What is, for example, the defensibility or the long-term value of a marketplace which cannot rely on users’ lock-in, and therefore has lower/no network effects?
Will Blockchain(s) Eat the Marketplace Stack?
Louis Coppey
3099

Hi Louis,

I think you are overlooking a central premise of blockchain “marketplaces” here (the wording might actually be a bit off. I think we need to call it a “market-enabling network” or something like that).

If executed well, the network participant’s incentives are pretty much aligned with the operator’s (formerly the owner). If a market-enabling network is based on a properly designed token system that distributes the network’s overall value to all users — relative to their value contributions — doesn’t that create the perfect lock-in? I believe so. After all, it is no longer only based on user experience and the network alone but also on a monetary incentive.

And, btw, such a system also alters the network operator’s business model. In a well-designed distributed and token-based system, the service fees can be much lower (because the costs are shared across the network), maybe even trending towards zero. Instead, though, the (initial) operator will profit from the entire system’s value by way of his token allocation. Basically, being a “network operator” is closer to being a major shareholder than an actual business (i.e. you make your money from dividends, not operating income).

Of course, this assumes an established regulatory framework for such organizations.

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