NFT Marketplaces and Decentralized E-commerce

Non-fungible tokens (NFTs) are a digital construction of currency, and the new system that has been developed for them has been increasingly used in organizational adaptations and upgrades. The potential for their system to provide a competitive advantage in their capacity to tokenize products sold online, combined with their improved security in protecting consumers from fraud, has made them increasingly attractive to stakeholders. Moreover, their potential to improve control over secondary market transactions has made them attractive amid the trend of decentralized e-commerce connections growth.

The increased capacity for digital representation established by NFTs has been regarded as useful in the extent of connection facilitated through growth of dentralized market activities.  Decentralized market growth has been shifting away from the centralization of buying and selling, such as had been increasingly great with eBay and Amazon-like services, and applying the expansions of connectivity technologies to new decentralized buyer and seller relationships. Decentralization has therefore facilitated efficiency and convenience, paralleling technological convenience, but still requires that buyers and sellers use some medium to strategically locate each other.

Products affected by NFT and decentralization trends most have included virtual gaming components, digital art, software licensing, and physical assets aided by e-commerce connectivity (such as automobiles or luxury products). The collectibles industry, with an estimated international market size of $200 billion, has also been somewhat affected by  developments in these areas.

Other benefits of NFTs that can be increasingly useful in decentralized commerce infrastructure include better facilitating physical goods authentication and removing double selling risk. This has potential comparative advantages for other areas of industry, such as real estate, as developments continue. Physical goods authentication may also be increasingly important in platform design and evolution in retail-related decentralization expansions. 

Peer-to-peer programs facilitating optimized decentralized e-commerce have therefore experienced rising demand for improvements and expansions across a spectrum of potential feature growths. The potential for digital currency use in general has also risen in response to this. Buyers and sellers can connect regarding unique and specific demands, and are interested in tools that promote optimal protection, convenience, and reach to the potentially mutally interested. 

E-commerce remains an area of great interest and investment as practical and innovative potentials continue to grow. The industry has been experiencing hundreds of billions of dollars in annual trade, as well as continuing growth, and therefore this extent of potential and comparable growth rates have been expected to continue through the near future. This has rationalized investments and research designs targeting optimization in connectivity facilitation, process handling, and other similar improvement-based focuses in the area.

The centralized focus of e-commerce marketplace activity has involved small business optimizations in famous names, such as the aforementioned eBay and Amazon, with other fame experienced by competitors such as Etsy and Alibaba among others. In this form of business structure, the companies generally work by charging users fees as the basis of organizational resources, which include design and maintenance employees for the extent of internet website-related developments (including integral customer service). Here, it is thought that buyers pay indirectly through higher prices, while sellers pay directly through the observable medium. While this has been effective, it has been thought that decentralized e-commerce may be both more effective and preferred. First and foremost, there is no prevention of “cutting out the middle man” in this model.

Centralized platforms may be more restrictive for additional reasons, such as government law or business regulation. In the traditional structure and expectations of the most commonly used systems of eBay and Amazon, the platforms may effectively restrict customers from making sales that are banned within an affected legal system, and product or service types may also be restricted as a result of their potential classification as being ethically offensive or counter to business objectives. Examples of this in action have included confederate flag, Washington Redskins, and video stream device banning. Centralized platforms have frequently imposed restrictions of sales boosting strategies of platform competitors, or process perceived as having too great of a potential to divert business.  

Evolutions in decentralized market platforms have begun to address restrictions inherent in centralized models as well as a range of common buyer and seller interests. Several platforms have been created to address markets of people who want to communicate directly in completing trades. A shared interest in these cases has been avoiding a server that is centrally controlled, and treating the buyers and sellers themselves similar to infrastructure or more integral platform components. Such platforms are still being developed, and different techniques have been used in attempt to best facilitate decentralized trading.

Approaches to optimization have included direct blockchain use, developing a network of nodes facilitating direct communication (without a blockchain reference), and establishing a contract system that ensures proper and thorough information exchange regarding aspects of the sale. Integrating blockchain for direct use involves the platform listing product information, and buyers and sellers alike continue to reference blockchains and initiate or complete stages of sales processes. In the network model, the nodes facilitate communication without a blockchain through technological processes that are analogous to the peer-to-peer connections used in BitTorrent program processing. In the system model, users navigate sales software application elements that include digital signing, and the signatures are used in maintaining sales and customer protection records.

Removing the middleman in a sales-based platform removes listing and selling fees, as well as administrative systems to facilitate trade-related processes, but preserves the capacity to create and maintain information records that facilitate sales protections. In addition to a lack of sales restriction, there is a lack of platform-based terms and conditions, as well as a lack of geographic restrictions. Trust can be facilitated and bitcoin taking, or neglecting to ship items, can be prevented, without eBay, Amazon, and Etsy-type business entity staff to regulate nearly all aspects of the trade. 

Fraud prevention methods in decentralized markets may be powerful in taking advantage of Bitcoin security. Multisignature transactions involve bitcoin delivery shared across multiple senders, requiring an additional agreement prior to transfer. Moreover, current decentralized platforms have not been using anonymity measures for engagement activities, which allows user IP data to be read, and is therefore some further deterrent to criminals. 

This current state of development in online trading has been labelled Commerce 3.0. The greater value established and spread across decentralized community is expected to make additional trading more appealing, or generally attractive to stakeholders in decision-making processes. Meanwhile, the capacity to locate ideal buyers and sellers without a centralized platform, trusting NFT and blockchain elements, remains an area of prioritized focus.

References

https://www.coincenter.org/education/key-concepts/decentralized-markets/
https://businessreview.berkeley.edu/decentralized-e-commerce/
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Philip Tadros - Founder
Philip Tadros is the Founder of Doejo an award winning Innovation Studio with over 50M dollars sold in Innovation, Consulting and Business Development services.