It has been several years since the ICO craze of late 2017 caused companies across many different industries to investigate whether or not blockchain technology and cryptocurrencies should be a core part of their business models. In fact, blockchain and crypto were so explosive that some companies did not even bother to investigate at all. They just simply added the word ‘blockchain’ to their names.
Since then, understanding of what blockchain is and what it can do has increased considerably; arguably, it is only now that blockchain protocols are beginning to be built and used in practical, meaningful ways on a widespread scale.
Interestingly, while the imagined blockchain and crypto integration of several years ago seemed very tech-heavy, with end-users dealing directly with tokens and blockchain transactions. Today, the projects that are being built to keep the tech side of things as hidden as possible, and the end-user experience as simple as can be.
As the UX of blockchain improves, so too does its range of use cases. Recently, Finance Magnates spoke with Justin Banon, Chief Executive and Founder of the Boson Protocol, about a growing sector of the blockchain and decentralized finance universe: decentralized commerce, or dCommerce.
The Boson Protocol is a dCommerce platform that allows its users to exchange digital value (in the form of cryptocurrency tokens) for real-world products, services or things without having to trade the tokens for fiat.
Justin spoke with us about the Boson Protocol, decentralized finance (DeFi) and the potential that dCommerce has to disrupt the world of eCommerce tech giants.
Disrupting the Flow and Control of Data in eCommerce
“You could think of large eCommerce platforms as doing two things, really,” Justin explained. “One is, they coordinate between a buyer and a seller, and they facilitate the transaction between them; they also may handle disputes and reversals. Boson Protocol also does this.”
The real difference between dCommerce platforms such as Boson Protocol and eCommerce platforms lies in the way that they handle data.
“These platforms also take commerce data and use it, yes to improve services, but also, they often hoard that data and use it to compete against the firms that operate on top of them, et cetera.” However, although Boson protocol “also accrues value to data,” Justin said that the platform “does it in quite a different way.”
“Whereas centralized eCommerce platforms have a fiduciary responsibility to their shareholders to extract maximum value from participants, Boson protocol (as a decentralized entity) is set up in such a way that the software prevents data capture by a centralized entity.”
Essentially, “Boson Protocol essentially coordinates transactions without extracting huge amounts of ‘rent’ from the participants,” he explained. “We coordinate those transactions in a largely autonomous way: we’ve invented a piece of game theory that basically means that you don’t need an intermediary, and in most cases, you don’t even need a human arbitrator.”
Additionally, “we store the data in a Web 3 data market that enables us to monetize that data, but return the value of the data to the community, to the users.”
“Take Facebook, for example, instead of all of the value of our data being separated from us and past up to Mark Zuckerberg and the shareholders, imagine if all the value from that data was recirculated within Facebook users, and you get a fair share.”
A Liquid Token Infrastructure
Who are the users of the Boson Protocol? The platform is not live yet, but Justin explained that in the future, “the participants will be sellers: similar to what you see on Amazon Inc. (NASDAQ: AMZN), eBay Inc. (NASDAQ: EBAY), et cetera, it’ll be people that want to sell services.”
On Boson Protocol, “they can upload and represent products and services as tokens that are essentially ‘blockchain vouchers’; then, they can connect with end-consumers who can then consume these services: they buy one of these vouchers and then go and redeem it.”
Justin explained that these vouchers are not completely restricted to the Boson Protocol ecosystem: “they can flow around as completely distinct entities,” he said.
“They’re not locked into a closed platform: in the same way that I can transfer Bitcoin to you, I can trade a token for a bicycle or a token for a meal. These tokens flow around the existing and emerging blockchain and decentralized finance (DeFi) infrastructure as representative of real-world things but in a digital format. There’s a whole ecosystem of participants emerging that can use these tokens.”
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Amazon Was a Small Startup Once, Too
The platform is due to launch its first application and core protocol toward the end of Q1 of 2021, and is targeted toward a global audience: “you can think of it a bit like an internet for transacting and transmitting real-world products and services that anyone can join and everyone can trust.”
And indeed, trust has been a major issue for many of the large centralized eCommerce companies. The problem has become so bad that, recently, the United States government has taken legal action to address it. But, how does something like the Boson Protocol compete with companies like Amazon, eBay and other eCommerce giants?
“I was studying platforms back when Amazon was disrupting the big book stores,” Justin said, as the company was doing in its very early days. Back then, the question was, “how could a small startup possibly disrupt Barnes and Noble and this kind of thing?”
“It was improbable,” he said. “But, it all came down to the business model.”
“The Amazon platform business model of coordinating a massive inventory of stock items (the ‘long tail’) with customers was fundamentally better” than what traditional bookstores had, he said. For example, “there was a limit on the number of books that you could stock in a store, and there were just a number of other facets to the business model that were disruptive.”
“We’re Not Applying Blockchain Technology to the Platform.”
“Likewise, there is a ‘first crop’ of dCommerce platforms” that are similar to what Amazon may have been in its very early stages, Justin said. “These platforms use blockchain, and they haven’t seen much traction yet, the reason being that actually, the technology of Amazon is actually pretty good for running a platform.”
But, what might make Boson different from any of the other dCommerce platforms that have not managed to pick up any traction yet? “The most disruptive feature of Boson is that we’ve invented a breakthrough game mechanism that automates away the need for human intervention,” he said.
Additionally, and perhaps more interestingly, “We’re not applying blockchain technology to the platform,” he said.
Instead, “we’re representing products and services as tokens, almost like entities or ‘stocks’, if you like, that can flow around liquid digital marketplaces.” In other words, “these trades and transactions [are not] performed in a closed platform.”
“You can see the impact of liquid, digital markets on financial services,” Justin said, “and the whole host of services that can be bundled and built on top of these things.”
“The Ability to Natively Swap Monetary Value for Non-monetary Value Directly” Is Key for the Boson Protocol
One of the important features of the Boson Protocol is that it offers its users “the ability to natively swap monetary value for non-monetary value directly is key to Boson Protocol’s model,” Justin said. As such, the on- and off-ramping from the fiat world into cryptocurrencies is reduced.
“For example, one of the applications that we’re building is a rewards program that offers cryptocurrency exchanges the ability to offer their customers rewards for real-world items, like meals and products,” he continued.
“What Boson enables is for an exchange to issue a token, a standard cryptocurrency asset, to their customers, which their customers can then go and redeem for a real-world item directly,” Justin said. “There’s no need to unload into fiat money before buying real-world products and services.”
Additionally, the merchants that are providing the rewards that cryptocurrency exchanges are offering to their users do not have to handle the Boson Protocol-issued reward tokens directly at all, if they do not want to.
“There are a number of options,” Justin explained. “We could have merchants directly integrated with Boson, or simply, we can arrange a deal with [merchants] so that they never see any of the blockchain or crypto assets if they don’t want to. It can be completely invisible.”
“This speaks to this concept of what we’re calling a dCommerce ‘stack’,” he continued. “There will be different components, so, for example, components to enable last-mile delivery via couriers that would plug in.”
“These on- and off-ramps are incredibly important,” Justin said. “Blockchain technology is truly core, backbone technological infrastructure. It’s not something that lots of sellers and buyers are necessarily going to integrate with.”
Therefore, “enabling suppliers to have a very familiar, API-driven interface in which to kind of upload their products and services and receive payment is absolutely key. Likewise, being able to plug into exchanges is very important.”
“Because Boson Protocol uses ERC20 standard cryptocurrencies,” which are based on the Ethereum network, “exchanges can list the tokens easily. There is zero integration with any crypto infrastructure.”