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Decentralized Markets — The Future of Trade and Financial Relations

16.02.2016


  Well, it’s the time to question: “What or who makes the world go around?” Some would answer that finances rule the world. This opinion has a fair amount of sense but reflects the reality only partially. Actually, reins of power belong to those who efficiently use information and advanced technologies of financial regulation having a necessary reserve of material resources.
Innovations in the financial sector are based on implementing blockchain technology, which proved its inexhaustible potential. New applications which are expected to be launched in the nearest future can turn the world around. We would prefer not to read dreams before having them, but it wouldn’t be inappropriate to consider several specific features of innovations.
It is possible to mark out two concepts of cryptocurrency’s development: decentralization of markets and financial transactions. Let’s take the first one as subject for today’s discussion.
It is aptly to make a historical parallel with invention of typography technologies which has radically changed a social structure of power in medieval Europe. According to Timothy May, cryptographic techniques will impart freedom to economic deals. They will finally go out of control of state and commercial financial institutions.
Advantages of decentralization

  • The uniqueness of decentralization mechanism is in execution of transaction among unlimited number of users without mediators.
  • The unnatural system of users’ hierarchy will disappear.
  •  Money transfers will be carried out in a stand-alone mode. Optionally, every subscriber may stay anonymous.
  • Mediation function will be given to a distributed network which controls a client base.
  • Limitations on selling and buying specific goods and services will be left behind.
  • Various protocols (escrow, zero-knowledge proof and others) will securely protect transactions from unauthorized access.

Forthcoming project
OpenBazzar, or OB1, has been developed by Amir Taaky as an alternative to the famous trade resource Silk Road. Talented scientist Brian Hoffman has radically changed the direction of the project development and created a decentralized analogue of modern online-sale brands. Investors became interested in prospects of the innovation and invested almost USD 1 million into its development. Developers cherish an ambitious idea to attract the sellers of well-known modern platforms. They won’t neglect men of art who wish to sell results of their work.
Promotion of peer-to-peer markets with decentralized structure will be performed using unique methods. The concept of Ricardian contracts used in OpenBazzar, has been developed by Ian Grigg and Gary Howland. The innovative software deploys two technologies of multi-signature for closing a transaction.
Some history
Attempts on creating decentralized markets were made before. Even a new kind of cryptocurrency has been designed – Altcoin. Probably, researches in this direction will be continued.
Unofficial online-markets collapse due to high level of decentralization. Moreover, nobody has succeeded to develop an efficient mechanism for regulation of decentralization level of shady markets. Modern money transfer systems are forced to carry out simulation of currency placement due to their centralized nature.
Unsuccessful attempts on creation of an official decentralized market are useful in gaining experience and, sooner or later, will result in a new platform with effective mechanism of transaction protection. It will seamlessly fit into the unique Bitcoin ecosystem.

When well ahead of Bitcoin launching Eric Hews predicted creation of technologies that will free people from financial dictate of governments and commercial institutions, he was absolutely right. Cypherpunks continue writing codes comparable in their complexity with the structure of human genetic chain in order to secure users’ personal information.