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There are four reasons I think decentralized marketplaces are inevitable: 1) Throughout history middlemen have suffered a common fate. They get squeezed out at

There are four reasons I think decentralized marketplaces are inevitable: 1) Throughout history middlemen have suffered a common fate. They get squeezed out at every opportunity. We have a chance to cut out the rent-seeking middlemen, with revolutionary new business models that allow fees to go to ~zero. 2) Blockchain technology gives us a censorship resistance. Not only from governments that like to ban certain types of marketplaces, but also from centralized marketplaces which like to pick and choose who is welcome on their platforms. Just look at Uber and Airbnb as examples. They have been banned in cities all around the world & have likewise banned certain individuals for life from ever using their marketplaces. 3) We can redistribute value to the people who actually contribute the most value in the network. Uber and Airbnb wouldn't be here today if it wasn't for the first 100 drivers/hosts, but what did those drivers/hosts get in exchange? Meanwhile, the early employees, investors and founders get filthy rich. New token economics give us a "better than free" business model that incentivizes people to use a platform that rewards early participants in the network. 4) Blockchain powered marketplaces are instantly global. This is a non-trivial advantage over anyone who attempts to create a centralized marketplace and has to wade through the local laws and banking regulations for each and every jurisdiction in the world where they wish to operate.

EGreg 9y ago
On the one hand, decentralization cuts out middlemen. On the other hand, for matching, you get the greatest selection if there is ONE marketplace.
- joshfraser 9y ago
  True, but that one marketplace can live on a smart contract, that is not owned or controlled by any one entity.
chrischen 9y ago
> 1) Throughout history middlemen have suffered a common fate. They get squeezed out at every opportunity. We have a chance to cut out the rent-seeking middlemen, with revolutionary new business models that allow fees to go to ~zero. Capitalism takes care of this. Through a competitive marketplace of marketplaces, marketplaces are forced to reduce middlemen fees to the lowest necessary. Even a block-chain middlemen-less implementation will have costs associated with decentralization (see PayPal vs Bitcoin transaction fees). Fees will never achieve zero because fees cover things like fraud, service, etc, that even decentralization can't remove. > 2) Blockchain technology gives us a censorship resistance. Not only from governments that like to ban certain types of marketplaces, but also from centralized marketplaces which like to pick and choose who is welcome on their platforms. Just look at Uber and Airbnb as examples. They have been banned in cities all around the world & have likewise banned certain individuals for life from ever using their marketplaces. This is false. Unless your blockchain distributed app purely runs on the blockchain (has no oracles in the case of Ethereum, has no real world data dependency, has no point where it converts or interacts with the real world such as enforcing an exchange of goods) then the real world can enact regulations on it and shut it down. Silk road was hidden using Tor, but not something a distributed app can necessarily be better at. The one advantage of crypto coins is it allows internet transactions that share some properties of cash like non-reversability. Try to run a non-sanctioned cryptocoin in China to resist censorship. You will not be able to do it. > 3) We can redistribute value to the people who actually contribute the most value in the network. Uber and Airbnb wouldn't be here today if it wasn't for the first 100 drivers/hosts, but what did those drivers/hosts get in exchange? Meanwhile, the early employees, investors and founders get filthy rich. New token economics give us a "better than free" business model that incentivizes people to use a platform that rewards early participants in the network. The first few drivers were commodities. You measure their reward based on the risk they put in and frankly those early drivers may have been early, but certainly did not put in the risk. If anything, uber/lyft/airbnb probably served them well by giving them employment that they otherwise would not have had. So the capitalist system is already working for the most part and a crypto-anarchist system is not necessary to make this point any fairer. > 4) Blockchain powered marketplaces are instantly global. This is a non-trivial advantage over anyone who attempts to create a centralized marketplace and has to wade through the local laws and banking regulations for each and every jurisdiction in the world where they wish to operate. For trading in information yes since cross-border information flow is mostly unregulated (except for China). But for anything that requires shipping, until you can ship it through a fiber cable then no. Local laws and banking regulations have a purpose, and simply having a distributed app does not make it easier to circumvent laws.
- tiuPapa 9y ago
  To be honest, the cryptocurrency movement feels like an attempt to shift the power from people who control money to people who control the technology.
  - chrischen 9y ago
    In time the the “early” crypto people will just become the new rent seekers.
    - tiuPapa 9y ago
      Yep, question is will they be able to update the prevalent system while doing their rent seeking or just succumb to the same problems that plague the system now.
subsubsub 9y ago
I think you make some good points, but I'm not sure about the following... 1) "We have a chance to cut out the rent-seeking middlemen" In the case of Amazon, is there really rent seeking? They provide lots of benefits as the middleman - trust, support, consistency (YMMV). 2) "...centralized marketplaces which like to pick and choose who is welcome on their platforms." Again, for me this is a feature, not a bug. 3) "...but what did those drivers/hosts get in exchange?" Money. "New token economics" What are new token economics? And why are they any better than what preceded them? The token sale doesn't reward participation, it rewards speculation
- cgmg 9y ago
  >Again, for me this is a feature, not a bug. And for some people, it isn't. The point of decentralisation is that you can opt-in to centralized systems if you want to. The converse is not true.
UncleMeat 9y ago
I consider network censorship to be a feature, not a bug. I want airbnb to be able to enforce that hosts are not able to deny service to black people. I want my uber driver to have insurance and a quick background check. From the perspective of somebody in the marketplace I prefer having people who break the social contract removed. Now there can be marketplaces that screw this up and perhaps there is some place for a truly censorship immune marketplace but they will be niche rather than taking over existing systems. Development is not free. Users generally want new features over time. A distributed 2000-era netflix service where people mail each other dvds wouldn't survive in 2018. Who does development without a middleman? Part of the reason why something like uber works is because drivers do not have the technical capacity to build their own system. The idea that cryptoassets and associated systems is going to bring about a revolution that frees people from capitalism is insane to me. Wealth is amazingly concentrated among early adopters and difficulty curves are generally weighted hard towards benefiting a few early people. Why would a distributed marketplace suddenly bring the power to the people? You still need the capital to buy a car to be a distributed-uber driver after all.
- wyager 9y ago
  > I consider network censorship to be a feature, not a bug. No one’s going to stop you from using an unfree, censorious system if you want to. However, we’re going to object vociferously if you try to force it on everyone else. > I want my uber driver to have insurance and a quick background check. The advantage of censorship-resistant markets is that added features are opt-in. I don’t really care if my uber driver is regulated according to taxi union rules, so I’d rather not pay the associated costs.
  - QAPereo 9y ago
    The average person wouldn’t even know what you were talking about, never mind actively trying to stop you from pursuing it. The only way they try to enforce anything on you is by dominating the market for a given service, and you are not going to change that.
    - 9y ago
adventured 9y ago
Decentralized marketplaces will never become dominant because the average consumer will never trust them. They could already exist, they don't for that reason: the majority of consumers have zero interest in them. > Throughout history middlemen have suffered a common fate. They get squeezed out at every opportunity. Be sure to let Priceline.com know how that theory actually works in practice, versus an 85 year old industry that should have squeezed out all middlemen by now. Google search, Facebook, Twitter, Instagram, Whatsapp, Tumblr, Reddit, Snapchat, Spotify, Netflix, these are all middlemen products/companies. eBay, Craigslist, Amazon, Walmart, Costco, Poshmark, Overstock, Alibaba, Target, Aldi, Ikea, CVS, Walgreens, the app stores, and on it goes. All middlemen stores/platforms. Visa, Mastercard, Discover, Amex, PayPal, Square, Stripe, JP Morgan, Bank of America, Wells Fargo, Citi, Ant and so on. All middlemen financial products and companies. Your premise is exactly wrong. History says, over and over again for hundreds of years now, that middlemen thrive in every industry perpetually. What changes are the details of which ones thrive or fail at a given time. There are zero examples of decentralized anything of scale similar to any of the giant platforms and it's not because we can't build them, people have tried over and over again to get users to use them. There's a reason for that persistent failure.
spynxic 9y ago
> with revolutionary new business models that allow fees to go to ~zero. Assuming fees are derived from the mining ability of the network, as more activity brings value to the network the mining fee should literally approach 0 cost.
astura 9y ago
>Throughout history middlemen have suffered a common fate. They get squeezed out at every opportunity. This is just... Absolute nonsense. Just factually incorrect. Middlemen, example Amazon, have never been stronger. People complain about it on HN all the time. Anyways, people use middlemen and are happy to pay the cost because they provide a useful service. They aren't just arbitrarily injecting themselves into transactions.
- joe_the_user 9y ago
  The only trend of ending middlemen is that small middlemen are being replaced by large middlemen.
- samolang 9y ago
  > Middlemen, example Amazon, have never been stronger. The strength of a middleman can be directly measured by how much they mark up prices. Does amazon really mark up prices more than the brick and mortar retailers it replaced?
  - astura 9y ago
    You're forgetting Amazon is a "marketplace" and not just a "retail store." Anyway, I don't think "markup" is very much related to how strong they are. I define "strong" as "how critical for business that service is." I'm just using Amazon as an example, one that everyone can understand has a massive amount of power. I think of distributors, not retail stores, to be pretty much the strongest middlemen there is. If you're making a widget are you going to hire someone full time to market your product to individual stores and then hire and maintain a fleet to deliver them? Fuck no you aren't, you're going to call a distributor.
  - meh2frdf 9y ago
    Hmm or how much they can out price competitors, which has largely been amazon approach, further more they keep expanding yo new markets!
visarga 9y ago
> We can redistribute value to the people who actually contribute the most value in the network. Actually that is how I envision people becoming self-reliant in a post-job society. Being jobless and with little money means you got: 1. free time, and 2. needs to fulfil. But jobless people are not without skills - we don't suddenly forget everything we learned when we lose our jobs. There's plenty of skilled people with time and a motive to work. So why not get services in exchange for services, from jobless person to jobless person? In order to do that we'd need a "human coin". Humans can make a lot of what they need directly - grow food, build houses, repair cars, supervise and educate kids, make clothes. These services should be obtained in the service-for-service system, without money. It leads to a more self-reliant society that doesn't depend on state money, or worse, on transferring money from corporations to people - we all know it's going to be hard to part corporations from their money in the name of social good. UBI is demeaning and robs people of agency, self-reliance is the exact opposite. Using a "human coin" we could create a marketplace of skills and services without corporate money. Self-reliance should exist at all levels - personal, family, social group, city and country. Each level should be as self-reliant as possible, reducing the need for international commerce and dependence on external factors. When self reliance reaches 100% there would be almost no need to use money, perhaps just for raw materials, so we should be researching new materials that are plentiful and can be produced locally.
- panda88888 9y ago
  How is the human coin different from existing currency? They are both store of value so a person can still exchange for goods and services when he or she doesn’t have things that the other party wants? I don’t see how the human coin can be more efficient and easier to use than standard currency, especially for local transactions.
  - visarga 9y ago
    Human-coin should represent proof of HUMAN WORK, not of crypto work. That's how it is different. It scales with population and is linked to people.
- siruncledrew 9y ago
nora4 9y ago
In my view what you are saying is a libertarian pipe dream. A fully decentralized world (mostly I mean web) will be a nightmare. People are already mad how Reddit/Twitter are so abusive as platforms. And these are still centralized systems, albeit more free compared to Facebook/Instagram. Just imagine the kind of hate, racism, nazism, *-ism that will be unleashed in a fully decentralized system. We are already complaining about Fake News and its torpedo effect on US democracy and the world. Now imagine if on top of that Facebook and so were in fact decentralized and permissionless. In one corner of the web, I hear people being mad when Twitter doesn't ban the POTUS. And on the opposite side I hear you complaining about centralization. I can't somehow get around both of these angry voices operating at the same time (even maybe by the same people). Do we want a centralized system at the end, or a decentralized permisionless system with all the nasty things it entails? For me, I don't know. I lean toward preferring centralized systems. I rather embrace the devil I know. Not sure, why you are so in love with decentralization. Are you sure we really want it? It's not all roses and flowers with decentralized systems.
- cgmg 9y ago
  There's a simple solution: Filter out what you (or your community) don't want to see, but don't force your sensibilities on everyone else.
  - jraedisch 9y ago
    That's what I thought: in a world with decentralized markets, people will probably spend more on the (software) clients or filtering services.
  - lazyjones 9y ago
    That doesn't work when you (or your small community) face thousands or millions of spammers or abusive users. People will just turn to centralised censorship/filtering authorities as they do with e-mail (even if you install SA on your own server, you will use blacklists maintained by others).
    - cgmg 9y ago
kakarot 9y ago
For high-cost items, an escrow feature is often deemed necessary by both parties in any marketplace. Furthermore, without an escrow feature, buyers will tend to stick to highly reputable sellers, creating a barrier for new competition and enabling price and power consolidation. How might this be solved in a decentralized marketplace?
empath75 9y ago
> revolutionary new business models that allow fees to go to ~zero. Blockchains are spectacularly inefficient. Fees aren’t going to go to zero on any blockchain that deals with any significant amount of traffic.

EGreg 9y ago

On the one hand, decentralization cuts out middlemen. On the other hand, for matching, you get the greatest selection if there is ONE marketplace.

joshfraser 9y ago
True, but that one marketplace can live on a smart contract, that is not owned or controlled by any one entity.

chrischen 9y ago

> 1) Throughout history middlemen have suffered a common fate. They get squeezed out at every opportunity. We have a chance to cut out the rent-seeking middlemen, with revolutionary new business models that allow fees to go to ~zero. Capitalism takes care of this. Through a competitive marketplace of marketplaces, marketplaces are forced to reduce middlemen fees to the lowest necessary. Even a block-chain middlemen-less implementation will have costs associated with decentralization (see PayPal vs Bitcoin transaction fees). Fees will never achieve zero because fees cover things like fraud, service, etc, that even decentralization can't remove. > 2) Blockchain technology gives us a censorship resistance. Not only from governments that like to ban certain types of marketplaces, but also from centralized marketplaces which like to pick and choose who is welcome on their platforms. Just look at Uber and Airbnb as examples. They have been banned in cities all around the world & have likewise banned certain individuals for life from ever using their marketplaces. This is false. Unless your blockchain distributed app purely runs on the blockchain (has no oracles in the case of Ethereum, has no real world data dependency, has no point where it converts or interacts with the real world such as enforcing an exchange of goods) then the real world can enact regulations on it and shut it down. Silk road was hidden using Tor, but not something a distributed app can necessarily be better at. The one advantage of crypto coins is it allows internet transactions that share some properties of cash like non-reversability. Try to run a non-sanctioned cryptocoin in China to resist censorship. You will not be able to do it. > 3) We can redistribute value to the people who actually contribute the most value in the network. Uber and Airbnb wouldn't be here today if it wasn't for the first 100 drivers/hosts, but what did those drivers/hosts get in exchange? Meanwhile, the early employees, investors and founders get filthy rich. New token economics give us a "better than free" business model that incentivizes people to use a platform that rewards early participants in the network. The first few drivers were commodities. You measure their reward based on the risk they put in and frankly those early drivers may have been early, but certainly did not put in the risk. If anything, uber/lyft/airbnb probably served them well by giving them employment that they otherwise would not have had. So the capitalist system is already working for the most part and a crypto-anarchist system is not necessary to make this point any fairer. > 4) Blockchain powered marketplaces are instantly global. This is a non-trivial advantage over anyone who attempts to create a centralized marketplace and has to wade through the local laws and banking regulations for each and every jurisdiction in the world where they wish to operate. For trading in information yes since cross-border information flow is mostly unregulated (except for China). But for anything that requires shipping, until you can ship it through a fiber cable then no. Local laws and banking regulations have a purpose, and simply having a distributed app does not make it easier to circumvent laws.

tiuPapa 9y ago
To be honest, the cryptocurrency movement feels like an attempt to shift the power from people who control money to people who control the technology.
- chrischen 9y ago
  In time the the “early” crypto people will just become the new rent seekers.
  - tiuPapa 9y ago
    Yep, question is will they be able to update the prevalent system while doing their rent seeking or just succumb to the same problems that plague the system now.

subsubsub 9y ago

I think you make some good points, but I'm not sure about the following... 1) "We have a chance to cut out the rent-seeking middlemen" In the case of Amazon, is there really rent seeking? They provide lots of benefits as the middleman - trust, support, consistency (YMMV). 2) "...centralized marketplaces which like to pick and choose who is welcome on their platforms." Again, for me this is a feature, not a bug. 3) "...but what did those drivers/hosts get in exchange?" Money. "New token economics" What are new token economics? And why are they any better than what preceded them? The token sale doesn't reward participation, it rewards speculation

cgmg 9y ago
>Again, for me this is a feature, not a bug. And for some people, it isn't. The point of decentralisation is that you can opt-in to centralized systems if you want to. The converse is not true.

UncleMeat 9y ago

I consider network censorship to be a feature, not a bug. I want airbnb to be able to enforce that hosts are not able to deny service to black people. I want my uber driver to have insurance and a quick background check. From the perspective of somebody in the marketplace I prefer having people who break the social contract removed. Now there can be marketplaces that screw this up and perhaps there is some place for a truly censorship immune marketplace but they will be niche rather than taking over existing systems. Development is not free. Users generally want new features over time. A distributed 2000-era netflix service where people mail each other dvds wouldn't survive in 2018. Who does development without a middleman? Part of the reason why something like uber works is because drivers do not have the technical capacity to build their own system. The idea that cryptoassets and associated systems is going to bring about a revolution that frees people from capitalism is insane to me. Wealth is amazingly concentrated among early adopters and difficulty curves are generally weighted hard towards benefiting a few early people. Why would a distributed marketplace suddenly bring the power to the people? You still need the capital to buy a car to be a distributed-uber driver after all.

wyager 9y ago
> I consider network censorship to be a feature, not a bug. No one’s going to stop you from using an unfree, censorious system if you want to. However, we’re going to object vociferously if you try to force it on everyone else. > I want my uber driver to have insurance and a quick background check. The advantage of censorship-resistant markets is that added features are opt-in. I don’t really care if my uber driver is regulated according to taxi union rules, so I’d rather not pay the associated costs.
- QAPereo 9y ago
  The average person wouldn’t even know what you were talking about, never mind actively trying to stop you from pursuing it. The only way they try to enforce anything on you is by dominating the market for a given service, and you are not going to change that.
  - 9y ago

adventured 9y ago

Decentralized marketplaces will never become dominant because the average consumer will never trust them. They could already exist, they don't for that reason: the majority of consumers have zero interest in them. > Throughout history middlemen have suffered a common fate. They get squeezed out at every opportunity. Be sure to let Priceline.com know how that theory actually works in practice, versus an 85 year old industry that should have squeezed out all middlemen by now. Google search, Facebook, Twitter, Instagram, Whatsapp, Tumblr, Reddit, Snapchat, Spotify, Netflix, these are all middlemen products/companies. eBay, Craigslist, Amazon, Walmart, Costco, Poshmark, Overstock, Alibaba, Target, Aldi, Ikea, CVS, Walgreens, the app stores, and on it goes. All middlemen stores/platforms. Visa, Mastercard, Discover, Amex, PayPal, Square, Stripe, JP Morgan, Bank of America, Wells Fargo, Citi, Ant and so on. All middlemen financial products and companies. Your premise is exactly wrong. History says, over and over again for hundreds of years now, that middlemen thrive in every industry perpetually. What changes are the details of which ones thrive or fail at a given time. There are zero examples of decentralized anything of scale similar to any of the giant platforms and it's not because we can't build them, people have tried over and over again to get users to use them. There's a reason for that persistent failure.

spynxic 9y ago

> with revolutionary new business models that allow fees to go to ~zero. Assuming fees are derived from the mining ability of the network, as more activity brings value to the network the mining fee should literally approach 0 cost.

astura 9y ago

>Throughout history middlemen have suffered a common fate. They get squeezed out at every opportunity. This is just... Absolute nonsense. Just factually incorrect. Middlemen, example Amazon, have never been stronger. People complain about it on HN all the time. Anyways, people use middlemen and are happy to pay the cost because they provide a useful service. They aren't just arbitrarily injecting themselves into transactions.

joe_the_user 9y ago
The only trend of ending middlemen is that small middlemen are being replaced by large middlemen.
samolang 9y ago
> Middlemen, example Amazon, have never been stronger. The strength of a middleman can be directly measured by how much they mark up prices. Does amazon really mark up prices more than the brick and mortar retailers it replaced?
- astura 9y ago
  You're forgetting Amazon is a "marketplace" and not just a "retail store." Anyway, I don't think "markup" is very much related to how strong they are. I define "strong" as "how critical for business that service is." I'm just using Amazon as an example, one that everyone can understand has a massive amount of power. I think of distributors, not retail stores, to be pretty much the strongest middlemen there is. If you're making a widget are you going to hire someone full time to market your product to individual stores and then hire and maintain a fleet to deliver them? Fuck no you aren't, you're going to call a distributor.
- meh2frdf 9y ago
  Hmm or how much they can out price competitors, which has largely been amazon approach, further more they keep expanding yo new markets!

visarga 9y ago

> We can redistribute value to the people who actually contribute the most value in the network. Actually that is how I envision people becoming self-reliant in a post-job society. Being jobless and with little money means you got: 1. free time, and 2. needs to fulfil. But jobless people are not without skills - we don't suddenly forget everything we learned when we lose our jobs. There's plenty of skilled people with time and a motive to work. So why not get services in exchange for services, from jobless person to jobless person? In order to do that we'd need a "human coin". Humans can make a lot of what they need directly - grow food, build houses, repair cars, supervise and educate kids, make clothes. These services should be obtained in the service-for-service system, without money. It leads to a more self-reliant society that doesn't depend on state money, or worse, on transferring money from corporations to people - we all know it's going to be hard to part corporations from their money in the name of social good. UBI is demeaning and robs people of agency, self-reliance is the exact opposite. Using a "human coin" we could create a marketplace of skills and services without corporate money. Self-reliance should exist at all levels - personal, family, social group, city and country. Each level should be as self-reliant as possible, reducing the need for international commerce and dependence on external factors. When self reliance reaches 100% there would be almost no need to use money, perhaps just for raw materials, so we should be researching new materials that are plentiful and can be produced locally.

panda88888 9y ago
How is the human coin different from existing currency? They are both store of value so a person can still exchange for goods and services when he or she doesn’t have things that the other party wants? I don’t see how the human coin can be more efficient and easier to use than standard currency, especially for local transactions.
- visarga 9y ago
  Human-coin should represent proof of HUMAN WORK, not of crypto work. That's how it is different. It scales with population and is linked to people.
siruncledrew 9y ago

nora4 9y ago

In my view what you are saying is a libertarian pipe dream. A fully decentralized world (mostly I mean web) will be a nightmare. People are already mad how Reddit/Twitter are so abusive as platforms. And these are still centralized systems, albeit more free compared to Facebook/Instagram. Just imagine the kind of hate, racism, nazism, *-ism that will be unleashed in a fully decentralized system. We are already complaining about Fake News and its torpedo effect on US democracy and the world. Now imagine if on top of that Facebook and so were in fact decentralized and permissionless. In one corner of the web, I hear people being mad when Twitter doesn't ban the POTUS. And on the opposite side I hear you complaining about centralization. I can't somehow get around both of these angry voices operating at the same time (even maybe by the same people). Do we want a centralized system at the end, or a decentralized permisionless system with all the nasty things it entails? For me, I don't know. I lean toward preferring centralized systems. I rather embrace the devil I know. Not sure, why you are so in love with decentralization. Are you sure we really want it? It's not all roses and flowers with decentralized systems.

cgmg 9y ago
There's a simple solution: Filter out what you (or your community) don't want to see, but don't force your sensibilities on everyone else.
- jraedisch 9y ago
  That's what I thought: in a world with decentralized markets, people will probably spend more on the (software) clients or filtering services.
- lazyjones 9y ago
  That doesn't work when you (or your small community) face thousands or millions of spammers or abusive users. People will just turn to centralised censorship/filtering authorities as they do with e-mail (even if you install SA on your own server, you will use blacklists maintained by others).
  - cgmg 9y ago

kakarot 9y ago

For high-cost items, an escrow feature is often deemed necessary by both parties in any marketplace. Furthermore, without an escrow feature, buyers will tend to stick to highly reputable sellers, creating a barrier for new competition and enabling price and power consolidation. How might this be solved in a decentralized marketplace?

empath75 9y ago

> revolutionary new business models that allow fees to go to ~zero. Blockchains are spectacularly inefficient. Fees aren’t going to go to zero on any blockchain that deals with any significant amount of traffic.