The Dangers of —and Fix for —”Fake Markets”

The Dangers of--and Fix for--Fake Markets with free trade through OpenBazaar

 

The Internet facilitates an astounding (and ever-increasing) amount of commerce in our world. Allowing people to communicate with each other anywhere in the world and at low cost has ushered in an new era of global trade.

However, a few powerful organizations wield great influence over commerce online, and they have used their power to set up a rigged game. A “fake market.”

Anil Dash recently wrote an article entitled “Tech and the Fake Market tactic” which gives examples of how a few companies have creating markets online that appear fair, but in reality are tilted in their own favor:

  • Google’s results showing Google products first
  • Amazon displays it’s own products over better alternatives
  • Uber drivers’ rates aren’t decided by the drivers but set by Uber

These companies aren’t doing anything you wouldn’t expect them to do — they are using their popularity to give themselves a further advantage. But as these companies’ share of online commerce grows, their ability to further manipulate the markets in their favor grows as well. It’s not hard to imagine how Google, Amazon, or other huge companies on the Internet could further their positions as “default” services by manipulating what their users see for their own benefit.

These companies also collect the data of all their users for their own purposes, charge fees when users sell on their platforms, and censor trade based on their own interests or on behalf of governments. They act as gatekeepers into their own tightly-controlled system. Most users aren’t aware they are seeing a rigged market, and even if they do realize it they aren’t aware of any alternatives.

What can be done about these rigged markets? In his article Anil suggests the following course of action:

Perhaps the single most effective action we can take is to educate our elected officials about the changes that are happening.

I disagree with Anil that elected officials are the right people to solve this problem. Their only tool is the application of law, which is a powerful but blunt instrument. Politicians don’t have a compelling track record when it comes to understanding new technologies. Regulators are often strongly influenced by the people they are regulating — a term called “regulatory capture” — and these powerful companies would try to help make the new rules end up in their favor.

There’s a more compelling way to address rigged markets: bypass the gatekeepers of online commerce altogether.

Their power comes from the centralized nature of the existing commerce platforms. They control the center; they control the commerce.

Fortunately, a handful of emerging technologies gives us the ability to fix these rigged markets once and for all. But new markets are emerging that have no center to control. They are decentralized, meaning each user in these markets connects directly to other users. These markets have no gatekeepers; there are no gates to keep in a completely peer-to-peer marketplace. Decentralized markets also have no fees, no data collection, and no censorship.

They can’t be rigged.

It’s not possible to have a truly open and transparent marketplace when one party controls the entire market. But online markets can be fair and free. Not because some elected officials may demand it, but because decentralization creates a level playing field where no one has an advantage over anyone else.

Decentralized tools such as OpenBazaar and Bitcoin are already being used as an alternative to the dominant online commerce platforms and payment methods. If you want to participate in online commerce that is fair and free, trying using them today.


Ready to fight back against fake markets?
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