The blockchain is the new technology that has been emerging and can be effective in improving decentralized marketplaces. If you have been following the advent and development of the technology, you would understand the impact that the service has been able to change the scenario for good. The traditional transaction methods are in for a huge makeover if the established forces give a thought to making use of blockchain technology for the better functionality.
Blockchain technology is a form of decentralized marketplace and works on an open source project. Blockchain came into being with the use of bitcoin as the base currency for the peer to peer commercial network.
How beneficial is it? Well, it does connect the buyers and sellers directly. There isn’t a concept of a middleman – no centralized database so to speak. You have no restrictions on what you would be able to sell and what not, practically speaking.
Here are a few areas that can be affected by Blockchain technology like Soma.
Reduced Frauds
All the data in the decentralized marketplace is encrypted to the core. The sole fact that it does away the need for intermediaries in itself would ensure you that the frauds are eliminated.
The current model of banking and other transactions works on the centralized database model. This can be a concern given the fact that the model is vulnerable to cyber attacks and hacking. Since the centralized model has only one access point, getting access to this point will give the hacker a complete access to the whole database.
The decentralized model works on the distributed model of functionality and each of the blocks has a time stamp. The encryption at each stage would make it a stronger option and thus less vulnerable to hacking and online frauds.
Ease Of Trading
Trading undoubtedly would be the sector that would stand to gain a lot if you are migrating to a decentralized model of the marketplace. Trade Financing can benefit in a lot of ways with the use of a decentralised mode of transactions.
The concept can take a whole lot of time. Trading is a concept that works with a huge number of points like traders, shippers, ports and other components. Introducing digitization at each of these stages can take time, but still – we would definitely consider that the technology and decentralized marketing concept have a huge potential in making it a better alternative, and the effective one at that.
Challenges Ahead In Implementing The Technology
The Blockchain technology and the concept of decentralized marketplaces are quite new as of now and may take a while to get imbibed. There are a few issues and you may need to overcome them before finally implementing the technology.
Privacy can be a concern as is the need for adhering to the guidelines. The concerned authorities will need to devise necessary guidelines to make it possible. However, we do not foresee it as a huge challenge and can be addressed easily.
In Conclusion
Well, that is a concise overview into how can a decentralized marketplace can streamline the current issues we face with the centralized system. Blockchain technology is bound to offer you a better functionality than in a centralized mode. The banking sector is what stands to gain a lot in terms of fidelity, transparency and trust.
We may need to wait till the exact guidelines are laid down. But as things stand now, a lot of work is being done and we expect the decentralized marketplaces becoming a norm quite soon.