Decentralization is not a luxury, it is a necessity. In a forward-looking article published in The Atlantic in 2012, science fiction writer Bruce Sterling referred to companies like Amazon, Facebook and Google as “The Stacks” and predicted the insidious takeover over the past decade. As the giant tech companies consume more of our lives, the fact that technologies are being developed that will allow us to roll them back is not only encouraging but essential.l.
Since Bitcoin (BTC) began decentralizing payments in 2010, the process of disintermediation has been at work in many sectors.from decentralized identity and digital asset management to decentralized games and prediction markets.
However, there is a sector in which -until now- It was impossible to break free from the clutches of monopoly power: the world of commerce. Registering physical assets in blockchains has been possible for some time, but that alone has not been enough to create a fully decentralized trading system.
Why do we need this so much? Isn’t it true that – as was shown during the COVID-19 pandemic – the current trading system operated by centralized companies already meets our requirements? We’re used to the idea that we can order something online and have it delivered to us the next or even the same day. If there is a problem with our purchase we can be pretty sure that it will be resolved by the company that brought the buyer and seller together.
It’s sometimes difficult to imagine exactly how the next iteration of a technology will improve our lives, especially when the current one seems to be working right. We’ve all heard Henry Ford’s quote about “faster horses,” and It was only with the advent of Bitcoin – and later the decentralized financial ecosystem – that many people began to realize how inefficient and extractive already existing financial markets are..
The rise of the decentralized networks of Web 3.0 is likely to be one of the most powerful meta-innovations in human history. This technology has the potential not only to increase innovation, but also to accelerate technological development and economic growth. to such an extent that we fundamentally solve the problem of innovation. This would trigger a transition of the metasystem to a crypto-economy of abundance after scarcity and capitalism, while at the same time dissolving negative externalities that threaten species.
What advantage could a decentralized trading system offer? The truth is that The great pre-existing systems of human activity are the enemies of innovation and progress. Centralization can lead to bottlenecks and systemic inefficiencies, while top-down management means that many new and exciting ideas never disappear from the drawing board.
Opening up these businesses by providing the same tools, data, and opportunities to vendors of all sizes that are currently only available to a subset of the largest and most privileged companies, enables a wide variety of products, services, and payment methods. Quality ratings and recommendations from Wisdom of the Crowds that we can barely imagine today. Decentralized value chains are inherently more efficient, as the value flows freely in this system without the need to divert resources to agents looking for rent.
If that is the vision, then what are the practical needs of such a system? A fully functional decentralized retail network, or “d-commerce”, should offer automated mechanisms to replace centralized transaction coordination and a Web 3.0-driven data market to replace data hoarding..
In terms of coordinating operations, existing decentralized systems can eliminate intermediaries and the need to trust third parties, but at a cost: introducing a form of arbitrage that creates costs and friction.. These costs can cause transactions under $ 100 to violate the business model, as arbitrage fees cannot be lowered below a certain threshold. The challenge for decentralized protocols is cHow to coordinate trade between buyers and sellers in a way that decentralizes trust but reduces arbitrage with all its external effects so that trading can be effectively automated.
Thanks to innovations in this area, Transactions can be conducted using non-fungible tokens, effectively converting them into futures contracts that minimize the need for human arbitrage and allow seamless integration with the rest of the Web 3.0 ecosystem.. Imagine a world where you can go to a store in Decentraland and purchase a custom painting or guitar that will be delivered to your doorstep in real life, or where the smaller vendor can also compete on an equal footing with its larger ones and more established competitors.
It will not be easy to break the ties that bind us to existing extractive networks, but it is necessary if we want to ensure that decentralization ultimately encompasses both the real and the digital world.
The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Justin Banon is the CEO and co-founder of Boson Protocol, a project that uses smart contracts to drive trade in the real world. Justin previously led Collinson’s Travel Experiences division, where he led a group of global loyalty reward platforms including LoungeKey, Mastercard Airport Experiences and Priority Pass. Justin holds a degree in physics from Imperial College London and an MA in Electronic Business and Innovation from Birkbeck College, University of London, and an MA in digital currency from the University of Nicosia.
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