E-commerce has always fundamentally involved trust. BitBoost’s marketplace changes that for the first time – ever.
Ever since cash moved away from being pieces of precious metal we exchanged directly between us, the monetary system has required trust. When the first coins were minted 2,500 years ago, you had to trust the issuer (typically the king) that the metal content was equal to the face value of the coin. Needless to say, most of the time it wasn’t, the difference representing profit margins of varying greed and acceptability. When the first banks arose, you had to trust that they owned the gold that backed the paper notes they issued. When money moved into the electronic realm several decades ago, even more trust was required – as shown by the story that one of our UK users recently shared with us:
‘When I first went to university, back in 1997, the internet was still in its relative infancy. Everyone was given a university email address, but we still had to access it over telnet, for example. I needed a particular book and the only place I could get it from was the US, so I emailed the book dealer. He told me he would need my credit card number – in those days, there was no PayPal – but that, for “security”, I should email it to him in two sections!’
There are a couple of points to be made from this great little illustration of e-commerce, 1990s style. Firstly, tech moves fast. That happened in 1997, and less than ten years later we had one-click ordering on Amazon, with instant search and payment seamlessly integrated into the platform. Blockchain is moving at a similar pace – faster, even, because it’s building on that existing tech, e-commerce framework and culture.
Secondly, the need for trust hasn’t changed: it was and remains an integral part of the conventional e-commerce environment. It may no longer involve emailing your credit card number (presumably to be entered manually into the merchant’s PoS terminal in his store), but trust is still a feature at every stage. And trust, as we’ve found in a series of episodes to impact the tech world, has a habit of being broken.
When you buy items on the web, you are placing your trust in a number of different entities. Obviously, there is the seller, who you trust to dispatch the product that you bought, in good condition and in timely fashion (and not, if it’s 1997, to steal your credit card details). Thanks to the development of effective reputation systems and sellers’ desire to maintain their status and livelihoods, this is probably the least of your worries now. It takes a long time for a seller to build up the strong reputation that makes them a popular option for buyers, and they will go to considerable lengths to protect it. Generally, reputation systems work pretty well, since it’s hard to fool the crowd and poor customer service is made plain for the world to see.
But you’re also trusting the platform – the technology developed by eBay or Amazon – as well as the company behind it. Servers go down, databases are hacked, businesses go bankrupt, or change their terms and conditions, or make decisions about who can and can’t use them. Then there’s the payment processor, whether that’s PayPal or your credit card provider, who can block or reverse transactions. Depending on their arrangement with the e-commerce platform, that may consistently work against you – PayPal, for example, has a policy of siding with the customer in disputes around eBay orders, meaning that sellers are often hit with unfair chargebacks.
In short, life online entails trust. These are big corporations with very lucrative businesses to defend. They can do pretty much whatever they want, and there have been enough stories about unfair business practices and unjust policies towards their users, to make it clear that customers are being forced to trust something that is at heart untrustworthy (see the controversies around Amazon for more details). That is not a good position to be in. Until now, though, consumers have never had a choice.
Centralisation inevitably entails control, and therefore trust. The history of humanity and technology – and especially money – has been a story of increasing centralisation. Blockchain finally starts to reverse that trend.
BitBoost’s marketplace is built on the Ethereum platform’s smart contracts, which execute automatically when the given conditions are met. Simply, this takes the trust element out of our e-commerce platform’s infrastructure. As John Gilmore, one of the founders of the Cypherpunks movement, said, ‘That’s the kind of society I want to build. I want a guarantee – with physics and mathematics, not with laws – that we can give ourselves real privacy of personal communications.’ We know that cryptography and the blockchain offer a far more reliable and fair foundation for a platform than any regulatory framework or code of conduct.
This enables a totally different approach for e-commerce. There is no company to take a cut of profits, to intervene in the purchasing process, or to reverse transactions. (BitBoost is able to operate a completely different business model thanks to the blockchain, and doesn’t need to charge commissions or other fees.) E-commerce is, finally, much like regular commerce in the physical world, as it always used to be. The buyer connects with the seller, hands over cash directly, and receives their goods. The trust involved in the last step, the delivery of items, is also managed by smart contracts and an escrow system that ensures there is fair arbitration with an independent arbiter in the event of something going wrong.
No trust required
And so, third parties no longer need to be trusted when buying and selling online. Trust, where it is required at all, is in the protocol – something that is underpinned by strong cryptography and powerful economic incentives. Smart contracts offer a fundamental advance for e-commerce, enabling it to evolve beyond its current model into something qualitatively different.
BitBoost’s marketplace is the first full-featured platform of its kind: a trustless e-commerce application, built on the blockchain. We have done everything we can to ensure that it combines the best of both worlds, with a great user interface and sellers’ tools, but without the centralisation and trust that come as standard with eBay and Amazon. We’re thrilled that you’ve chosen to find out more and hope you’ll join us on our journey!