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Proposal: How to create a P2P marketplace in a decentralized economy. Could Steemit provide the answers?
These are my thoughts on how Steemit could use the blockchain social media first mover advantage to disrupt e-commerce platforms. I would love to hear what you think about the proposal and details of any activities that are on-going at Steemit in this area.
One of the great promises of the decentralized economy is the opportunity to streamline the peer-to-peer (P2P) transaction process by removing the middleman. One of the largest direct P2P e-commerce platforms is eBay. While there are businesses on the platform, the model is proven to support P2P with eBay as the middleman.
What value is the middleman providing and at what cost?
The middleman’s value proposition:
- Feedback on Buyers and Sellers establishes reputation on both sides of the transaction.
- The first benefit of selling through eBay is the proprietary bidding algorithm that provides the framework for the deal. During the listing process the user determines how long the item will be listed for and the type of transaction that will take place and eBay manages the transaction from setup through completion. Proprietary bidding also manages the ability to bid your highest amount confidentially and allow the system to increment to the highest bid as other buyers show interest. Bidding wars provide a big advantage to Sellers with great items.
- Integration with a transaction payment system like PayPay makes the transaction easier for users paying in fiat currency.
- Integration with shipping providers allow added flexibility to the transaction.
- Buyer protection is one of the biggest benefits of the middleman. Buyers and Sellers feel a sense of protection having eBay and particularly the buyer dispute resolution process. Buyers need assurance that the item ordered is as described or payment can be refunded without hassle.
Seller costs:
For a seller to complete a transaction on eBay’s platform they must pay two fees:
- Insertion fee when the item is listed
- Final value fee after the final price is determined.
These fees are deducted from the seller’s bottom line.
Steemit barriers to P2P domination
What are the barrier preventing Steemit from disrupting the e-commerce marketplace in a decentralized economy? I’ve categorized them as Tail winds and Head winds and I believe we are half way there as a community. I can think of a few and would like to hear from you any others that come to mind.
Tail-winds
- The first blockchain based social media platform provides community and reputation needed to connect buyers and sellers.
- Crypto-currency STEEM provides the mechanism for the transaction. No need to integrate a payment system.
- First mover advantage provides the opportunity to take this to market as a social platform, not just a marketplace portal.
- No Fees!!!!
Head winds
- Framework for the creation of the deal: The platform exists to connect the parties for a transaction but the framework for managing the details of how long items are up for bidding and how to integrate shipping are the first barriers.
- Dispute resolution: I believe this is the large barrier. I would love to think that the Steemit community would be able to self-govern P2P transactions and do the right thing, when disputes arise but that may not be reality. One option for to think about is an escrow function that holds distribution of funds until the buyer is satisfied. Perhaps having the code sourced so all savvy developers could approve prior to implementation would help. The mechanics of an escrow system are always a good discussion. How is escrow any different that a middleman? Perhaps it lives in the code as a form of Smart Contract until validated by both sides of the transaction.
Please let the community know how you see this unfolding with comments to this post. The possibilities are very exciting!
Appreciate your thoughts on this. What is the downside to a social media leaders creating a way for users to exchange more than comments and photos? Is it just because that's the way it's always been done? Is it because it's too difficult to focus on more than one specialty in the market?
It certainly is easier but it's only a matter of time before users wish to buy something from another user. It could be anything like an awesome photo from a great vacation to golf clubs. Why direct that traffic to another site if you could just exchange Steem and the goods?
Maybe I'm crazy, maybe this is visionary. Time will tell.