How Blockchain Technology is Changing the Online Marketplace

How Blockchain Technology is Changing the Online Marketplace

Many years ago, brick-and-mortar stores were rowdy, fraught with noisy negotiations, and not so convenient. The internet happened and online marketplaces sprouted everywhere, facilitating easier and convenient purchases. But prevalent cases of credit card fraud made these transactions generally unsafe.

In the future, blockchain technology promises to revolutionize how transactions are executed by making the online marketplace safer, more comfortable, and swift. It is okay to get all excited about this truly revolutionary concept but let’s take a moment to consider the technology and the expectations.

More about Blockchain Technology

The word blockchain is synonymous with decentralization. You might have heard of cryptocurrencies and how they eliminate central regulatory authorities or middlemen. The same theory applies to a blockchain-based marketplace.

Since we understand that a blockchain is a distributed ledger platform where transactions are recorded, verified, and executed, a decentralized marketplace will be made up of a peer-to-peer network which directly connects consumers and sellers and facilitates transactions between them.

What are the Features of Blockchain-Based Online Marketplaces?

There are five major features of blockchain technology. We shall take time to explain the way in which these features will influence the existing marketplace. Here’s a brief overview of how the system works.

  1. Transactions are governed and regulated by smart contracts
  2. All payments are made directly from the buyer to the seller. There’s no third party influence
  3. Fiat currencies aren’t allowed. The default currencies are cryptocurrencies
  4. The users determine the terms of sale
  5. There’s a limit to the amount of personal data required

Now, let’s go into details.

A blockchain-based marketplace is an open-source platform. This means that unlike Amazon or eBay, it isn’t controlled by an individual or a body. The implication of this simple fact is far-reaching. Since there isn’t a central hub where the activities are controlled, it means that it is supported by nodes contributing to the network, so there’s no chance of down-times or lack of support.

This also eliminates the possibility of hacking into the platform to compromise vital information. The fact that payments are made directly to the parties involved also causes the cost of transaction to be reduced (if not effaced). In addition to this, the payments are instant.

Transparency is another major feature of blockchain-based online markets. On conventional markets, there are algorithms, requirements, and a myriad of metrics which are factored in sales and it appears as though the modus operandi isn’t plain enough.

Existing Blockchain-Based Markets

OpenBazaar

In April 2014, this project was born. It goes into record as one of the first ever legalized peer-to-peer online markets. Even though it emerged after Silk Road went under, and was originally named Dark Market, this market has been able to establish itself as something more than an illicit market. One thing that makes the platform so secure is the use of escrow contracts for transactions.

ModulTrade

Small and medium-sized enterprises rejoice when they hear ModulTrade being mentioned. This platform facilitates global trade by re-enforcing trust via smart contracts. It is able to mitigate the concomitant risks of trading globally and in doing so, transactions are faster and easier.

Ink Protocol

One unique thing about this project is that a company is able to build up an online reputation on different marketplaces instantaneously. This is achieved via a decentralized platform which features an inbuilt escrow contract.

How to Incorporate Blockchain in Your Market

While there’s no assurance that the process is as easy as 1,2 and 3, there is a simplified approach in decentralizing the marketplace and including it as part of your digital strategy.

1.Smart Contracts

Smart contracts are the digital protocols which enact the transactions between the buyer and seller. They are self-executing and can automatically verify trades once specified conditions are met. This is instrumental in achieving a scalable blockchain-based marketplace.

2.Cryptocurrencies

This is the next step to take. Cryptocurrencies fit right into the modus operandi of blockchain technology and a marketplace with this feature will only make things easier.

Conclusion

In all honesty, we’ll admit that blockchain technology is still in infancy when it comes to understanding and adoption but fact remains that potential in the online market sphere is enormous. Not just as hot trending keyword, but as a business mode, it is pretty much the perfect time to introduce blockchain technology into your business operation.

It all starts with identifying where it fits within your statement of business objectives. ‘Blockchain for blockchain sake’ would never be an approach that would work in the longer term, but a well thought out strategic business model surrounding the technology that helps improve customer value would serve as the key driver of growth for organizations.

Like to know where you can fit Blockchain into your organizational plans? We at Biztruss can lend you a hand and more. There’s no better conversation starter these days. So hit us up and we could get chatting. And even if you go about with figuring this out yourself (which is indeed phenomenal), never hesitate in asking us a quick question or dropping a few handy tips we can use in our next blog.

More your way in quick time! Till then, stay plugged to the Blockchain revolution and watch this space.

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