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We recently connected with Daniel Dabek, the Executive Director and Chief Software Architect at the Safex Foundation, an organization that supports blockchain-centric e-commerce solutions. Dabek explained how Safex aims to “democratize” the engine of digital commerce by leveraging blockchain technology.
He believes that distributed ledger technology (DLT) and cryptocurrencies have created a new movement in the e-commerce industry, which will allow merchants to compete on a whole new level.
Our discussion is below.
Crowdfund Insider: What role does blockchain play in making e-commerce safer, more efficient, faster and more inclusive?
Daniel Dabek: Blockchain and cryptocurrencies empower the user. People generate their own account (private key) and no longer need to store sensitive financial information like credit card numbers or personal information on random websites when shopping online. This substantially reduces losses from fraud and hacking. There are simply too many goals for hackers when everyone is in control of their own private key.
In addition, the cost is solved because a centralized company has to purchase and manage an extensive server infrastructure. This activity is extremely expensive and requires extensive experience for installation, operation and maintenance (even paid in advance). However, a suitable open source public blockchain network is established by ordinary people and companies.
Anyone in the world can download the software and turn it on. This instantly connects a new computer to the global network and immediately begins participating in the processing and transport of transactions for users around the world. Therefore, it is possible to implement a large global infrastructure based on demand very economically and efficiently.
This low-cost, low-commitment infrastructure leads to the effect that network usage is also cost-effective, meaning that it is accessible to more people. Imagine paying $ 0.0001 to sell a product and anyone on Earth can see and buy it; instead of paying $ 39.99 a month to Amazon, where only credit card holders can purchase. Far more people are able to afford blockchain-based services than those who are centralized and deny cryptocurrency.
Crowdfund Insider: Why do we need decentralized markets compared to traditional markets like Amazon and Alibaba for buying and selling goods?
How do you think these markets will be able to compete against the digital commerce giants who already control most of the market?
Daniel Dabek: The reason the e-commerce giants control market share is due to their high fees all along the payment processing chain. These commissions act as a great governor on merchants’ ability to progress, so the e-commerce giant is able to act faster and heavily consume the lion’s share of the market.
The introduction of blockchain and cryptocurrencies to the equation levels the playing field for traders versus giants. Merchants will finally have an alternative that is highly low cost to operate and allows for innovation. Merchants will no longer be limited by platform policies that limit the ability for others to purchase the supplier’s inventory.
Safex democratizes the ecommerce engine by establishing it on a blockchain and allows the people of the world to participate openly. This has created a new movement in the industry and is on a trajectory to allow traders to compete on a whole new level. We believe e-commerce will expand at the expected rate (> 20%) per year due to the emergence of platforms such as Safex.
[We think that there’s] been a platform [before] which provides instant non-repudiable payments to merchants in real time. This means that traders can immediately reinvest their earnings into new inventory and start making financial decisions that weren’t possible before the advent of cryptocurrency and blockchain networks.
Crowdfund Insider: As a decentralized global marketplace, what benefits do you think Safex has over Amazon and its other centralized counterparts?
Daniel Dabek: The cornerstone of the Safex market is the blockchain network. This is open source software development that anyone can download and run a node, essentially storing and serving transaction data recorded in the blockchain ledger. It is low cost to use, and a large collection of these low cost free nodes creates a great network and solid infrastructure.
While Amazon and other centralized marketplaces have to maintain and manage vast silos of servers and data exchanges, our network is united in the beginning and it’s our community and the fun of running the network is our infrastructure. In this way, we are able to provide the lowest cost to host and serve the market data and payments that make the world go round.
Crowdfund Insider: How do you plan to manage the buying and selling process on Safex’s e-commerce platform when the platform is totally decentralized?
Daniel Dabek: The platform itself stores two sets of data: the financial item and the arbitrary data. The blockchain is concerned with ensuring that the products are hosted and that other users are able to send funds to the offer and that both parties are aware of the transaction and that the funds are immediately canceled on the blockchain. This incorporates exchange rate feeds [that are] updated [in a] decentralized [manner] on the blockchain via price oracles.
In addition to the financial element needed to list an offer in the blockchain ledger, there is the extra data field which accepts any random set of data. This is where we employ a standardized data structure that can be easily detected and read by almost any programming language. This additional data is where you can store images, descriptions, formatting, country restrictions, shipping methods, and any other data developer or merchant will adopt. The protocol is released with an initial version, but is flexible to expand its offering to users.
Anyone with access to the internet and computers / phones can download and configure a wallet application that interfaces with this market. They can list, manage and purchase products from a single app. App hosting depends entirely on the decentralized blockchain network for data and interactivity.
Crowdfund Insider: What are the reasons people might want to switch from buying and selling on traditional platforms to doing so on Safex? What benefits does the platform offer to its buyers and sellers?
Daniel Dabek: The network effect of blockchains is profound. Anyone on earth can communicate with at least some of the thousands of blockchain nodes in the world and start making transactions. Safex takes advantage of this advantage by enabling direct trade on that network. This means that merchants will be able to engage customers on a global scale. Because blockchain is globally accessible, buyers should have access to a larger catalog of products to choose from.
This will be possible as large e-commerce platforms have high upfront fees, which often require a credit card to start selling. Safex clears this important deterrent as anyone can start selling by essentially downloading a wallet application. Creating an account and selling products costs fractions of the cryptocurrency which cost fractions of a penny and there are no recurring costs to use the platform. We expect existing merchants to be listed at least in parallel and, importantly, bring a whole new crowd to the ecommerce space due to our lower barriers to entry.
And an important point about Safex being a cryptocurrency is that payments are instant and cannot be charged back. This means that suppliers are able to recapitalize their business at the point of sale (funds are available immediately from a sale), rather than waiting and processing with centralized entities which often take weeks and months before suppliers can restock.
Crowdfund Insider: What has Safex’s story been so far and how do you plan to expand the platform in the future?
Daniel Dabek: Safex has built a large early adopter community made up of software developers, tech enthusiasts, marketers, investors, and most importantly, existing users of Amazon, Ebay and others. In 2015, we established the project and released a participatory token in an auction where 99% was sold and ~ 150 bitcoins worth $ 50,000 were collected.
Since then, the community has proliferated over 10,000 users as the development team has assembled the code for a sovereign blockchain network and cryptocurrency with an e-commerce platform. This year, after 9 months of live testing with hundreds of participants, the team is ready to release the market to the public.
Cryptocurrency has been used to purchase services and goods throughout its existence, although never before has the entire trading process been vertically integrated into a decentralized protocol with adequate incentives for all participants. Now, our mission is to equip the people of the world with a strong tool that can enable their prosperity by providing goods and services to the world market on Safex.
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