Devolution is not a luxury; it is a necessity. In a conscientious article in The Atlantic back in 2012, science fiction writer Bruce Sterling referred to people like Amazon, Facebook and Google as “The Stacks,” predicting the stealth power grab that has taken place over the past decade. As the huge technology companies consume more and more of our lives, the development of technologies that allow us to push back against them is not only encouraging: it is essential.
Since Bitcoin (BTC) began the process of decentralizing payments in 2010, we have seen the process of decontamination at work in many sectors, from decentralized identity and digital asset management to gaming markets and decentralized prediction.
However, there is one sector where – until now – it has been impossible to free ourselves from monopolistic power: the world of commerce. Registering physical assets on blockchains is something that has been possible for some time, but that alone has not been enough to allow a fully decentralized system of commerce to emerge.
Why do we need this so badly? Isn’t it true – as was proven during the COVID-19 pandemic – that the current trade system, run by central businesses, is already meeting our needs? We are now used to the idea that we can order something online and get it the next day or even the same day. If there is something wrong with our purchase, we can have reasonable assurance that it will be resolved by the company that has brought buyers and sellers together.
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Sometimes it is difficult to conceptualize exactly how the next iteration of technology will improve our lives, especially if the current one seems to be working adequately. We’ve all heard Henry Ford’s quote about “faster horses,” and many people didn’t realize how inefficient and extractive the legacy financial markets were until Bitcoin arrived – and later, the decentralized finance ecosystem.
The emergence of decentralized Web 3.0 networks is likely to be one of the most powerful meta innovations in the history of man. This technology has the potential not only to increase innovation but to accelerate rates of technological evolution and economic growth to such an extent that we fundamentally solve the innovation problem. This would trigger a metasystem transition to a post-capitalist, post-capitalist economy of abundance while resolving negative externalities that threaten species.
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So, what advantage could a decentralized system of commerce offer? The truth is that large legacy systems of human activity are enemies of innovation and progress. Centralization can create congestion and systemic inefficiency, while top-down control means many exciting new ideas never make it off the drawing board.
Opening up these enterprise zones by providing the same tools, data, and opportunities for vendors of all sizes currently available to a subset of the largest and most privileged allows a variety of products, services and rails pay and for the true “wisdom of crowds” the quality of reviews and recommendations that we can hardly imagine today. Devolved value chains are more efficient in nature because value flows freely in such a system without having to divert resources to intermediaries seeking rent.
If this is the vision, then what are the practical necessities of such a system? A fully functioning decentralized, or “e-commerce” network should offer automated mechanisms to replace central transaction coordination and a Web 3.0 powered data market to replace data caching.
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In terms of transaction coordination, existing decentralized systems can eliminate intermediaries and the need to trust third parties, but at a cost – by introducing some form of arbitration, which introduces cost and friction. These costs can result in transactions below about $ 100 violating the business model because arbitration fees cannot be reduced below a certain threshold. The challenge facing devolved protocols is how to coordinate trade between buyers and sellers in a way that decentralizes trust but reduces arbitration, with all its externalities, so that trade can be effectively automated.
Thanks to innovations in the field, transactions can take place with non-deductible vouchers, effectively turning them into futures contracts that reduce the need for human arbitration and provide seamless integration with the rest of the Web 3.0 ecosystem. Imagine a world where you can go to a shop in Decentraland and buy a customized painting or guitar that will be delivered to your door in real life, or where the smaller-scale seller can compete on a level playing field the age of its largest, most established competitors.
It will not be easy to break the ties that bind us to existing abstraction networks, but it is necessary if devolution is to eventually encompass the real world in addition to the digital one.
The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Justin Banon is the CEO and co-founder of Boson Protocol, a project that uses smart contracts to power real-world trade. Prior to this, Justin led Collinson’s Travel Experience Division, where he managed a group of global loyalty award platforms including LoungeKey, Mastercard Airport Experiences and Priority Pass. A physics graduate of Imperial College London, Justin also holds a master’s degree in e-business and innovation from Birkbeck College, University of London, and a master’s degree in digital money from the University of Nicosia.