Blockchain may make e-commerce cheaper, fairer

A Blockchain-based system that allows buyers and sellers to interact directly can make for digital goods “cheat proof” and the products cheaper, says a study by India-origin researchers.

Blockchains allow multiple stakeholders to transact money or data virtually over linked

Besides Blockchain, their proposed solution involves “smart contracts” and game theory.

“Our scheme offers potentially a big improvement over the state-of-the-art in because it allows buyers and sellers to interact directly with each other without the need for third-party mediators of any kind,” said Bhaskar Krishnamachari, at Viterbi School of Engineering, University of Southern California, the US.

“It uses a dual-deposit method, escrowing a safety deposit from both buyer and seller that is returned to them only when they behave honestly. And the verification of who is at fault and who is honest is done automatically by the smart contract,” added Krishnamachari.

This “smart contract” stores a good’s digital hash code or “digital fingerprint”.

Krishnamachari created an algorithm that runs on a programmable as a “smart contract” with Aditya Asgaonkar, a recent undergraduate computer science alum at BITS Pilani

Here’s how the system might work:

An wants to sell her digital book, but she hopes to avoid going through or some other company that takes a commission.

Instead, she uses Asgaonkar’s and Krishnamachari’s blockchain-based solution and lists the book’s price at $20. An interested buyer contacts her.

To ensure an honest deal, both the buyer and seller agree to pony up a $10 deposit through a programmable platform.

The then sends the digital book to the buyer, who could only access it by making a verifiable payment for the correct amount.

If the transaction satisfies everybody, then both parties receive their deposits…

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