Long before today’s on-demand economy, there were community marketplaces, mom-and-pop shops and milk being delivered daily, directly to doorsteps. Yet as the digital revolution continues, it seems as if technology is working in favor of e-commerce giants. Today, online marketplace such as Amazon and Walmart-owned Jet.com are seeing massive increases in sales, while local commerce is stagnating.
Fortunately, not all new technology is favoring large corporations. Blockchain serves as the perfect example of a rising technology being used to boost local commerce and peer-to-peer interactions, allowing a number of small-scale industries to flourish and regain a foothold in the community. And as more industries jump on the blockchain bandwagon, exciting new ways to utilize the blockchain for local economic growth are developing.
One of the latest blockchain trends is the creation of decentralized applications, also known as “dapps.” Unlike today’s common apps, such as Uber or Gmail, dapps don’t require “middlemen” to function. Dapps are revolutionary in that they connect users and providers—customers and businesses—directly, bringing back a true sense of peer-to-peer transactions, trust and transparency. Dapps are also typically open source and don’t have a central point or server that can be vulnerable to system failures or security breaches.
Dapps: The Future Of Online Marketplaces?
Online marketplaces in particular are beginning to find great value in harnessing the blockchain through dapps. 5miles, a leading consumer-to-consumer marketplace in the U.S., is paying close attention to blockchain technology and decentralized applications. 5miles plans to empower the decentralization of the online marketplace through CyberMiles, a foundational blockchain being developed by 5miles’ blockchain technology lab, 5xlab.
“Our vision for the future is a public network that provides secure and trusted business services for its members, by its members,” said Dr. Michael Yuan, CyberMiles’ chief scientist. “All small businesses should be able to use the services provided by this network to support what we call ‘smart business contracts’ and highly-efficient transactions.”
5miles hopes to migrate its sellers and buyers gradually and seamlessly onto a fully-decentralized network, in so doing becoming a pioneer in decentralized online marketplaces. This shouldn’t come as a surprise though, as 5miles has been heavily engaged in the research and development of blockchain technologies. The company believes that blockchain can provide natural solutions to common problems associated with “C2C” marketplaces.
“5miles has seen that economic incentives, when transparent and properly implemented, motivate people to be active and good participants in a community,” said Dr. Lucas Lu, 5miles’ founder and C.E.O. “If those incentives can be earned throughout the various processes that run a marketplace and online community, then many marketplace functions that are currently centralized can be done in a decentralized manner, powered by the communities’ own members. This strengthens the participation and creativity of its marketplace participants, while at the same time allowing the network to become even more dynamic and scalable.”
The Benefits of Decentralization
While there are a number of benefits that can be gained from decentralized networks, 5miles notes that three things in particular will help revolutionize online marketplaces.
1) A Marketplace That Never Shuts Down
One of the key advantages of a decentralized network is the high availability of network services. Decentralized networks are resistant to data center failures since it operates on the blockchain. Typical data centers are engineered for high reliability, but all too often human errors occur, resulting in loss of data and money for their customers. With a decentralized network, however, network services will be available as long as some nodes are running.
Since most C2C marketplaces today rely on centralized servers and IT departments for back-end services, a data center failure can cause the marketplace to go down entirely. But in the CyberMiles blockchain network, computing power and business services all can be provided by members of the community. As a result, the network service is more resilient to failures.
2) A Secure Marketplace Based on Trust
Decentralized networks run on the blockchain. This means that transactions are transparent and can be verified by members of the network. In addition, records become immutable since it is difficult to change data without the peers on the network detecting tampering. Users can have confidence in the permanence of their records, along with a strong sense of data security.
The recent Equifax data breach, for instance, may never have occurred on a decentralized network, as transactions made across the blockchain are practically untraceable. Unlike credit card or other bank-oriented transactions, blockchain transactions are added cryptographically onto the ledger and are irreversible. Though blockchain is public, it completely discourages fraudulence in the infrastructure.
3) A Marketplace Built for Community
Many consumers today have lost their sense of community. It’s not everyday that we purchase fruit and vegetables from a farmers’ market or meat from the local butcher. Rather, most consumers look towards big-box retailers like Walmart and even Amazon to have groceries delivered directly to their door.
Fortunately, a decentralized ecosystem offers the possibility that all participants can share and essentially govern their own marketplace communities. Productive, active participation also is recognized and rewarded, recreating basic values in our day and age. Community-based conflict resolution also will be put in place, meaning customer service reps won’t be needed to deal with disputes between buyers and sellers. (In this case, a pool of community arbiters will work with the conflicting parties to reach a resolution.) Everything is basically community-driven in a decentralized marketplace.
A Decentralized, Localized Future
While the concept of dapps is still new, a number of revolutionary companies are starting to recognize the value of a decentralized network. As 5miles has discovered, decentralization can help solve many of the problems associated with C2C marketplaces.
Granted certain technologies have made life a lot more convenient, many consumers are growing more skeptical and even fearful of stored information breaches, data center failures and non-secure networks. Monopolistic e-commerce players also have taken a sense of community away from shoppers, leaving local merchants practically at their mercy.
Lucky for them, a decentralized future could happen sooner rather than later. As blockchain continues to gain traction, companies everywhere are going to start seeing the value that decentralized networks can provide. From trust and security, to efficiency and community, decentralized, localized commerce could usher in a brighter, better future.