6 min read
Opinions expressed by Entrepreneur contributors are their own.
The global blockchain technology market is estimated to accumulate $39 billion in revenue by 2025.
Now imagine Ethereum, the most potent blockchain, settling $30.5 billion in daily value. That’s 12X more than Paypal. And that’s happening today.
But blockchain is more than just a cryptocurrency enabler or a fintech for hackers. Blockchain is enabling Web3, what many are calling the next generation of the internet.
Nowhere more prescient is this featured than in the consumer marketplace space.
Imagine if users of Airbnb, Uber, Upwork, and Zillow all had a stake in the system. The platform not only paid them, but they had ownership, and not just gradually higher fees taking a bigger and bigger piece of their part of the pie. Fees on marketplaces typically increase significantly from Day 1 to IPO and beyond.
These top marketplaces first started taking the world by storm a decade ago. It was called the Sharing Economy or Collaborative Economy. Today, the hot VC trend is the Creator Economy, and it somewhat overlaps. Back then, these marketplaces slowly replaced every single line item on the classifieds site Craigslist as chronicled by Andrew Parker and David Haber of Spark Capital in the now infamous graphic showing the unbundling of each classifieds section into distinct, custom marketplaces.
Related: 10 Entrepreneurs Who Are Showing Why Blockchain Is Here to Stay
Craigslist was one of the earliest online marketplaces. All it did was digitalize the classifieds in the newspaper. (Remember those?) Then the Internet 2.0 generation made better versions of each section, from ride sharing to education to real estate.
Real estate is where I built my last startup in Storefront as part of the sharing economy. I remember how excited the tech industry and venture capitalists were in 2012 and 2013 when we raised $10 million to scale out our ‘Airbnb for Retail.’ It was the place to be. But that’s changing fast.
Today, Bitcoin, Ethereum, and blockchain have the hearts and minds of millions, including VCs, tech entrepreneurs, and more and more the mainstream public ($DOGE to the moon, anyone?). It’s the future. The way that business will be done whether the blockchain is front and center or hidden in the background. And it’s going to change the way we bring power to the people in a big way.
First, let’s look at the differences between today’s marketplace and a blockchain-empowered marketplace.
A marketplace today connects two parties, supply and demand, through a centralized body. It takes fees for the connection made and also leverages complete control and ownership about how the platform is used. There’s usually a decent level of disintermediation to avoid the platform fees, and the costs generally rise the more significant the company gets.
Related: 4 Ways Your Small Business Can Benefit From Blockchain
A blockchain marketplace is often a decentralized peer-to-peer network that directly connects consumers and sellers without an intermediary. It looks pretty similar, minus the organizing body giving up some controls. It might even feel familiar to the users. In some cases, the underlying blockchain may be governed by a centralized body. That said, there are a set of key elements that change the paradigm:
- A blockchain marketplace can manage its interactions on the chain, of course, but it can also launch a token.
- That token could be tied to collaborative governance based on how much of the token you hold. For example, two tokens equal two votes to any future changes to the marketplace. Similar to an annual shareholder meeting, but decentralized. This structure is often called a DAO or decentralized autonomous organization.
- You could then award more tokens for engagement in the marketplace—like completing a profile, a job, a referral, or actions that help others.
- So, the more tokens you own, the more you have a say in the business, and the more wealth you create for yourself, and the more loyal you are to the platform.
- Additionally, you could still receive fiat (dollars) for actions you do or projects you complete. The token is supplementary but essential to driving community buy-in for the platform and reducing disintermediation. It also is aligning the incentives of the platform and the people.
- That said, and most important to users of the marketplace, reduced or zero fees are now possible with the addition of the token model because value can be “minted” for users, not just extracted by the company.
- Add to all this the value of crypto traders buying your token and the potential rise of value. It drives excitement and the third circle of your community.
That gives you an initial idea of what’s possible, but the innovators and operators will probably take this even further. So far, in fact, that we may see a complete remodel of the post-Craigslist aftermath of companies. Take the Honeycomb 3.0 imaging of the collaborative economy marketplaces by Jeremiah Owyang.
Related: Why ‘Now’ May Well Be the Right Time to Start a Blockchain Company
Consolidation of similar consumer marketplaces from the last generation of innovation has already begun. I surmise that we will see a complete overhaul of the ecosystem over this decade, turning once novel tech-driven marketplaces into blockchain platforms that you may or may not even know there’s a crypto function behind the scenes.
A few examples of how this is already happening:
1. Freelance talent
Upwork or Toptal models transform into Braintrust, a freelance talent marketplace that runs on blockchain. Braintrust offers the $BTRUST token as an aside to limiting project fees for talent to zero and offering a co-op model from day one for users to have ownership in their growth story.
2. Real estate
Zillow and Redfin moving to MakerDAO ($MKR) or Realt.co DeFi (decentralized finance) platforms. It makes perfect sense to manage transactions on a blockchain, from real estate investing to mortgages and title transfers. In doing this, you remove the middle woman and reduce transaction costs and complexity.
Chase or Schwab to Coinbase or BlockFi. Coinbase was the first crypto company to go public in a big way on the NASDAQ stock exchange as $COIN. BlockFi has raised over $500M and provides 5-10% or more interest on cryptocurrency holdings. Compare that to the .01-.04% high yield savings accounts in the traditional finance world.
Carbon Offsetting to Carbon Renewal with $NORI and $REGEN. Yes, there are even ClimateTech applications fighting climate change and supporting our preservation and protection of the natural world. Despite the concerns around crypto mining energy costs, the low cost of renewables and changes to blockchain tech from proof of work to proof of stake will work out these issues, and platforms like Nori and Regen will turn the tables on carbon sequestration for the greener.
It’s an exciting time for the next generation of the web. The applications, or should I say dapps (as decentralized applications are called these days), are as endless as the possibilities. Blockchain will be the future of the marketplace, the internet, and our virtual lives. It’s just a matter of time. Are you ready for decentraland?