3 Ways Blockchain Will Revolutionize the MLM Industry

Blockchain technology is making global waves. If you look at the news today, people are discussing the unpredictability of the blockchain currency market. But they are also talking about the future.

A future that is defined by trust and decentralization. It’s not a coincidence that these two things are also essential to the growth of the MLM industry.

In recent posts, I’ve been discussing the legal struggles of Burke Hedges, the successful MLM entrepreneur who spent the past 30 years teaching distributors how to grow big with MLMs. He went from training distributors to achieve the American Dream to fighting for it, when he was severed from his downline after his contract with LifeVantage was abruptly terminated in 2010.

Unfortunately, what makes Hedges’ story unique is not the circumstances, but the fact that he’s been so vocal about it. Hedges has the resources to fight. And he’s still fighting. His case is now in appeals court.

But not all distributors can do that. Think about your sister, or your uncle or that friend from high school who’s always trying to sell you leggings — would they be able to afford $1 million in legal fees?

If you’re anything like me, the answer is probably not.

So how did we get here? How did an industry that promises so much end up being disappointing for many? And how do we restore trust in the industry?

Those are the questions I’m going to tackle in this blog post.

The Centralization Issue

In the case of Burke Hedges v. LifeVantage, we learned of a company’s right to not renew a distributor’s contract for any reason and permanently sever a distributor from their downline in the process.

In the contract between LifeVantage and Hedges it’s rule 17.5, one you’ll come to learn intimately if you follow this case.

17.5 — Non-Renewal

An Independent Distributor may voluntarily cancel his or her Independent Distributor Agreement by sending written notice within thirty (30) days of the anniversary date. The Company may also elect not to renew the Agreement upon the Agreement’s anniversary date.

This might sound like a normal clause to see in a contract, or just some legal junk to fill the space. But I assure you that if you’re a distributor you should be paying attention to this clause. It puts your business income at risk.

In this clause the money is forever controlled by the supplier. Signing a contract like this one means you could have a downline that produces millions of dollars in residual revenue for a company, only to be cut out of the distributorship for no reason at all.

That doesn’t sound like good business. To prevent this, the MLM industry must take the position of decentralization offered by blockchain technology.

Why Blockchain?

Blockchain technology can restore distributor trust in the MLM industry.

Here are three ways blockchain technology will revolutionize network marketing.

No One Controls the Access to Funds

Smart contracts allow for automatic transfer of currency to be triggered by certain actions across a peer-to-peer network. For instance, the transaction that occurs when a new member is added to the downline could be an action that generates payment in a smart contract.

Transparency and Accountability

In recent news, MLM companies have made headlines for overstating and inflating distributor income to get new distributors on board. When transactions occur through the blockchain, each is recorded in a digital ledger offering greater transparency and increasing accountability.

Decentralization

Cutting out the middle men, like banks, financial institutions and currency exchanges makes it more cost effective for everyone to access currency. That means a distributor’s product or services can reach more people.

The Answer is Blockchain

In the years to come, as blockchain technology gets better, more secure and easier to use adoption will increase. You don’t need to be an expert to know that. But what remains to be seen is the impact it will have on the MLM industry.

Blockchain offers the MLM industry exactly what it needs.

It offers a pathway to regain the trust of distributors and consumers who have been jaded by unfulfilled promises. Blockchain will once again allow MLMs to be the most simplified route for individuals to fulfill their life goals.

Burke Hedges wrote the book Who Stole the American Dream?, but perhaps a better question is who is going to bring it back?

Do distributors have the courage to tell suppliers that they won’t sign a contract with a rule 17.5 clause in it? And what technology will protect them from being severed from their downline?

The answer to that last question is blockchain technology, and it isn’t going anywhere. It’s time distributors figure out how to embrace it to their advantage.