are indeed real human users. However, since these tracking mechanisms clearly aren’t enough all by themselves. The Pinmo approach to ad fraud elimination also incorporates an entirely new and much more subversion-proof level of vigilance through blockchain technology.

The blockchain is a cornerstone of Pinmo’s efforts to deliver almost perfectly secure, fully authentic advertising performance for customers who want genuine ROI on their investments. How it works is what sets it apart from the methods used even by giant social media platforms in their own anti-fraud, anti-bot measures.

What the blockchain fundamentally does is allow all users and administrators of a network in which information is being transacted to verify each one of those transactions and source it back to a specific, known point of origin. Thus, in the case of the Pinmo platform, ad campaigns are created by advertisers through the AI-supported Pinmo dashboard for their accounts, these campaigns are then also optimized by Pinmo’s manual and algorithmic campaign support protocols. The specific ads in these campaigns are then shared to particular incentivized human social media users based on their interests, and those human users in turn share these ads as they see fit to their friends and followers for maximum reach and conversion.

With this, three different factors work together to ensure that each ad is being shared by real users through real social media accounts to other real users:

First, Pinmo’s own Watson-powered user verification procedures and two-factor authentication are working to filter a base of real people who are being compensated to share Pinmo ad campaigns on their social media accounts.

Secondly, these shares by users and the converting actions they generate are verified for their authenticity through Pinmo’s system, which is itself supported by IBM’s Watson supercomputer for maximum verification and processing power

Third and most importantly in this entire context, the entire sequential process of ad campaign creation, ad sharing to users, ad selection and sharing by users and advertisement response (clicks and converting actions) by friends and followers of those users are all tracked as transactions in Pinmo’s own decentralized blockchain network.

What this last characteristic means most of all is that users, advertisers and Pinmo’s own administrators can track the performance of each ad not just as an abstract analytics statistic but also as a specific series of cryptographically secured blockchain transactions which are all sequentially registered across a distributed ledger of events and cannot be falsified. These blocks can be individually reviewed live, as they’re created by advertisers who want to examine their own analytics down to the most granular possible level.

The full combination of AI ad optimization technology, manual verification of all user activity, shares and clicks, and sequential blockchain tracking of all transactions works to create an advertising environment in which fraudulent click activity through bots and fake user accounts become much more difficult to get away with.

How Blockchain Technology Can Validate Ad Campaign Metrics

One of the fundamental requirements of ad campaigns is effective analytics. You, as a marketer, want to know precisely how your ads are being displayed, where they’re being shown, how they’re converting and how accurately these metrics are all being tracked. These needs only increase in importance as a given ad campaign becomes more complex.

There is, however, a fundamental problem to how these performance analytics have been tracked up to now: A lack of complete transparency. Yes, social or search advertising platforms like Facebook, Google, Twitter and others, as well as numerous small ad management services, have both human and algorithmic systems in place to handle this problem to deliver varying degrees of analytics precision, but they all suffer from ambiguity gaps. In other words, while you can have ad campaign metrics for performance delivered to you in detailed reports, full transparency for verifying the progression of actions that led to them step-by-step is largely out of bounds.

This is where blockchain technology such as that used by Pinmo steps into the picture in a distinctly innovative way. In order to explain how it does this, let’s take a quick look at how a basic blockchain works first.

In essence, a blockchain is a distributed ledger of sequential transactions (these transactions being events of any kind in which information is recorded and exchanged). The different nodes, or computers, across which the ledger transactions are distributed all represent parts of that particular blockchain’s network. Every time a transaction happens within a blockchain, it is spread among all these nodes and has to be cryptographically validated by a majority of them through a sort of automatic consensus mechanism that stamps the transaction as a legitimate event in said blockchain’s sequence.

When this happens, the transactions being validated are added as new cryptographically stamped “blocks” in the sequential chain of all previous validated transactions. This chain of blocks is spread across the entire distributed network ledger for the sake of additional security through decentralization. The whole thing in its totality is what we now call a blockchain. Since each transaction block comes sequentially after previous blocks and attaches to them by a cryptographically unique mathematical hash process, the sequential integrity and origins of any given block are absolutely secure.

This in turn assures anybody who looks at the whole blockchain that the timeline of transactions contained in each block represents completely validated and real events inside the platform that the chain is being run on. Because most blockchains are completely open for detailed examination, anybody can examine every sequence of activity inside each block in minute detail to verify its legitimacy.

This description of the blockchain is of course very basic. Plenty of additional and highly detailed mathematical processes work behind the scenes to make a blockchain function as it should. However, these basics alone are enough to make it obvious how this technology can be helpful to the validation of online advertising metrics.

Basically, by making each possible piece of activity in an ad campaign –be it the creation of an ad, its sharing by someone else, a converting click on that ad by another person and so forth—into a mathematically “tagged” transaction inside some sort of customized blockchain ledger, an advertising platform like Pinmo can deliver perfect campaign tracking.

In other words, with blockchain integration of ad campaign activity at its most granular level, Pinmo or any other ad platform that does the same thing can deliver not only overall ad campaign analytics, it can also let an advertising client examine the blocks for their ads for themselves. By being able to do this, the advertiser can see the exact process of actions by the ad platform and third parties that made any given advertisement perform poorly or well. The level of analytics this delivers is far more detailed than has been the case with conventional ad campaign analytics up to now.

What Is the Blockchain? A Beginner’s Guide

Pinmo is starting to use blockchain technology as a key part of its transaction verification and payment processing infrastructure, so obviously our content will involve the word “blockchain” and other key terms related to it. But what if you’re a complete newbie to the world of cryptocurrencies and the only

Well, this basic introductory guide is for you. We’re going to lay out exactly what blockchain technology is at its most basic, how it applies to cryptocurrencies like Bitcoin (and others) and why it’s so important for other things like business and digital transactions.

The Basics

The word “blockchain” itself describes the essence of what a blockchain is. In digitally metaphorical terms, it’s a chain of information bundles called blocks, each of them tied to previous and successive blocks by something called a hash. Each block contains a sequence of digital information (also known as transactions) that has been encoded in such a way so that it’s condensed into a sequence of mathematically generated cryptographic characters called a hash. This hash terminates that block and carries over into the next block in a way that creates a chain of connections between all blocks in a blockchain. In other words, a blockchain is a cryptographically segmented ledger of information.

To clarify this further, if Block 1 in a blockchain contains transactions A, B, C, and D, then its hash could be abcd1. Then when block 2 is generated, with transactions E,F,G,H, the hash from block 2 would be created for EFGH but with the summary from Block 1 included as well, thus creating a hash that looks like this:

Previous block hash: ABCD1

Block 2: EFGH2.

(These are just basic examples, real hashes are much more complex).

How Blockchains Create Security

Now comes a second important part to the power of a blockchain: As you can see with the above, each new block contains its own hash of all transactions in that block and a summary of the previous block’s hash. This means that somebody trying to tamper with Block 1 might be able to change its hash but the original authentic hash summary of it in Block 2 will still be registered there, making the falsification of Block 1 obvious. This is a crucial cryptographic security feature of the blockchain.

However, you might ask what happens if someone just tampers with the first block and then also changes all successive blocks to reflect the fraud? Well, this is where a second huge security feature of the blockchain comes into play: The data contained in these blocks and in the blockchain as a whole, is not just stored on one server or computer. Instead, it’s copied across a whole network of other computers, called “nodes”. Thus if anyone modifies a whole sequence of blocks on one computer or even multiple computers, the majority of blocks will still register the original transaction hashes for each block and what that majority shows will be what’s valid. This last aspect of the blockchain is what turns it from simply being a cryptographically secured ledger of information and converts it into a DISTRIBUTED cryptographically secured ledger of information.

This combination of sequential cryptographic hashing between blocks and distribution across a network of nodes is the basic thing that makes blockchains immutable and highly secure for securing information that can’t be tampered with.

Blockchain Types

There are of course many blockchain types in existence today and they all have their variations. However, the essential design described above applies to most of them and definitely to the important ones that would be used for public financial transactions or record keeping.

These commercially used blockchains can be divided into two basic user configurations: Public blockchains, and permissioned blockchains. A public blockchain would be something like the one behind Bitcoin or Ether tokens – anyone can download it, anyone can examine it and anyone can generate new blocks for them (as long as they have the right computing hardware to do so). A permissioned blockchain would be one in which only certified users with permission can access it to read blocks or generate new transactions and blocks.

One other fundamental part of any blockchain is the concept of digital identity. Each user on the chain, generating blocks of transactions, has their own unique digital signature for the transactions they’re responsible for. These are also encoded into individual blocks of transactions and a crucial ingredient to verifying which transactions belong to which person or entity inside a given blockchain. In a closed chain such as that used by a business to handle payments and information transactions for its users and clients, these identities are what allow all users to see who did what and when they did it. The “what” in this case could consist of specific transactions, specific activities or payments in digital tokens.

Blockchains for Everything

On a final note for the basics of how a blockchain works, we need to mention that the word “transaction” as we’ve described so far could consist of any sort of digital information. This means a blockchain could be used to store and transfer almost anything digital at all. These pieces of information could include information about activities, digital currency (cryptocurrency like Bitcoin) ownership records or records of ownership for any other sort of digital asset.

In other words “transaction” simply refers to information being exchanged across the blockchain and noted down in its blocks. A company or organization that uses a blockchain could use it for any kind of information at all. Some blockchains can be used for multiple things at the same time. One example of this is the Ethereum Network, which can host a third party’s code so they don’t need to build their own blockchain from scratch. Through this Ethereum-based blockchain, a company can create its own cryptocurrency for internal use and also track user/client activities of any kind on the same chain across their own network of nodes.