The Need for Decentralized Commerce

Apr 23, 2018 · 4 min read

Decentralized technology cannot achieve mainstream adoption unless it supports the fundamental requirements of mainstream commercial applications for consumers, business, institutions and governments.

At present, the technology can only be used to transact if you don’t care about confidentiality or regulatory compliance. That’s like offering someone a car that cannot be registered. It might be an amazing vehicle but it’s almost useless for the everyday driver.

Decentralized commercial services, need to support confidential, compliant transactions. As soon as that is possible, the full potential of the technology will be unleashed, empowering businesses and consumers to pay, trade, insure, exchange, invest, borrow, lend or conduct any form of business without reliance upon trusted, centralized, intermediaries to provide the underlying service.

Disintermediation is an awkward word, which simply means eliminating the “middleman”. Intermediaries introduce “processing friction” in the form of fees, inefficiency, error and complexity into our daily commercial engagements and transactions. In contrast, a decentralized commercial service would eliminate the intermediary along with all the expense and waste, making everything fast, cheap and potentially costless.

Essentially, if a service currently requires an intermediary to provide trust between the counterparts to a commercial transaction (tokenized money or data), then it is ripe for disintermediation.

Let’s consider Bitcoin and banks as the simplest and most famous example of decentralization. Bitcoin demonstrated how the banking system could be replaced with digital wallets that communicate with the Bitcoin blockchain. Suddenly, Bitcoin promised a niche demographic of crypto enthusiasts the ability to access banking services, without the delay or fees of an entire banking system.

Sadly Bitcoin has not lived up to its potential to disrupt banking services because a slow, expensive, unregulatable, pseudonymous currency with an extremely intimidating user experience lacks almost everything that is required to achieve such an objective.

Clearly, Bitcoin as it stands, falls far short of supporting the real world requirements of decentralized commerce, but it was a brilliant idea that has awakened us all to the possibility of disrupting the banking system. An intermediary service that represents 7.3 percent (or $1.4 trillion) of U.S. gross domestic product in 2016. Think about the magnitude of the change this one commercial example exposes in the U.S. alone, and then consider how banks must be reacting to the existential threat of decentralized technology?

Not surprisingly, the banks are attempting to protect their centralized hegemony by co-opting the technology for their own benefit. The most prominent example of this institutionally controlled technology, is RippleNet (or potentially XRP). The success of a centralized solution like RippleNet at the expense of a fully decentralized banking solution would be a great shame, because decentralized technology promises much more than the disruption of a single (albeit trillion dollar) industry. It promises us total control over “our own money”. This is because a decentralized banking service would have no controlling intermediary or centralized point of vulnerability exposing it to bias, vested interests, price manipulation, coercive or corrupting forces (by either the public or private sectors).

Indeed, decentralization holds the untapped power to eliminate all intermediary inefficiency and prevent them from profiting from our own money and data, by restoring to us, full control over our digital assets, which until now, we have been forced to relinquish in exchange for accessing their centralized services.

So the challenge facing the decentralized community is to develop technology that can support basic commercial requirements, as Ripple has for banking, yet remain decentralized.

The scope of the discussion to this point, has been deliberately limited to the example of decentralizing banking. So let’s pause for a minute to realize that all existing centralized commercial services can be disrupted by and benefit from, decentralized technology. This demonstrates the massive potential of a decentralized technology that genuinely supports the requirements of mainstream commercial services. We should absorb the magnitude of this realization.

A platform supporting the development of decentralized commercial services would promise to disrupt almost every mainstream service we engage with in our daily and business lives. It would enable the mainstream adoption of decentralized technology and introduce huge new efficiencies and eliminate vast amounts of waste from the economy. Clearly such profound change would dramatically benefit every sector of society.

However, as the banking example shows us, decentralized technology faces some daunting hurdles if it is to disrupt mainstream commercial services. The question is, how does a decentralized technology provide identifiable users, confidential transactions and regulatory compliance? Surely confidentiality and compliance produce a paradox that is impossible to resolve, and how can you provide compliance yet avoid government overreach and centralized control? So, not only do some of these essential commercial features appear to be anathema to the founding tenets of cryptocurrency, they also appear to be genuinely impossible to achieve?

But achieve them we must, because commercial services are mainstream services, and as such, the decentralized community must be able to offer the market decentralized versions of these commercial services if broad adoption of the technology is to be achieved.

Fortunately, the team at CRDZ has found a way to clear these seemingly impossible hurdles (without abandoning the fundamental ideals of decentralization) thereby unleashing the full potential of decentralized technology and ushering in the wholesale disruption of all commercial services.


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