Is Blockchain the Future of C2C Marketplaces?
Online marketplaces are gaining value and popularity with each day. With websites like Amazon, eBay, and many others growing exponentially in demand and catering to every user need for products and services, the future is golden for this industry.
The same is true for C2C Marketplaces or websites that let consumers connect and sell directly to other consumers. A popular example is OLX, where you can sell or buy secondhand goods directly to/from a user.
The ever-rising trend in the online C2C marketplace space is of freelancer service providers, who find it beneficial to connect with and provide services directly to consumers rather than paying to an intermediary. However, there is a major problem of privacy and security with the existing customer to customer trading platforms.
Whether you are selling a product or a service through such a marketplace, you need to share your personal information and service details to the platform, which creates a security and identity risk. Also, it is not easy to trust a buyer/seller on a direct marketplace when there is no middleman. So, what’s the solution?
Well, there are some blockchain projects that intend to revolutionise the C2C industry, and meanwhile, promise to solve the existing problems of this sector.
What is a C2C Marketplace?
A C2C or customer to customer marketplace is a platform through which customers can connect and trade with each other, without having to take help of a middlemen like a dealer. Some examples include eBay, Craigslist and OLX. eBay is not a complete C2C marketplace yet it allows users to sell their secondhand goods through the platform. Many other online commerce giants, including Amazon, have also started this kind of service.
Most of the existing C2C platforms are centralized in nature where there is one controlling or managing authority. For instance, eBay, though, allows its users to sell goods directly to other users, it still has complete control over the transactions performed and goods sold by its platform users. It can see your personal as well as transaction details and may even share it with others, as and when required. Let’s see what are other problems of traditional (centralized) C2C platforms.
Problems with traditional C2C Marketplaces
Well, the biggest issue with the existing online C2C marketplaces is their centralized nature which gives rise to the problems of transparency, security and anonymity.
When the entire platform is controlled by one internal system, it is natural for users to worry about the security of their transactions. Here’s how.
No Transparency in Cost: A marketplace that is being controlled by a third-party will never be transparent about the cost of the transaction. In fact, the user has little to no control over the fees charged by these platforms. As you may have witnessed, traditional C2C platforms can change their transaction fee structure as per their convenience. Moreover, the end buyer never knows the actual price of the product and the fee they are paying for each trade.
Trust Issue: Centralized marketplaces are a killer of social interactions in trades. This not only makes it difficult for consumers to find the required help but also it hurts the trust factor. People should be able to trust you in order to buy from you. This factor is mostly missing from C2C marketplaces where there isn’t even any middleman whom both buyer and the seller trust.
Lack of Security: Even though traditional C2C platforms claim that they are completely secure and reliable, users of these platforms are mostly unaware of how and whether their transactions are protected from online/offline threats. Moreover, the personal information of the user as well as product details which are stored by the website may get out in case of a hack and the information can go public.
Apart from that, human intervention on the existing centralized C2C marketplaces often lead to errors and is also responsible for security fraud happening on these platforms.
So, what’s the solution? Well, some startups have been working on blockchain-based e-commerce solutions that may just have the ability to improve the adaptability, transparency and security of these C2C business platforms. Let’s see how it works.
How can a blockchain help with the issues of traditional C2C marketplaces?
Blockchain has been a very promising and reliable technology when it comes to the security of digital transactions, both money and data. This is what makes the technology suitable for a range of industries where data and identity protection may be a requirement. But how can blockchain help improve the C2C trading? Let’s find out.
Blockchain is a decentralized network of nodes (computers) where new transactions are verified and then encrypted automatically. All the verified blockchain transactions are stored in a ledger (database) which is public but can only be accessed or modified with proper authorisation and the right combination of public-private keys. In order to hack a blockchain transaction, a hacker will have to modify each copy of the ledger, which is virtually impossible, since the ledger is distributed among thousands of nodes.
The biggest use of the blockchain technology in the C2C commerce space is to facilitate secure P2P (peer-to-peer) transactions.
Take an example of EZCash, which is a blockchain-based digital C2C marketplace that allows users to buy and sell goods over a secure P2P network. The best part is that all the transactions performed on the marketplace are anonymous and do not require either party to provide their personal information in order to transact. That means any user can buy anything on the platform from any seller without having to reveal their identity. This protects the privacy and anonymity rights of the users.
A blockchain-based decentralized C2C marketplace can also ensure complete transparency of the cost, as the transactions are performed directly between the users through smart contracts and with no third-party invention and/or fee.
The blockchain will also contribute to reducing fraudulent activities in the e-commerce space, as all the transactions are verified through smart contracts which are nearly impossible to penetrate.
Besides the above things, the blockchain technology may have many other benefits for the C2C industry, as already proved by the ongoing and upcoming projects in this field. It will not only make it possible to perform completely secure and anonymous C2C transactions but also the dedicated cryptocurrency will make it easier to securely pay for such transactions.