Blockchain technology has been growing at an unbelievable pace over the past two or so years. Through 2021, some see a 61.5% annual growth rate. As the revolutionary technology increases in popularity (see Jamie Dimon’s latest endorsement) more blockchain-based companies are dreaming up the next big step for a variety of industries.
Certainly the impact that blockchain has had over in recent years has been nothing short of stellar. And, on the investment front billions of dollars have been poured into blockchain companies so far in 2017. Initial Coin Offerings (ICOs) or token sales have zoomed to around $2 billion (bn) this – versus $256m in 2016.
Against this backdrop, several blockchain-based companies in particular are looking to revolutionize the way business is conducted through online marketplaces. These companies are creating decentralized platforms to foster peer-to-peer (P2P) interactions.
For example, take Soma, which stands for ‘Social Market’, is a new Blockchain-based platform that creates a digital community where users are able to buy and sell items or services through a P2P network. By creating ‘cards’ that represent the physical item or service, the platform has created a way for users to sell goods and services with transparent history and feedback.
Having started a month-long ICO late this September, it also seeks also to address fraudulent sellers on classifieds platforms such as Alibaba, Amazon, and Ebay.
On that score, according to report published from research firm Frontier Economics this February and commissioned by the International Trademark Association (INTA) and the International Chamber of Commerce, it has been estimated that counterfeiting and piracy could rise to $2.3 trillion by 2022.
Add in associated social, investment and criminal enforcement costs it could push the total to $4.2 trillion and put around 5.4 million “legitimate jobs” at risk according to the analysis.
The latest figure contrasted with the global value of the counterfeit market standing at $1.7 trillion in 2015 and shows no sign of slowing. Indeed, Frontier estimated the global value of counterfeit and pirated goods and services back in 2013 was between c.$923 billion to $1.13 trillion, a figure equating incredibly to the size of the Spanish economy in 2015.
Buyers and sellers benefit from clarity, pricing freedom, and effectively immediate compensation. The platform utilizes a token called the SCT.
Here think of a digital ‘coin’ with real value that can be exchanged for traditional funds and currencies like US dollars or Sterling. Buyers purchase SCT and can then use them on the platform, and sellers agree to accept SCT as payment. (Note: Individuals wishing to participate in cryptocurrency or token offerings should be aware that it is highly speculative and that the market is largely unregulated).
In this way, and contrary to traditional platforms, users can connect directly without the nebulous middleman involved. Potential clients select and communicate directly with the seller, who will be providing the service instead of working through a third party. The result is lower fees and increased communication.
Jukka Hilmola, a Finn who is Co-founder of Soma that has worked in various start-ups during their early phases and possesses an LL.M from Queen Mary University of London, commenting said: “Inevitably, the disruption of C2C-markets is currently happening. By utilizing blockchain to leverage its disruptive business model, Soma will be able to differentiate from the other mobile-first start-ups in the industry.”
The greatest advantage of these decentralized platforms is the blockchain technology itself. As a blockchain – think of a ledger or database that contains a history of all transactions that take place on the platform – the platforms are completely auditable by all participant.
This leads to fairer pricing for clients, as all prices are visible and verifiable. Potential customers are able to select the provider that best suits their needs, both financially and practically.
