Decentralization and Disintermediation in Blockchain-based Marketplaces

Abstract

Marketplaces facilitate the exchange of services, goods, and information between individuals and businesses. They play an essential role in our economy. The standard approach to devise digital marketplaces is by deploying centralized infrastructure, entirely operated and managed by a market operator. In such centralized marketplaces, trusted intermediaries often provide various services to traders, such as managing market information, processing payments, and providing arbitration services when a dispute arises. Advancements in information technology have challenged the need for both authoritative market operators and trusted intermediaries. In particular, blockchain technology is increasingly being applied to deploy digital marketplaces. Blockchain-based marketplaces facilitate trade directly between peers while reducing the dependency on both authoritative parties and trusted intermediaries. The role of blockchain in such marketplaces is to replace social trust with cryptographic primitives. This enables the decentralization and disintermediation of different components in digital marketplaces. In the context of this thesis, decentralization refers to the concept of delegating decision-making and activities away from a central authority. Disintermediation reduces or removes the involvement of trusted intermediaries when trading on a digital marketplace. This thesis introduces innovative approaches to decentralize and disintermediate all aspects of blockchain-based marketplaces. We first identify the five aspects of blockchainbased marketplaces: information management, matchmaking, settlement, fraud management, and identity management. We then design, implement, evaluate, and deploy five decentralized mechanisms. Each introduced mechanism focusses on one or two aspects of blockchain-based marketplaces. For each mechanism, we consider feasibility and realworld deployment as crucial requirements for successful adoption.