What Is a Decentralized Marketplace?

A decentralized marketplace, built on blockchain technology,  allows traders or investors to trade with each other while eliminating middlemen. They are available globally  and require no intermediaries to make trades possible. 

No one has to know or trust anyone else as each trader has a copy of the exact same data and if the trade conditions are not fulfilled or data is altered or corrupted, the transaction cannot be executed. 

Decentralized marketplaces also reduce points of weaknesses in systems where there may be reliance on specific actors which can result in reduced access to resources, outages, bottlenecks, or lack of incentive mechanisms to prevent corruption or inefficiencies. 

While most commonly used for cryptocurrencies, investors can also use decentralized marketplaces to trade NFTs, houses, or even patented innovations or intellectual property. 

Centralized marketplaces often have higher fees, lack transparency, and create rules that users may not wish to abide by. They also have greater security risks because the network relies on a single point which increases the chances of failure or hacking. On a decentralized marketplace, trades are executed by the traders only, with funds transferred, thanks to smart contracts. 

They are more transparent because traders must all mutually agree on data and information that takes place in the exchange. Since there are no intermediaries, transaction costs are much cheaper. 

If buyers and sellers agree to conditions, the transaction is executed automatically. Traders also don’t need to be located in the same place to make a trade. 

Author:

Johannes Schweifer is the CEO of CoreLedger, a company empowering businesses of all sizes to access the benefits of blockchain technology. Schweifer co-founded several blockchain start-ups, including Bitcoin Suisse. He’s a passionate problem solver, holding a master’s degree in Chemistry and a PhD in distributed computing and quantum chemistry.