William Mougayar

On Tech, Business, Society.

Tag: business model

Decentralized Peer-to-Peer Marketplaces

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On November 18, 2014

In Think Tank

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We’re at the cusp of seeing a lot of new peer to peer (P2P) marketplaces with decentralized operations.

Recent advances in blockchain technology based on decentralized consensus are making it possible to create totally decentralized marketplaces whose usage will be easily met by the critical mass of Internet users.

Existing P2P marketplaces have some characteristics of traditional marketplaces, but there is more to it.

Among the existing factors for marketplaces success, liquidity is important. Onboarding difficulty is also a factor. Other barriers could be psychological, legal, technological, or business model related. We need to preserve these characteristics, but go beyond them.

A decentralized P2P marketplace has a lot less friction at the center than traditional marketplaces. There is a lot more power and benefits at the edges than there are at the center.

In a previous blog post, The Race to Decentralize Everything and Give Power to the Edge of the Networks, I mentioned that marketplaces are one of the areas being affected.

Let’s review the progression of the various types of marketplaces:

1) Vertical marketplaces: Top-down controls. That’s where most e-commerce sites are. They sell, you buy. Examples: Bonobos, Birchbox, Frank & Oak, etc.

2) Semi-central marketplaces: They facilitate selling and buying laterally, and outside of a top-down model. Amazon, eBay, Etsy are the grand daddies. A few sell, many buy.

3) Decentralized peer-to-peer marketplaces: Anyone sells. Everyone buys. As many sellers as buyers. The central controls less. Trust, rules, identity, payments are embedded at the peer level. Participants arrive already trusted, and decentrally acknowledged. Examples of marketplaces and services to support them are being concocted by startups, such as Lazooz for transportation, OpenBazaar for p2p trading, or Openname as the identity protocol.

I’m particularly excited that we are going to see increased innovation around the creation of decentralized peer-to-peer marketplaces. I think the required plumbing infrastructure & middleware services to enable their operations are becoming more and more available.

What do these P2P marketplaces typically do?

1) Sharing. This includes temporary renting, using or leasing from someone else on the network. E.g Sidecar.

2) Selling and buying. Peers selling and buying from each other. Eg VarageSale, Kiinzel.

3) Providing a service. Each peer can provide a service, or find a service. E.g. Vayable.

What are the requirements for participation into these marketplaces?

Users will arrive with these services already “baked in”, prior to their participation:

  • Identity
  • Rules
  • Trust
  • Payment method
  • Terms
  • (ps: others?)

And they will offer open and neutral access of specific functions, such as:

  • Arbitration
  • Match-making
  • Inventory management
  • Notifications
  • Bid/ask
  • Aggregation
  • Information organization
  • (ps: others?)

Maybe one day, launching a decentralized peer-to-peer marketplace will be as easy as running a website.

What do you think?

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The Bitcoin and Cryptocurrency Investment Landscape

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On April 10, 2014

In Think Tank

Infrastructure, Middleware Services and Applications. I’m sticking with that segmentation, but have updated the bullets inside each one of these segments, based on my deeper understanding of the cryptocurrency market. Bitcoin Landscape 2 Here’s the new segmentation that I see.

INFRASTRUCTURE

  • Blockchain 2.0 Platforms, including sub currencies or new currencies. These are entirely new platforms with a scripting language, and with a focus that targets developers who want to write crypto-based applications. E.g. Ethereum, Mastercoin, Invictus, Ripple, etc. Some are based on the Bitcoin blockchain, others use an independent consensus-based blockchain, and a new one uses a sidechain concept. Some are more advanced than others, but the proof will be in the apps they generate, the number of developers that are committed to them, and the ease of use and completeness of their solutions.
  • Mining Hardware. There is no escaping specialized hardware for mining Bitcoin or other currencies. The latest hardware models are not cheap, nor are meant to be purchased by the average user.
  • Alternative Coins. Slightly different from the Blockchain 2.0 platforms, these are simpler implementations where the focus is more on the currency propagation and usage, rather than building sophisticated apps on top on these currencies. E.g. Litecoin, Dogecoin. They are part of infrastructure in my opinion, because usage needs to exist on top of these alternative coins.

MIDDLEWARE SERVICES

  • Compliance, Trust and Certification. Who will be the Underwriters Labs, or JD Power of the crypto space? Lots of opportunities there verify and assert that the services offered are secure, authentic and with the required quality of service.
  • Exchanges. There are different types of exchanges, including ones that also offer a merchant payment gateway, or are proxies to other exchanges.
  • Crypto-based Software Suites with Services, e.g. a RedHat type for Linux, or Shopify for ecommerce. These are SaaS products that are a swiss army knife from spinning a currency, a DApp, on-blockchain services, etc. As of now, these don’t exist, but there are needed.

APPLICATIONS

  • ATM’s. One day, we won’t need specialized Bitcoin teller machines, but for now, that’s the only way to quickly withdraw or convert Bitcoins.
  • Trading marketplaces. These will be the equivalents of what you can do on a stock market today. A slew of financial services such as Bitcoin derivatives, or real clearinghouses are lurking around the corner.
  • Consumer Wallets. This segment is ripe for a handful of leaders to emerge. Currently, there are probably a dozen contenders, and another two dozen flavors of wallets. A leading wallet should be universal (support multi-currencies), include microtransactions, peer to peer direct money transfers, and have offline/online storage mechanisms. Arguably, your Bitcoin wallet is also your own bank, so it needs to be widely secure, easy to use and versatile.
  • Decentralized Identity and Reputation Systems. A handful of options are emerging, such as NamecoinID or OneName but the business model is unclear. Clearly, only one system is needed, so this makes this segment a risky one, although a winner-takes-all approach is what’s needed.
  • Decentralized Organizations with smart tokens and currencies (where tokens appreciate based on increased activity by users that raises the network value). Branded/corporate coins will be part of this segment. David Johnston has written the seminal paper, The General Theory of Decentralized Applications “DApps” describing this segment. It is conceivable that these types of decentralized organizations will touch a variety of facets, from specialized services, to industry-focused ones, and even country-specific ones.
  • Analytics and Big Data. Still embryonic, but there has to be a play in analyzing the huge amounts of data that Bitcoin and cryptocurrency systems will be generating.
  • Smart Contracts/Property and Trustless Services. These could be seen as micro-apps, or building block components, and they are what the cryptocurrency platforms are supposed to enable. Here’s a known list, and there’s probably more that’s possible:
    • Decentralized micro-insurance, e.g. crop insurance
    • Escrow services, based on multi-sigs
    • Decentralized storage, e.g. decentralized DropBox
    • Decentralized Bid/Ask to negotiate transactions, e.g. securing a parking spot by bidding it
    • Decentralized Internet access, e.g. OpenGarden
    • Decentralized Law
    • P2P Gambling
    • P2P Lending
    • On-chain email spam detection
    • On-chain stock market
    • On-chain marketplaces
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The 8 Identities of Bitcoin

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On February 1, 2014

In Think Tank

Bitcoin, because Bitcoin and the Internet are about to get joined at the hip. When the Internet started to get commercialized around 1995, we often described it as multi-purpose kind of phenomenon. It was simultaneously a Network, a Development Platform, a Transaction Platform, a Medium, a Marketplace, and a Community (we didn’t call it Social Network then). It is fitting that we describe and understand Bitcoin today by its multiple functionality traits to break down that complexity into chunks of knowledge pieces. So, I put together this diagram depicting the multi-faceted identities of Bitcoin: Bitcoin Identities

1. Digital Crypto-currency

The digital currency function is probably the most “visible” element of Bitcoin. Basically, it enables users to pay for goods and services via a digital wallet that is encrypted for security purposes. As a currency, Bitcoin is gradually being accepted both online and offline.

2. Peer-to-Peer Network

There is nothing “central” about Bitcoin. A user reaches and transacts with another user instantly, no matter where they are in the universe, and regardless of banking hours. No intermediary can filter, block or delay a transaction between 2 users or 2 nodes that are consuming a transaction. And any node on the network is allowed to offer services based on the knowledge of Bitcoin transactions anywhere.

3. Distributed Accounting Ledger

It’s a distributed, public, time-stamped, asset ledger that keeps track of every transaction ever processed on the Bitcoin network, allowing a user’s computer to verify the validity of each transaction such that there can never be any double-counting. This is a primordial feature of Bitcoin, also called the “blockchain”.

4. Open Source Software

The core Bitcoin protocol is open source. It was initially developed by its creator Satoshi Nakamoto and released in 2009. Since then, it is maintained by a core group of developers, and continuously improved and enhanced by thousands of developers who are innovating with products, services, and applications that take advantage of the Bitcoin protocol robustness.

5. Software Development Platform

For developers, Bitcoin has several APIs, including a transaction scripting language, a P2P nodes communications API, and a client API to check transactions on the network. Other APIs will be developed. Developers are flocking to the Bitcoin platform to innovate at the applications and services levels.

6. Computing Infrastructure

Mining Bitcoin requires the deployment of a certain amount of computing infrastructure at a commensurate degree of difficulty. When you mine Bitcoins, you are rewarded with a “block” of Bitcoins that has value. Anyone with enough computing power (and money) can run the specialized software that “mines” for Bitcoins.

7. Transaction Platform

The Bitcoin network enables a variety of money-related transactions, but also meta-transactions based on the “proof-of-work” algorithm that is part of the Bitcoin protocol. This means that applications like escrow services, contracts verification and other legally binding services can be implemented without expensive third-party intermediaries.

8. Financial Services Marketplace

Bitcoin also enables earning mechanisms beyond compute-intensive mining. The Bitcoin network is itself fueled by money, but it is also an incredible innovation environment for the next generation of financial services. It’s been said Bitcoin is the “Internet of money”. This is probably one of the most exciting phases of its commercialization. So, Bitcoin brings with it a new language of terms and concepts, just like the Internet brought us new terms like browsing, website, HTTP, SMTP, HTML, blogging, URL, TCP/IP, etc. Welcome to the new Bitcoin nomenclature! Now, imagine the possible mashups of innovations that will spring out on top of these 8 powerful features and characteristics. By combining them together, you’ll start to imagine the incredible enabling powers of Bitcoin.]]>

Objectives, SaaS, Sales, Venture Capital, Conversions, Monetization, Growth, SEO, Mentorship, HR, Weekend Roundup #13 Oct 6 2013

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On October 6, 2013

In Week in Review

Startup Management is a manual selection from the hundreds of weekly articles being curated. Previous issues are available here. There are 13 links in this edition. Forward to a friend, so they can sign-up and benefit too. Business Models To monetize large networks of engaged users with a free product, founders need to create a new product that is different from the free one, leading-up to a Monetization Dilemma they will face. That dilemma emerges when the founder doesn’t get as excited or involved as they were with the original consumer product. I list 8 points for managing this dilemma. Conversions Bill Gurley revisits “the most powerful Internet metric of all”, 13 years after he first wrote about it, in Conversion: The Most Important Internet Metric of All (Revisited). “Conversion improvements typically are the aggregate gain of 100 tiny improvements, not one silver bullet. Rarely will you find one single change that is going to have a 5% lift in conversion… rather you will find 30 things on a page that all have a tiny impact.” This is a must read.

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