What are decentralized markets and how do they work?
Decentralized markets operate globally and do not require a central isto run or a broker to oversee the exchange.
Centralized market platforms have the ability to provide the level of service and reliability that ordinary users expect, but they may also lack transparency and charge high fees.
Sometimes rules are imposed that users may not agree to.
This is where the role of decentralized markets is under way.
In this article, we will review what decentralized markets are, and how they work with some examples:
What is a decentralized market?
The decentralized market is based on matching buyers with sellers to sell goods and services.
Most important functions such as executing trades and releasing money are controlled through a contract or smart program instead of a person.
This means that buyers and sellers agree to the terms and when the terms are met, the transaction is automatically executed by the program.
This makes decentralized markets resistant to censorship, and reliable.
Since most decentralized markets tend to use cryptocurrencies for payments, decentralized markets also enjoy all the advantages of a global payment system and operate 24/7.
A historical look at decentralized markets:
Some of the first online markets that still exist today are Craigslist and eBay, which were launched in 1995.
In 2011, silk road was launched and although it is not a really decentralized market, it is a market that has prompted many users to use Bitcoin.
OpenBazaar is one of the most decentralized and well-known long-term markets, starting in April 2014.
Syscoin is a blockchain network focused on decentralized market applications that was also launched in April 2014.
Advantages of decentralized markets:
The biggest difference between the central market and decentralization is the need for intermediaries or not.
Without brokers, fees are lower and sometimes not required at all.
Market rules are fully transparent in decentralized markets and cannot be changed without user acceptance.
When you add services such as reviews, reputation and conflict resolution, decentralized markets get many benefits from traditional markets with additional transparency and lower fees.
There are many different types and settings for decentralized markets.
Here we will focus on specific blockchain markets, applications, and market platforms.
Syscoin is a blockchain protocol or a project can be defined as a network with a built-in platform for e-commerce and decentralized markets, enabling users to take advantage of syscoin’s application blockchain, which is characterized by high transaction rates as well as high security.
In addition, the Syscoin blockchain is interoperable or compatible with other chains that use Syscoin Bridge.
Decentralized market applications:
OpenBazaar acts as a peer-to-peer app or connects app users who want to trade directly.
It has many benefits of being a blockchain such as not having to rely on a central authority, intermediaries or a central database, and since it is only about business transactions and e-commerce, there is no need for miners or complex consensus algorithms.
OpenBazaar also has the advantage of having no fees or restrictions on use.
Anyone can download the software and start dealing.
The software uses multiple payment cryptocurrencies such as Bitcoin, Bitcoin, LiteCoin and Zcash.
Another way to decentralize markets is through a platform or protocol where developers create tools that allow other people to create their own peer-to-peer markets.
Origin and Origami are projects that do this using the ethereum blockchain.
By creating a system of smart standards and contracts, these platforms allow almost anyone to rotate their own decentralized markets.
Both systems also provide users with easy and simple ways to manage lists, warranties, reviews, ratings, buyers and sellers.
Decentralized market codes:
Some decentralized markets have their own code to help facilitate the operation of the market.
Syscoin users can create their own codes on the “Syscoin Platform Tokens” platform, which is shortened by “SPT.”
Project codes aim to be used in governance decisions so that asset token holders can influence platform decisions.
The token also rewards users, developers and market operators.
“Origami” has its own code ERC20 called ORI.
ORI is used to resolve disputes as well as in its decentralized payment system and allows for reduced transaction costs.
What can be done with decentralized markets?
Most decentralized markets allow you to buy, sell and pay with cryptocurrencies.
Decentralized markets allow for savings on platform fees and can be accessed anywhere without the need to provide personal information or trust a central provider.
As decentralized markets are still far from the size, size and use of their central counterparts, the challenge for almost all of them is to get more buyers and sellers on their platform.