In todays world we face financial middleman in everyday transaction without cash.
In fact, if we go to a restaurant and we decide to pay with credit card, a middleman allows us to pay. He assures to the restaurant not only that we have enough money, but also that he will receive the payment.
So, what is a middleman?
In finance, a middleman is a third party that has several functions:
· check the balance of the buyer and define if he or she can effectively pay
· assure that the money will arrive to the balance of the vendor
· record of transactions and track them.
Therefore, the middleman will grant the regularity of the transaction, which is great, but obviously it does not do it for free.
In fact, a financial middleman always take commissions that are usually included in the final price of a product.
Considering the previous example, the middleman would be the bank of the buyer and will contact the restaurant bank in order to make the payment happen.
Assuring that the transaction is 100% verified is important for a customer/company trust relationship, and therefore crucial to the survival of the company. However, if we move outside of the financial sector, middlemen can be found in any sector. Does that always make sense?
Is a middleman necessarily a bad presence?
Think about Airbnb. It is a platform that allows you to sleep in someone else’s house or room paying less than the price of a comparable hotel room. The software AirBnb has the function of a middleman between you and the landlord of the house. It acts as a way of executing simple tasks, such as searching for a good place, and allows for the main options that are necessary for the deal, like payment and creating a digital registry of the purchase.
Or think about BlaBla car, it is a platform that allows you to have a lift from a stranger between two destinations.
Back in the days, a middlemen was inserted into the production line if he can assure an important part and was paid for it. A supermarket could become a middleman between a producer of chocolate and its customer.
But as you can notice in our airbnb example, a middleman can have also the role to connect people and make you of a cheaper service, than the classical methods, such as hotels or taxis.
Why are the fees so high?
Middlemen are in any sort of business and, often, they are necessary in order to perform a certain kind of service.
For example, an equity crowdfunding platform allows you to reach a crowd of investors. It has several middlemen in its business such as financial middleman, legal and so on.
Therefore, the combination of each commission will be a significant cost for the platform.
How Can TaoDust reduce the fees?
By using the Blockchain, TaoDust can cut out financial middleman.
In fact, the blockchain technology consists as a decentralized ledger, that allows users to transfer values without a middleman.
Transactions on a blockchain are not only far cheaper than traditional ones, but also quicker, because it cuts all the traditional bureaucracy. It does not require the trust a financial institution with government backing can offer, because we can trust the immutable database to act out its actions without corrupt activity.
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