B2B as unmarketplace

Unrealized promise

At the onset of B2B marketplaces, Gartner Group anticipated B2B commerce to grow to $7.3 trillion by 2004. Why did it not happen? To be fair, Ariba is selling $0.5B worth of B2B services yearly, while Alibaba's take is over $1B. But why is it not at least 100 times higher?

The answer is quite simple - fear. In most industries in which marketplaces succeeded, they brought both positive and very negative effects to the market. They decreased fragmentation, increased visibility, facilitated transaction completion. But they also created a new entity, a new player, a gorilla that dictates everyone their rules and often steals the relationships with the end users.

##Un-marketplace Blockchain offers logical centralization, which provides universal access which is achieved without a central player and instead is based on trusted computing. It therefore removes the fear for the participants to join the market equally and independently. The services provided today by a central player, like Alibaba, such as vendor Identity verification, attestation of their legal status, location and factory equipment, escrow and other transaction completion schemes can now be done by independent third-parties and new automated smart contracts. Participants automatically accumulate objective transactional reputation, which is not locked in to a specific application or site. New entrants can offset the lack of reputation by offering fidelity bonds.

Sourcing of products, services and inventories becomes logically centralized, providing visibility, which facilitates permission-less commerce. New services start to freely grow, such inspections, arbitration, training, repairs, logistics, sales, marketing, and more. Transparency of transactions provide the deterrent to malfeasance and the assurance that all participants are on the same page. In such environment conflicts rarely occur. Un-marketplace can provide livelihood for people globally as it creates mechanisms for simple and safe commerce with low overhead.

Data on the blockchain belong to their rightful owners. As their business grow participants will benefit from the ability to import all their deal flow from the blockchain into their internal systems for accounting and analysis purposes.

#Un-marketplace and the Enterprise The blockchain is a new data structure that offers significant benefits for the IT infrastructure. When the blockchain is used both outside and inside the enterprise, it creates a new security-first homogeneous foundation for new applications. But the most exciting cases to us are those where a blockchain bridges the divide between the un-marketplace and the internal operations of the company, becoming a power for changing existing structure.

This is an emerging field, but here are some potential use cases:

Workflow

With a private chain you could better tie an internal business process with an external B2B and B2C workflow. Today companies like wallets, merchant processors and exchanges resort to off-chain centralized operations, while in fact they could be running them on private chains. This would make them a lot more resilient in the face of non-stop hacker attacks.

Supply chain

In a supply chain, a company could cryptographically tie on-public-chain orders with on-private-chain manufacturing, inner workflow, etc. and then back to on-public-chain invoice and payment. One niche example of this cryptographic tying of the off-chain processes to the on-chain is in old Timo's paper: http://arxiv.org/abs/1212.3257 and a talk for it: https://www.youtube.com/watch?v=qwyALGlG33Q Jorge (core bitcoin dev and Blockstream co-founder) claims says it motivated their first small code release: https://github.com/Blockstream/contracthashtool

##Employee vs Company Identity Another example could be a balance of employee accountability with a public face/identity of the company. In many business applications transactions outside the company should only use company's Identity, while the workflow inside the company should have an explicit trail of decisions made by every employee. Existing example is SSL certificates where employees of the company that did the verification of the business are not mentioned in a certificate, but for audit and troubleshooting purposes their exact verification actions need to be recorded.

Other work on decentralized markets

Open bazaar is creating a new decentralized market. Great variety of products and product-specific price negotiation and logistics workflow make data semantics a complex topic in marketplaces. Open Bazaar addressed a subset of cases with product listings, escrow-based contracts and participant roles, like buyer, seller, notary and arbiter. If I understand it correctly Ricardian contracts bake the identity and product inventory into the workflow. When products will need more attributes and complex classifications, when one type of escrow is not enough, when notary and arbiter roles are not enough, when identities start changing, this simple scheme will need to evolve.

How does Tradle look at this problem space? We believe to address variability you need a declarative object type system that grows from the bottom up to achieve mutual understanding between the participants. The social economics of this approach are not yet well understood, but it is clear that this approach follows a more popular today model of NoSQL databased which have loose and dynamic type systems, as opposed to SQL databases that have typically offered a top-down type system (db schema) development model.