Can Blockchain Protect Consumers and Merchants from Two-Sided Markets?
Blockchain platforms might protect consumers and merchants from the rise of monopolistic two-sided markets.
A two-sided market is a platform controlled by one large corporation such as Amazon (NASDAQ: AMZN). The corporation serves as the gatekeeper to the two-sided market, deciding who can participate in it, setting prices, and establishing rules.
Two-sided markets constitute monopolies because they give large corporations control over the retail process, Columbia University Law Professor Tim Wu charged. Wu thinks two-sided markets are a threat to free enterprise because they let big corporations set the rules for retail.
A U.S. Supreme Court case called Ohio v. American Express demonstrates how two-sided markets can restrict freedoms, Wu contends. Plaintiffs in the case challenged Amex’s practice of requiring merchants to sign gag orders. The gag orders prevent merchants that accept American Express cards from telling customers about cheaper alternatives.
Wu is concerned because the Supreme Court ruled that American Express (NYSE: AXP) was not operating a monopoly, so it allowed the gag orders. He fears further restrictions on free enterprise and competition are more likely because of Ohio v. American Express.
The Decentralized Blockchain is an Alternative to Two-Sided Markets
Big corporations are in control of two-sided markets because such platforms are centralized.
The corporation that owns a centralized platform sets the rules. Anybody that wants to buy and sell on the market has to follow the corporation’s rules.
A grave danger with two-sided markets is that they would be easy for governments to seize control of. Authorities would simply have to take control of one server or datacenter to dominate most two-sided markets.
Blockchain-based platforms are decentralized which means there is no central authority that can set rules. A decentralized platform is distributed throughout the cloud (amongst thousands of computers) so no corporation would be able to block access to it.
Merchants would be able to participate in a blockchain platform without going through a gatekeeper. That greatly reduces the possibility of a monopoly, and restrictive practices like gag orders.
More importantly, no government would be able to control a decentralized blockchain platform. The operations of such a platform can be dispersed all over the cloud, so there would be no facility for bureaucrats or thugs to seize.
Rubius Inc. is trying to Make Decentralized Blockchain Markets a Reality
There are a number of technical problems that have to be solved in order to make decentralized technology accessible to mass markets. Rubius Inc. is a blockchain research and development firm; that is dedicated to solving those problems, and building a decentralized blockchain marketplace that is accessible to everybody.
The first of these problems is seamless access to the marketplace by ordinary people. Rubius aims to solve this problem with Aryl, an easy-to-use Ethereum wallet and trading platform that can be accessed via a simple smartphone app.
Aryl will provide a Volatility Shield feature that automatically converts ERC20 (Ethereum-based) cryptocurrencies. The Volatility Shield is designed to make cryptocurrency as easy to use as PayPal’s Venmo.
Anonymous cryptocurrency would form the basis of a decentralized blockchain marketplace. Peer-to-peer payment (P2P) solutions such as Aryl would enable such a marketplace to function without a gatekeeper or central authority. Instead, merchants and consumers would make payments directly to each other.
Rubius’s Decentralized Solutions
Rubius plans to develop trustless software that would allow both ecommerce and brick-and-mortar merchants to participate in the marketplace directly. Trustless software would automatically make payments in cryptocurrency or fiat currency without restrictions.
Rubius’s planned solutions include a decentralized payments gateway that can facilitate transactions from a wide variety of sources. This gateway would form the basis of a decentralized point-of-sale (POS) that would allow merchants to accept a wide variety of payments.
Payment methods the system might take include digital wallets, like PayPal, Alipay, Apple Pay, Google Pay and Tencent Pay, as well as credit cards, debit cards, wire transfers, and electronic funds transfers. That would make it hard for big corporations like American Express to restrict the operations of merchants.
Such decentralized payment technologies will be the best protection merchants and consumers have from monopolistic corporations. A truly decentralized marketplace and payments system operating on blockchain would make it impossible for anybody to establish a monopoly through a two-sided market.
Rubius’s is dedicated to building the solutions that will make such a marketplace a reality.
To learn more about Rubius, please read this whitepaper:
https://rubius.io/rubius-whitepaper.pdf
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