American multinational retail giant Walmart plans to patent a blockchain-based reselling marketplace solution. This has been revealed by the US Patent and Trademark Office (USPTO) recently, as part of the patenting process.
A customer who wants to resell a product currently has to find her own way to do so. She may opt for reselling marketplaces, but those aren’t optimal solutions i their current operating model.
Reselling marketplaces require buyers to explicitly trust resellers whom they have never met. While a large number of buyers do trust completely unknown resellers, it’s also true that new resellers have much difficulties in selling anything in a marketplace like eBay, because they haven’t sold anything before and have no reputation accumulated.
On the other hand, there are also cases where resellers use unethical scammers to build artificial reputation. Buyers have no way to know whether a reseller has built up reputation using such unscrupulous means.
While it’s theoretically possible for reselling marketplaces to implement know-your-customer (KYC) mechanism so that the buyers know that the reseller they are transacting with has genuine reputation, it’s often not practical. Smaller reseller marketplaces simply can’t mobilize the resources needed to implement a through KYC mechanism.
A technology solution where decentralized design will make every transaction transparent to all buyers and sellers, and trust is guaranteed systematically, without buyers having to explicitly trust unknown sellers, will help. Walmart has zeroed in on blockchain in their quest for such a technology.
Blockchain is a decentralized network, where computers on the network, called ‘nodes’, maintain a distributed database in a shared manner. Every node has complete details of all transactions in the blockchain, hence every node is a ledger. Hence blockchain is also called ‘distributed ledger technology’ (DLT). The network can’t be destroyed by taking out any central server.
Block records, called ‘blocks’, are linked vie a predetermined protocol in blockchain, and no existing block can be deleted or updated. A new block has to be created to update the blockchain, and it can be done only after solving a complex cryptographic puzzle, while consensus mechanism of blockchain ensures that every transaction is validated by majority stakeholders. Such rigor makes hacking a blockchain economically non-viable, hence blockchain also promises immutable records.
Smart contracts, i.e. pieces of code allowing legal-like functions, such as transfer of crypto tokens based on fulfillment of contractual obligations, govern relationship between stakeholders in a blockchain. This delivers trust in the system mathematically.
Walmart‘s proposed solution will require the customers buying their product to register in a blockchain-based resellers marketplace, for potentially reselling it in the future. The registration can be done through a point-of-sale (POS) system, or via web-based applications, or a mobile application. There may be a time limit to register the original product.
The reselling platform will be owned by the enterprise. The reselling transactions will all be recorded in a blockchain, with each record being tamper-proof, and fully transparent for other potential buyers to see. The reputation of the reseller will be mathematically guaranteed.
There are blockchain-powered decentralized marketplaces that have emerged, such as OpenBazar, and Ink Protocol. Walmart, headquartered in Bentonville, Arkansas, USA, is awaiting the grant of their blockchain-based reselling marketplace patent, however, the company has already made big strides in adopting blockchain. For e.g.:
- They have filed a patent application for a blockchain-powered “Smart Package” delivery system, for tracking package contents, environmental conditions around the package, and the location of it;
- They are ready to use blockchain for tracking supply chain for their live food business.