For one reason or another, decentralized marketplaces aren’t currently a well-known or commonly discussed application for blockchain technology. But when you consider some of the things that make blockchain useful — namely trustlessness and transparency — blockchain-based marketplaces begin to seem practically inevitable.
Centralized online marketplaces like eBay, AliExpress, and Craigslist require strangers from all over the globe to trust each other with what can sometimes be very large sums of money. Opportunistic scammers and fraudsters have, unsurprisingly, found a myriad of different ways to make a quick dollar at the expense of other users on the platforms, and customer support services commonly fail to make things right.
Still, these platforms have worked surprisingly well. Most people are trustworthy, and most transactions are successful. In fact, things have gone so well for eBay in the past couple of decades that it is now a ~$35 billion company.
Ultimately, however, eBay and other online marketplaces of today will eventually struggle to compete with the blockchain-based marketplaces of tomorrow.
You may not have heard of any of them yet, but in this article you’ll learn about 7 decentralized marketplaces that already exist and might someday become the leaders in P2P (peer-to-peer) exchanges of goods and services.
Rather than start things off with a decentralized marketplace itself, we’re going to begin with a protocol that can be used to build decentralized marketplaces, Origami Network.
In much the same way that 0x protocol makes it easier and safer for independent parties to build decentralized exchanges (relayers) on Ethereum for transacting with cryptocurrencies, Origami Network lowers the barrier of entry for creating a trustless platform on Ethereum to exchange goods and services without involving a middleman.
Origami is open-source. Marketplaces built with it are permissionless (i.e. don’t require users to hand over personal information to use them), have low fees, offer instantaneous payments, and include a decentralized reputation system for buyers and sellers to establish their trustworthiness.
The benefits of building a marketplace on top of Origami include that it can’t be shut down or regulated by a third party, it doesn’t leave users vulnerable to having their personal information stolen by hackers, and it’s less susceptible to fake reviews and manipulation of user reputations as compared with centralized marketplaces.
The Origami project is backed by 2 French banks (CIC and BPI France) and is already supporting 6 decentralized marketplaces, which can be found on the project website linked above. In total, these marketplaces have more than 500k monthly visitors. Not a huge user base yet by any means, but the potential for growth is certainly there.
FundRequest is a decentralized marketplace for open-source software development. It allows buyers to easily and safely request development work such as bug fixes, security audits, or new features. On the other side, developers can work on completing requests and earning the funds that are attached to them.
Open-source software (OSS) is more transparent (duh!), flexible, and affordable to use for end consumers compared to traditional software. According to the FundRequest whitepaper, estimates have shown that OSS has saved consumers about $60 billion annually, a staggering figure that will no doubt grow even larger as open-source projects continue to gain adoption in the coming years.
However, OSS has one big flaw. That is, it has historically been much harder to profit from open-source software compared to that which is privately developed.
Take Tim Berners-Lee for an example. He is the inventor of Hypertext Transfer Protocol (HTTP), the foundation for the modern web. And yet, Berners-Lee – one of the people who helped initiate a global economic revolution and usher in a new era of human prosperity – is neither extremely rich nor famous.
For some, building really cool technology is reward enough in itself to work on OSS. But for most people, money comes first. Without a financial incentive to attract developers, most open-source projects (up to 80%) are abandoned before completion.
FundRequest helps solve this problem by connecting organizations that need help with software development to developers who want to make money. Both parties benefit significantly from the existence of this low-cost P2P marketplace.
To make things even easier for users, the FundRequest platform currently supports ETH and all ERC-20 tokens. This allows any projects that join the open network to conveniently fund their development tasks straight from their project development wallet.
As the network expands over time, payments will eventually occur with FundRequest’s native token, FND, by default. Meanwhile, the ability to fund requests with ETH or an ERC-20 token will become a paid feature.
FND’s primary purpose for the time being is to serve as a catalyst to the platform’s development and improved user experience. An additional use for FND is that freelance developers will be able to stake it in order to work on a request. This is a critical feature, as it disincentivizes bad behavior such as taking a request and then failing to do any work on it. It also makes it costly for developers to take on multiple requests at once, making them more likely to deliver the requested work in a timely manner as a result.
The FundRequest marketplace is very thoughtfully designed and can ultimately play a huge role in furthering the development of open-source software around the world, particularly in the blockchain industry. To learn more about the platform, you can read What is FundRequest?
Our next project, like Origami Network, isn’t itself a decentralized marketplace but rather a protocol that can be used to build decentralized marketplaces on top of it. This one is called Ink Protocol, and it is already being used by multiple projects in the ecommerce and blockchain industries.
Ink Protocol can be integrated into new decentralized marketplaces or existing marketplaces that want to improve their reputation system and transparency. In fact, Ink Protocol is currently being used in the Listia marketplace which was founded in 2009 and now boasts over 10 million users.
Buyers on Listia can use Ink’s native XNK token, an ERC-20 token which is listed on Bibox, CoinBene, QRYPTOS, Bancor, Coss, and IDEX.
As a reputation system, Ink beats the existing competition by being decentralized, independent of any single platform, and public, making it easy to transfer seller reputation from one platform to another. Not only that, but the Ink Pay dApp can be used for any payment, regardless of whether or not a marketplace is involved.
One of Ink Protocol’s most important features is that it eliminates the problem of fake reviews. Users can only leave feedback on another user after they have completed a transaction with them, making seller reputations far more credible than on most other platforms.
If you’d like to take a deeper dive into Ink Protocol, we recommend this comprehensive guide from our friends at CryptoPotato.
As alluded to earlier, Listia isn’t the only marketplace that’s integrated Ink Protocol. Up next is a project that uses Ink Protocol for its reputation system and is one that many crypto enthusiasts will already be familiar with.
Participate in any ICO’s Telegram group and you’ll no doubt see the word “bounty” popping up all over the place. These aren’t bounties like the ones in old Western movies, but rather development and marketing bounties that projects make available for members of the public to fill.
There’s one decentralized marketplace that currently hosts just about every bounty in the crypto space, Bounty0x. It’s essentially a freelancing platform that’s designed specifically for blockchain startups, utilizing smart contracts to decentralize the entire process.
When a startup wants to outsource some tasks, they first establish clear terms for the work involved and set a price for it. There are 3 types of bounties: Simple/Automated Bounties, Sheriff Bounties, and Super Bounties.
The Simple/Automated Bounties are those which are clear enough that they don’t require an independent analyst to determine whether or not the work requested has been completed satisfactorily. When a freelancer, which Bounty0x calls a Hunter, fulfills the conditions of a smart contract for one of these bounties, it automatically triggers the payment from the smart contract.
In the event that the conditions of a bounty aren’t so clear cut, an independent analyst, called a Sheriff, is brought in to evaluate whether or not the bounty conditions have been successfully fulfilled. To incentivize Sheriffs to do this work honestly, they must stake tokens that can be lost in the event that their decision is disputed and determined to be invalid. On the other hand, if a Sheriff evaluates a bounty and their decision isn’t disputed, then they earn a token payout.
Finally, the third type of bounty is called a Super Bounty, and is for the less common situations where the work requested isn’t so clear cut that it can be effectively evaluated by an independent party.
Bounty0x originally launched in late 2017, and has since released their Beta platform. The full launch is scheduled for early 2019. To learn more about Bounty0x and how you can use it to earn some extra money as a Hunter or Sheriff, check out our guide What is Bounty0x?
ModulTrade is a decentralized marketplace designed specifically to meet the needs of small enterprises that typically struggle to connect to global trade markets. It eliminates the problems of lack of trust, high entry cost, and complex trade operations by offering a smart contract platform that provides the trade-related services and reputation system needed to run a decentralized marketplace.
The marketplace uses a simple 3-part process to facilitate trades. In the first stage, the buyer and seller enter a smart contract with each other and the buyer deposits the funds. Next, the seller ships the product(s) and the smart contract tracks them through the delivery process. Finally, once the product(s) have been delivered, the smart contract automatically releases the payment to the seller.
Goods on the ModulTrade marketplace are priced in MTRc, the native currency of the ModulTrade blockchain, as well as in ETH and EUR. Additionally, consumers who make their purchase with MTRc can get discounts of 10-30% on the products currently up for sale.
To learn more, see the ModulTrade whitepaper.
OpenBazaar is one of the original decentralized marketplaces, having first been created at a 2014 hackathon in Toronto. The project was originally called Dark Market, a reference to the infamous online black market Silk Road, which had been shut down just a few months prior to the hackathon in October 2013.
After the original hackathon team decided not to continue developing Dark Market, a new group took over and renamed it OpenBazaar so that it could brand itself as a more conventional online marketplace rather than focusing predominantly on darknet markets.
After securing $1 million in venture capital investment from Union Square Ventures and Andreessen Horowitz, the first release of OpenBazaar was published as open-source software in April 2016.
Today, OpenBazaar offers a high-quality user experience along with support for more than 50 different cryptocurrencies including Bitcoin, Ethereum, Litecoin, and Zcash. It connects consumers with small businesses from more than 30 different countries, without charging sellers any platform fees, monthly fees, or listing fees. Bank accounts and credit cards are not required, as every transaction on the platform can be done peer-to-peer with cryptocurrencies.
The OpenBazaar decentralized marketplace is currently only available for desktop, but mobile updates are under development. If you’d like to download the desktop version and do some shopping or even some selling, the link is here.
Blockmarket is a blockchain-based marketplace associated with the cryptocurrency Syscoin and developed by Blockchain Foundry Inc. The marketplace includes a decentralized identity system, encrypted messaging, instant transactions, zero platform fees, and a direct portal to the Syscoin wallet.
The project claims to be the world’s first decentralized marketplace, having been oficially launched in September 2017. (This claim isn’t necessarily true, as OpenBazaar launched more than a year prior. Although it is true that Syscoin had the first working beta, which came in 2014.) However, Blockmarket does also have some unique characteristics to separate it from the others on this list. For example, the latest software release, Blockmarket Desktop 3.0, allows for users to create their own customizable digital assets/tokens.
Blockmarket combined with the Syscoin wallet does provide some good functionality, but the project currently seems to be confined solely to the Syscoin community. For that to change, a web version of the marketplace is absolutely critical. A beta version was originally scheduled for late 2017 but has been delayed because it requires functionality from Syscoin 3.0, which wasn’t released until May 2018.
We’ll have to wait and see how the user experience is on Blockmarket Web once it’s released, and whether or not it’s enough to really grow the user base. For the time being, the future domain for the web version of the marketplace simply says “coming soon.”
The question to ask in terms of decentralized marketplaces becoming the default platforms for exchanges of goods and services online is not if it will happen, but rather when it will happen. The economic inefficiency of middleman services will make it impossible for centralized marketplaces to compete in the long-term as blockchain infrastructure develops and connects the world with global currencies.
For ecommerce marketplaces, the road ahead is full of obstacles and fierce competition. It will be interesting to see what substantial progress, if any, can be made during this infrastructure and early adoption phase for the blockchain industry.
On the other hand, the 2 more blockchain-focused projects from this article — FundRequest and Bounty0x — are already well on their way to achieving significant adoption for their marketplaces in the years to come, as they can play integral parts in achieving mainstream adoption for the industry as a whole.
Related: 11 Blockchain Projects Geared for Enterprises
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