Have you ever been to the Bazaar*? It is an endless oriental market that you can stroll around for days finding something new around every corner. Full of goods, species and tastes. Even if you have never actually experienced it, you probably saw an example of one in the Aladin movies, and it’s good enough for a talk about the bazaar of data. Speaking in abstractions, the basic characteristic of a bazaar is a multiple numbers of sellers. For a bazaar to be a bazaar it needs to contain a near infinite number of sellers, like the number of grains of sand or the number of users on the internet. Let’s see the outcomes of that:
- Variety — many sellers means many good of different qualities and prices.
- Low barrier — it’s easy to become a seller. In fact, being a seller it’s not a yes or no property but a spectrum, many of the Bazaar buyers can also sell something on a side.
- Censorship resistance — as with Blockchain, many nodes means it’s harder to censor the goods.
- Fault tolerance — again, if one node is failing there’s many of others.
Reading this the Bazaars sounds swell, but there’s one drawback. Making choices is hard: you need to scan a lot of independent buyers and build trust relationships with a few of them, and there’s a lot bargain. This makes the centralised supermarket (or a Cathedral) a lot easier for buyers. Maybe that’s why the bazaars shrank in the western world (and economies of scale too), but we’re here not to talk about history.
Let’s go along with our food theme and assume you’re looking for a place to eat. The restaurants in an offline world fit well into the Bazaar model. Big companies and chains do exist, but there’s also a lot of independent, small places. We all love SME’s (small and medium-sized enterprises) and understand their importance for the local economy, so let’s focus on them.
Imagine a street full of restaurants, when you go along it peeking inside each one to feel the vibe and to see what is served inside. Every place has a sign to make it easier to find, and the menu is featured outside. You are trying to pick a place that suits you the best by it’s atmosphere, quality and price.
On the other hand, assume you want to order food online. A restaurant may have a website, but just the big companies can afford an easily navigable, mobile friendly and up to date one. Not to mention to develop an interface for online ordering. There’s too much for a small place that specializes in making food, no tech. But I can’t over emphasise how important it is to be online these days.
That is from where the notion of the online marketplaces stem. These provide the SME’s with all the bells and whistles needed to create a presence on the web. Another important advantage is that it gives a uniform interface to view all the business on the market. The online marketplaces, developed by high tech companies, is a great gateway for user consumption.
But from the perspective of governance the online marketplace isn’t a marketplace at all. It does not belong to the public or governed by a local authority, it is a private company. And this is the game changer for everybody involved. The user may still have the P2P feel, but actually it’s highly centralised. All transactions and data is stored and approved by the marketplace owner. Do we want want to give to him such power?
There can be a lot of startups, but eventually only a handful of the strongest will survive. While a young company is open to cooperation in order to attract new business, as they grow they become more strict with its customers and less likely to embrace an open relationship with new players on the market to protect themselves from the threat of losing business to these new players. Eventually, an oligopoly is formed, and the big players start to dictate theirs game to the rest. Which means:
- Higher fees for businesses involved which translates into higher prices for the consumers.
- The marketplace owner can manipulate and censor the data for revenues.
- Closed systems stop to evolve when become profitable and mature. The company just doesn’t want to change something that works until the next disruption. An open system has many heads, so the evolution will not cease.
Decentralisation to the Rescue
Although the first use case of the blockchain is crypto currencies like bitcoin, we can use the same tech to build an online marketplaces which will be owned by the community, without a centralised administration or a private entity as sole stakeholder. We can leverage the current technologies like Ethereum or IPFS to start the switch from the data Cathedral to Bazaar of data. We are still at the beginning of the path, and I don’t know what tools we need to make it. But, for the common good, the future should be decentralised.
*Of course, I took this metaphor from ERS’s canonic The Cathedral and the Bazaar.