Traditionally, buying and selling online has always entailed a trade-off. You sacrifice privacy and cost savings for reliability, or risk being burned with no recourse when a transaction does not go as planned.
The blockchain-based startup Particl is building a better way to buy and sell online. The company is creating a new, blockchain-powered market that allows transactions that are simultaneously private, free of third-party costs and trustworthy.
The Drawbacks of Traditional E-Commerce
Traditional online markets fall into two categories, each with major pitfalls.
The first category is e-commerce sites where a central authority oversees transactions, such as Amazon. The benefit of a site like Amazon is that transactions are guaranteed. If a seller doesn’t deliver the purchase you paid for, or if a buyer fails to pay for their purchase, a third-party authority will solve the problem.
But this peace of mind comes at the cost of privacy. The company that runs the e-commerce site knows what you buy or sell, how much you paid for something, and usually lots of personal information as well. In addition, the company usually takes a cut of the transaction, which leads to added costs for buyers and sellers.
The second category of online markets are peer-to-peer e-commerce sites, like Craigslist. These sites offer matchmaking services for buyers and sellers, but do little else. Anyone can use them without revealing the details of their transaction to third parties and without paying transaction fees.
The drawback to conventional peer-to-peer markets is that there is no way to guarantee transactions. If a buyer or seller gets into a dispute, no one is going to help resolve it or offer compensation to the aggrieved party.
Particl’s E-Commerce Vision
Particl is working to productively disrupt online buying and selling by building a new platform that provides all of the benefits of peer-to-peer (and business-to-business) e-commerce without the drawbacks.
The Particl market uses cryptocurrencies and smart contracts in an innovative way to provide an e-commerce outlet where users get privacy, guaranteed transactions and freedom from third-party fees.
The Particl market is able to square the e-commerce circle through several innovative strategies. They include the following:
- Private Communication Tools
Privacy tools for communication, such as encrypted chats, are built into the Particl market. These make it possible for market users to interact in total anonymity, without relying on third parties. Neither Particl nor anyone else can access communications between users.
There are other tools available for private communication, of course; Particl doesn’t claim to have invented privacy tools. Yet by building them directly into its platform, Particl saves users the hassle of having to set up private communication channels using external tools. This approach also mitigates the risk that a misconfigured tool or social engineering could be used to defeat privacy measures
The Particl market is not an unruly, anything-goes arena. Nor is it one where a central authority gets to impose the law.
Instead, the Particl market will be self-governed by its own community. The self-governance architecture will include mechanisms for preventing the exchange of illegal goods: Particl is building an e-ommerce platform for mainstream buying and selling, not a murky darknet site. In addition, the Particl governance model will include rules for protecting users.
- MAD Escrow
To ensure the fairness and reliability of transactions without relying on third parties, the Particl market uses the innovative concept of Mutually Assured Destruction (MAD) escrows.
Under the MAD escrow model, both the buyer and seller in a transaction deposit money into a smart contract. The seller escrows an amount equal to the cost of the item they are selling, while the buyer escrows twice that amount. Each party must sign off on the transaction in order for it to take place. If one or both parties fail to sign off, each loses their escrow money.
While this escrow model creates a cost for both buyers and sellers in the event that a transaction goes awry, it also provides a strong disincentive for fraud because neither party can profit from a failed transaction — and if one party deliberately attempts to harm the other, both pay an equal price.
- Currency Agnosticism
While Particl has created its own cryptocurrency, called PART, the Particl market will not require users to utilize PART tokens (though there are additional privacy benefits if they do, namely support for Confidential Transactions and RingCT).
The market’s support for all cryptocurrencies reflects Particl’s goal of building an inclusive and dynamic e-commerce platform. In addition, because the market will not depend on a specific cryptocurrency, it will not face the risk of collapse in the event of problems with a particular cryptocurrency.
Traditional e-commerce models are broken. Users have to sacrifice privacy for reliability when making transactions, or vice versa. And they usually have to pay fees to whichever company runs their platform.
Particl is changing this by leveraging the blockchain. The Particl market will provide total privacy and reliability, without added costs.
The Particl market is currently in development, but you can test the latest code — which is completely free and open source — from GitHub to take a closer look. And if you’d like full details on the Particl market vision and the technology behind it, this white paper explains it all.