Towards a Decentralized and Secure Electronic Marketplace

For commerce (electronic or traditional) to be effective, there must be a degree of trust between buyers and sellers. In traditional commerce, this kind of trust is based on such things as societal laws and customs, and on the intuition people tend to develop about each other during interpersonal interactions. The trustworthiness of these factors is based, to a large extent, on the geographical proximity between buyers and sellers. But this proximity is lost in e-commerce. In conventional electronic marketplaces the trust among participants is supported by a central server that imposes certain rules of engagement on all transactions. But such centralized marketplaces have serious drawbacks, among them lack of scalability, and high cost. In this paper we propose a concept of decentralized electronic marketplace (or DEM, for short) which would allow buyers and sellers to engage in commercial transactions, subject to an explicitly stated set of rules, called the law of this marketplace—which they can trust to be observed by their trading partners. This trust is due to a scalable decentralized mechanism that enforces this stated law, and to the reputation mechanism that is also supported by the law of DEM.