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Blockchain - An Amazon Killer?

2K views 18 replies 12 participants last post by  Bluebonnet 
#1 ·
Unless you're a speed reader, this (full article link at the foot) will take maybe twenty minutes to read, but I think most people will find it worthwhile. I have trouble understanding technology like Bitcoin and Blockchain and this is far and away the best explanation of them I've read.

At its most basic level, a blockchain, among other services, can allow all its participants to collectively remove their valuable personal data from the commercial giants like Amazon and Facebook and Google and decide who gets to see it and who gets to use it. The data is kept secure by needing to be verified by thousands, maybe hundreds of thousands of PCs. The writer offers an example of a hacker being faced with attacking every single PC on the Blockchain to try to steal user data as opposed to cracking one (albeit on numerous servers) data store like Amazon. He must go from "breaking into one house to breaking into every house in the village"

The extract below made me think that if all authors and book buyers used a similar app to the one mentioned (aimed at books of course, not transit) then Amazon's digital book service could pretty much close down.

But when a new service like Uber starts to take off, there's a strong incentive for the marketplace to consolidate around a single leader. The fact that more passengers are starting to use the Uber app attracts more drivers to the service, which in turn attracts more passengers. People have their credit cards stored with Uber; they have the app installed already; there are far more Uber drivers on the road. And so the switching costs of trying out some other rival service eventually become prohibitive, even if the chief executive seems to be a jerk or if consumers would, in the abstract, prefer a competitive marketplace with a dozen Ubers. "At some point, the innovation around the coordination becomes less and less innovative," Burnham says.

The blockchain world proposes something different. Imagine some group like Protocol Labs decides there's a case to be made for adding another "basic layer" to the stack. Just as GPS gave us a way of discovering and sharing our location, this new protocol would define a simple request: I am here and would like to go there. A distributed ledger might record all its users' past trips, credit cards, favorite locations - all the metadata that services like Uber or Amazon use to encourage lock-in. Call it, for the sake of argument, the Transit protocol. The standards for sending a Transit request out onto the internet would be entirely open; anyone who wanted to build an app to respond to that request would be free to do so. Cities could build Transit apps that allowed taxi drivers to field requests. But so could bike-share collectives, or rickshaw drivers. Developers could create shared marketplace apps where all the potential vehicles using Transit could vie for your business. When you walked out on the sidewalk and tried to get a ride, you wouldn't have to place your allegiance with a single provider before hailing. You would simply announce that you were standing at 67th and Madison and needed to get to Union Square. And then you'd get a flurry of competing offers. You could even theoretically get an offer from the M.T.A., which could build a service to remind Transit users that it might be much cheaper and faster just to jump on the 6 train.
https://www.nytimes.com/2018/01/16/magazine/beyond-the-bitcoin-bubble.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news&_r=0
 
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#2 ·
The problem is that in this hypothetical situation, virtually ALL authors and ALL book buyers would have to participate, using the same app, for there to be enough competition to make Amazon give up on e-book sales. I don't see that happening. The author's example of Uber remaining the most popular ride service because "there's a strong incentive for the marketplace to consolidate around a single leader," is actually what is known in marketing as inertia. For example, you keep using a product or service just because it's familiar, and you feel it's too much trouble to try the competitor's product, even if they give you a giant coupon.

People who shop (for any kind of product) at Amazon are not necessarily sticking with Amazon because of inertia. Amazon tries very hard to please the customers, and the company is rewarded with repeat business and new customers attracted by the company's good reputation and recommendations from friends. No one thinks Amazon is going to suddenly come crashing down, as Uber might, considering the bad behavior of some of their executives and their many attempts to evade regulations and legal scrutiny. The latest example of Uber's messiness is the "Ripley" software they used to remotely lock their computers and change passwords to prevent law enforcement from accessing them: https://www.theverge.com/2018/1/11/16878284/uber-secret-tool-block-data-law-enforcement-ripley

As for books, why do so many people buy their books from Amazon? Two reasons: (1) they trust the company (as noted above), and (2) Amazon has a vast selection of books. On a blockchain app offering books from dozens (or hundreds) of authors/sellers, how would the consumer know who was as trustworthy as Amazon? How many of the potential book suppliers would have the same large selection of books as Amazon?

The transit example of someone posting "I am here and I want to go here," for books would be "I want to download [type of book]." Then the consumer would receive replies from (potentially) hundreds of hopeful authors. I believe this would be as difficult and frustrating as searching for a book is now on Amazon. You search for what you want, but so many authors have deliberately miscategorized their books that it's hard to find what you wanted.

Okay, suppose we're in the blockchain app environment. The consumer posts "I want a thriller novel," and waits for sellers to respond on the app. I'm afraid that way too many of the hopeful authors who responded would do the same thing they do today on Amazon: say the book is something it's not. The consumer wanted a thriller, but would get offers for erotica, romance, space opera, fantasy, etc., in addition to books truly in the thriller genre. The usual crowd of scam authors would show up too, trying to get in on the action.

Another question: where would book buyers post reviews, in the blockchain app environment? On some review app? Who would verify the reviews are legit? A bunch of blockchain miners who could take forever to complete the math calculations to prove the legitimacy? If the blockchain environment eschews any centralized organizations, where would the reviews be posted?

I can't defend or promote blockchain until I can understand it, and unfortunately it's quite hard for me to understand although I've read many articles about it. I think I'm beginning to sound like a Luddite, so I'll stop now.
 
#3 ·
The issue is indeed one of trust and for those who know what blockchain is a sizeable proportion of computer users will refuse to use it. Just as many (me included) will not use torrent downloads or in an earlier era engage in SETI@Home. Blockchain's biggest problem, rather than its biggest advantage, is security. The endless run of stories of major hacks of large corporations will paradoxically make people less likely to trust something as anonymous as blockchain. To quote Gandalf in Peter Jackson's Lord of the Rings "We do not know who else might be watching."
 
#4 ·
Since the indie folk I hear discussing blockchain the most are J Penn and Orna Ross, and since I tend to associate both with unbridled futurist optimism, the skeptic in me wants to say, “eh, we’ll see” about the whole blockchain thing.

But the one idea I’ve heard that resonates as likely to me is that, in the event of blockchain technology becoming a primary currency factor, Amazon will probably acquire, rather than be toppled by, said technology. And I mean Amazon as a whole. How much of that might trickle down the the KDP system... who
can say, lol.
 
#5 ·
Admittedly, I know nothing about blockchain, but I did see this the other day...

Ten years in, nobody has come up with a use for blockchain
Everyone says the blockchain, the technology underpinning cryptocurrencies such as bitcoin, is going to change EVERYTHING. And yet, after years of tireless effort and billions of dollars invested, nobody has actually come up with a use for the blockchain - besides currency speculation and illegal transactions.
Article: https://hackernoon.com/ten-years-in-nobody-has-come-up-with-a-use-case-for-blockchain-ee98c180100
 
#7 ·
BVLawson said:
After hearing about how several companies' stock prices soared after they added "Blockchain" to their titles (and made no more changes), I'm thinking about changing my name to Blockchain V. Lawson. I'm guaranteed to make the NYT bestseller list.

FYI, timing can be fun. This article on "Blockchain for Books" was reported on Passive Voice today:

http://www.thepassivevoice.com/2018/01/blockchain-for-books/
Heh, talk about timing. Some cryptocurrency fanboys are having a very, very bad day.
 
#8 ·
Bitcoin and Blockchain are like watching a fire in a fireworks factory.

You know it will eventually gutter and die, but along the way there's dozens of flareup and ruckus explosions, destroying everything around them and sending other things sky high before gravity inevitably brings them crashing down to misery and squallor.
 
#13 ·
she-la-ti-da said:
No. Amazon will either buy it out, or destroy it, or just refuse to deal with it, like they do Paypal.
I don't think the PayPal ban is a technology issue. My understanding is that Amazon refuses to use PayPal because it was created by a competitor, eBay. Amazon won't touch PP. When they bought Zappo's (shoe website), Amazon eliminated the PayPal payment option. I remember that well because I always used PayPal at Zappo's. The acquisition was in 2009, and they dumped PayPal as of January 2014. You can still see the notice on the Zappo's website:
https://www.zappos.com/general-questions#cant-use-paypal
 
#14 ·
I don't know how many correspondents on this thread have read the full article from the NYT. Its focus is much more on the potential of blockchain technology than on cryptocurrency.  As to the commercial imperative - what would readers/authors get from using such an app - if I'm understanding it correctly, everyone who signs up becomes a shareholder at some level in the technology and the rewards need not be currency based.

Again, if my understanding is correct, Amazon could not simply buy blockchain technology; there is no entity to buy from. It is open source. If Amazon removed a middleman in the publisher, why can't technology develop further to also remove the middleman that is the shopwindow & payment processor? In effect, that's all that Amazon is. It connects buyers with sellers in the same way Uber connects drivers with passengers.

Surely the ultimate achievement of ever-developing technology in this sphere would be to remove as many tiers as possible between buyer and seller.
 
G
#15 ·
thesmallprint said:
It connects buyers with sellers in the same way Uber connects drivers with passengers.
This logic only applies in commodities, where everything is considered the same and cost/availability are the only factors. If I need to get from point A to point B, I don't particularly care if the person who picks me up is Jane Doe in a Toyota or John Doe in a Ford. So long as the car is clear and I get to my destination on time.

I don't buy books as commodities. I DO CARE which books I end up with. I don't select random titles with no knowledge of the author, content, or plot and just say "Hey, so long as it is written in English, it is okay." That is not how people buy most things.

When people shop, they want to find what they want, pay for it, and go. Too often, when we talk about the buyer/seller relationship, we fail to consider the actual buyer's thought processes and needs. It benefits SELLERS to remove middlemen because then we keep more of the profit. But it does not always benefit BUYERS, who then have to engage in more front-end labor to find the things they want and buy them.

I work in contract packaging. Understanding consumer behavior is a fundamental part of the business. Nobody is concerned about coming between the buyer and the seller. The problem is getting between the buyer and WHAT THEY ACTUALLY WANT. The reason Amazon is Amazon is because they connect buyers with WHAT THEY WANT. The buyer logs on, finds what they want, buys it, and is done. The fundamental problem with most of these concepts like blockchain and whatnot is that they don't solve a need FOR THE BUYER.

The average consumer does not want to be a "shareholder" (beyond their 401K) in a retailer. They want to buy their stuff and get out. The average consumer is not really interested in buying directly from each author. Sure, there is a demographic that purposefully does so as a matter of social justice or some high-brow reasoning. But that is not the typical consumer concern. They want to buy their stuff and get out.
 
#17 ·
Bards and Sages (Julie) said:
This logic only applies in commodities, where everything is considered the same and cost/availability are the only factors. If I need to get from point A to point B, I don't particularly care if the person who picks me up is Jane Doe in a Toyota or John Doe in a Ford. So long as the car is clear and I get to my destination on time.

I don't buy books as commodities. I DO CARE which books I end up with. I don't select random titles with no knowledge of the author, content, or plot and just say "Hey, so long as it is written in English, it is okay." That is not how people buy most things.

When people shop, they want to find what they want, pay for it, and go. Too often, when we talk about the buyer/seller relationship, we fail to consider the actual buyer's thought processes and needs. It benefits SELLERS to remove middlemen because then we keep more of the profit. But it does not always benefit BUYERS, who then have to engage in more front-end labor to find the things they want and buy them.

I work in contract packaging. Understanding consumer behavior is a fundamental part of the business. Nobody is concerned about coming between the buyer and the seller. The problem is getting between the buyer and WHAT THEY ACTUALLY WANT. The reason Amazon is Amazon is because they connect buyers with WHAT THEY WANT. The buyer logs on, finds what they want, buys it, and is done. The fundamental problem with most of these concepts like blockchain and whatnot is that they don't solve a need FOR THE BUYER.

The average consumer does not want to be a "shareholder" (beyond their 401K) in a retailer. They want to buy their stuff and get out. The average consumer is not really interested in buying directly from each author. Sure, there is a demographic that purposefully does so as a matter of social justice or some high-brow reasoning. But that is not the typical consumer concern. They want to buy their stuff and get out.
This. This-this-this-this-THIS!!! It's why people who don't even like Amazon and Walmart as companies shop there. They can get what they want quickly and easily then get out. This is why getting readers to move to an alternative platform is so hard. They go to Amazon and have access to millions of books in one place, one click and the book is on their Kindle Fire/iPhone Kindle app/computer Kindle app/etc. and they can also get that pair of shoes and cell phone charger at the same time. That's what the competition is up against. Unless you can offer a better experience for the BUYER, Amazon is going to stay on top.
 
#19 ·
thesmallprint said:
I don't know how many correspondents on this thread have read the full article from the NYT. Its focus is much more on the potential of blockchain technology than on cryptocurrency. As to the commercial imperative - what would readers/authors get from using such an app - if I'm understanding it correctly, everyone who signs up becomes a shareholder at some level in the technology and the rewards need not be currency based.

Again, if my understanding is correct, Amazon could not simply buy blockchain technology; there is no entity to buy from. It is open source. If Amazon removed a middleman in the publisher, why can't technology develop further to also remove the middleman that is the shopwindow & payment processor? In effect, that's all that Amazon is. It connects buyers with sellers in the same way Uber connects drivers with passengers.

Surely the ultimate achievement of ever-developing technology in this sphere would be to remove as many tiers as possible between buyer and seller.
I did read the entire article.

We understood it in different ways. I don't think that "everyone who signs up becomes a shareholder at some level in the technology and the rewards need not be currency based." I thought that if you participated in blockchain cryptocurrency at a certain level, you'd become a miner [for the creation of new units of cryptocurrency], not a "shareholder" in the technology. Look at it this way -- all of us who use computers are using Windows or Apple technology, but that doesn't make us shareholders in the companies. Alternatively, we can use Linux, an open source technology, but we don't become shareholders in Linux either. Going beyond crytocurrency -- as you pointed out, blockchain technology is open source, so there would not be one company with proprietary rights and the ability to sell shares in a venture. What companies such as Kodak are trying to own and sell are their proprietary cryptocurrencies, not the blockchain technology itself.

What "rewards" that are not currency-based would participants receive in return for using blockchain technology, other than the opportunity to become a miner? You may be thinking of blockchain users as stakeholders rather than shareholders. Definition from the Business Directory.com: "Stakeholders can affect or be affected by the organization's actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources." Wide adoption of blockchain technology would certainly affect all of those stakeholders, and could affect them in ways that were beneficial, i.e. rewards.

About payments: I'm not aware of a pressing need for new payment options at his time. (Granted, I am saying that from the viewpoint of the consumer.) Current payment processing technology for online purchases is not so cumbersome that a critical mass of customers are seeking alternative payment methods such as cryptocurrency. Existing payment procedures are not perfect, but they're still pretty efficient. PayPal does have some layers -- your bank account and your credit card backup -- but you don't have to use PayPal if you don't like it. You can use a credit card at almost any online store, and a debit card at many stores. Amazon has a payment option that does not require any kind of card. You can set up a direct debit to your bank account for Amazon purchases.

The only advantages I can see for merchants using blockchain payment technology would be elimination of the fees they have to pay to credit card companies and PayPal. However, I doubt that a blockchain payment system would be entirely cost-free. For consumers, using blockchain payment would enable them to avoid interaction with banks and credit card companies, if that's their goal. They may wish to be anonymous buyers. Or they may be un-banked. But there are ways to order products without a bank account or credit card. Some online retailers will accept money order payment by mail, or customers can use things like Green Dot cards. You can also use the old way: wire a cash payment through Western Union. There's a fee, but the transaction is simple and fast.

Many of us like to say, "Cut out the middleman!" but sometimes you need them. Middlemen can be valuable to the customer, such as in dispute resolution. Credit card companies can help the consumer resolve purchasing or product quality problems; American Express is known for their great service in this area. Amazon and PayPal have good dispute resolution procedures too. If blockchain eliminated all middlemen, it might also leave the consumer stranded and alone to resolve any disputes. Middlemen are also valuable to the supplier, in terms of outsourcing distribution.

Anyway, I think this is a good discussion, and I'm glad you introduced the topic, thesmallprint.
 
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