The way people buy and sell has transformed drastically since the arrival of the online marketplace with Amazon and eBay in 1994. Fast forward to the present day 2021, a new cycle of marketplace is under development due to the emergence of blockchain technology. It’s disrupting nearly every industry and blockchain for online marketplaces provide new opportunities to transform how we transact online and in our everyday lives.
Blockchain is a platform-like technology with a decentralised, distributed ledger. This digital ledger records, verifies and tracks the transactions and contracts made between parties. Data records are time-stamped, stored as ‘blocks’ in the chronological ‘chain’ of data, and cannot be altered. Blockchain-based marketplaces function as decentralised peer-to-peer networks that directly connect producers, sellers and consumers. The parties can buy and sell, directly and transparently, without the need for intermediaries.
7 key differentiators of blockchain for online marketplaces
A decentralised network ensures 24/7 availability and maintenance
A blockchain-based marketplace is hosted by its users and supported by their computing power, ensuring the marketplace is always accessible and maintained. The decentralised nature of the digital ledger also makes the data hosting is more secure, private and transparent. Removing the centralised host and their associated costs means the lowest possible prices can be set for producers, sellers, and consumers to benefit from.
Direct, instant payment with low or no transaction fees
Compared to major traditional marketplaces, the blockchain model supports drastically lower costs of selling products. Lower fees to producers and sellers mean lower prices for consumers. Payments are transacted directly between the involved parties using digital currency, so producers and sellers don’t need to trust or wait around for financial intermediaries to take payments on their behalf.
Flexible terms foster high levels of trust between party interactions
Blockchain-based marketplaces not only eliminate intermediaries, but also the need to accept third-party terms and conditions. Each seller can specify their own terms so that consumers have greater choice and can shop around for the best deal. Producers and sellers are able to choose how they distribute their content to best suit their needs, encouraging healthy competition and subsequently providing consumers with the best prices and customer experience.
Exciting new ways for sellers and consumers to interact with easy drop-shipping
It’s a model where all parties win – sellers monetise their audience, producers increase sales through sellers, and customers access a broad choice of global products. Producers aren’t subject to fees for placing their products on the marketplace, they only pay when a product is bought. Sellers are able to offer any products or services and promote them as they wish, getting commissions for each sale. Consumers are free to select the products or services they desire at the most attractive price to them.
Robust security from immutable data and cryptographic network validation mechanisms
Transactions are easily traceable on the blockchain, as the technology offers immutable and time-stamped verification of all transactions. Manipulations such as double charges, fraud, abuse, hacking etc. are unable to occur in a blockchain marketplace, making it an incredibly secure ecosystem for the exchange of goods and services.
Transparency across transactions and agreements guarantees full traceability
Producers and sellers verify their products and businesses with digital ID’s to increase trust in their products and supply chains. The digital IDs are unique, enable full tracking capabilities, and allow parties to share in the product journey from production, to the promotion and purchasing for improved customer experience across the board.
Smart contracts whereby a customer and a seller agree on and record the terms
These unbreakable, reliable agreements enable retailers, sellers and consumers to make trusted transactions directly with one another. Digital smart contracts protect consumers and sellers with 1. an escrow service or 2. trusted mediation by independent network participants. Smart contracts are going to be the standard for achieving a true peer-to-peer model devoid of third party interference.
Case study: Diamond trading in a blockchain-based marketplace
The global online blockchain exchange could provide the opportunity for users to trade in a two-sided market that is backed with security and transparent prices. For this application, blockchain technology could enable users to buy diamonds with crypto tokens, leveraging smart contracts as evidence of ownership. The tokens would be treated as shares backed by the physical assets rather than money, and serve as a payment for item insurance, custody and delivery. Diamonds could be bought or sold as whole pieces, or even parts of a single diamond that function as a shared investment. Furthermore, machine-learning algorithm’s could be used to evaluate and categorise the diamond. This would enable users to purchase, sell and invest in diamonds without prerequisite specialist knowledge. Overall, blockchain for online marketplaces would be an efficient solution for transparent, secure diamond trading that is user-friendly, fast and simple.
Blockchain for online marketplaces will fundamentally change the way we buy and sell
Ultimately, blockchain is gradually disrupting industries across the board and retail is among them. The technology provides a new networked business model that is sure to usher in this new cycle of the marketplace, presenting exciting opportunities for the future of user interactions, payments and agreements.
Looking to take advantage of the opportunities of blockchain for online marketplaces? To find out more about potential applications for your business, please contact Adrian Apperley directly at +66 (0) 8 1751 8308 or through .
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