Decentralization is not an unnecessary luxury; it is a necessity. In a forward-looking article in The Atlantic Ocean in 2012, science fiction writer Bruce Sterling referred to the likes of Amazon, Facebook and Google as “The Stacks”, who predict the insidious seizure of power that has taken place over the past decade. As the giant tech companies consume more and more of our lives, the fact that technologies are being developed that allow us to go against them is not only encouraging: it’s also essential.

Because Bitcoin (BTC) began decentralizing payments in 2010, we have seen the process of disintermediation at work in many sectors, from decentralized identity and digital asset management decentralized gaming and prediction markets.

However, there is one sector where – until now – it has been impossible to free us from the grip of monopolistic power: the trading world. Registering physical assets on blockchains is something that has been possible for some time, but that alone has not been enough to create a fully decentralized trading system.

Why do we need this so badly? Isn’t it true – as proven during the COVID-19 pandemic – that the current trading system, operated by centralized companies, already meets our needs? We are now used to the idea that we can order something online and have it delivered the next day or even the same day. If something is wrong with our purchase, we can have reasonable assurance that it will be resolved by the company that brought buyers and sellers together.

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Sometimes it’s hard to imagine exactly how the next iteration of a technology will improve our lives, especially when the current one seems to be working enough. We’ve all heard Henry Ford’s quote about ‘faster horses’, and it wasn’t until Bitcoin arrived – and later the decentralized financial ecosystem – that many people began to realize how inefficient and extractive the old financial markets are.

It is likely that the emergence of decentralized Web 3.0 networks will be one of the most powerful meta-innovations in human history. This technology not only has the potential to stimulate innovation, but also to accelerate the speed of technological evolution and economic growth in such a way that we fundamentally solve the innovation problem. This would trigger a transition from the meta-system to a post-scarcity, post-capitalist crypto-economy of abundance, while resolving species-threatening negative externalities.

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So, what benefit could a decentralized trading system provide? The truth is, great legacy systems of human activity are the enemies of innovation and progress. Centralization can create bottlenecks and systemic inefficiencies, while top-down management means that many exciting new ideas never get off the drawing board.

Opening up these areas of business by providing suppliers of all sizes with the same tools, data, and opportunities currently only available to a subset of the largest and most privileged companies, creates a diversity of products, services and payment rails and a true “wisdom” of crowds ā€¯quality assessments and recommendations that we can hardly imagine today Decentralized value chains are by their very nature more efficient because the value flows freely in such a system without the need to divert resources to hire-seeking middlemen.

If this is the vision, what are the practical requirements of such a system? A fully functioning decentralized trading or “d-commerce” network should provide automated mechanisms to replace centralized transaction coordination and a Web 3.0 powered data marketplace to replace data hoarding.

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In terms of coordinating transactions, existing decentralized systems can eliminate middlemen and the need to trust third parties, but at a price – by introducing some sort of arbitrage, which involves costs and friction. These costs can mean that transactions below about $ 100 break the business model because arbitrage costs cannot be lowered below a certain threshold. The challenge that decentralized protocols face is how to coordinate trading between buyers and sellers in a way that decentralizes trust but reduces arbitrage, with all its externalities, so that trading can be automated effectively.

Thanks to innovations in the field, transactions can take place with it nonfungible token vouchers, effectively converting them into futures contracts that minimize the need for human arbitrage and provide seamless integration with the rest of the Web 3.0 ecosystem. Imagine a world where you can go to a shop in Decentraland and buy a painting or a custom guitar delivered to your home in real life, or where the smallest seller can compete on a level playing field with even the largest , most established competitors.

Cutting the ties that bind us to existing extractive networks will not be easy, but it is necessary to ensure that decentralization ultimately encompasses the real world alongside the digital one.

The views, thoughts and opinions expressed here are the sole ones of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Justin Banon is the CEO and co-founder of Boson Protocol, a project that uses smart contracts to drive real-world commerce. Prior to that, Justin headed Collinson’s Travel Experiences Division, where he led a group of global loyalty rewards platforms including LoungeKey, Mastercard Airport Experiences and Priority Pass. Justin has a degree in physics from Imperial College London and also holds a master’s degree in e-business and innovation from Birkbeck College, University of London, and a master’s degree in digital currency from the University of Nicosia.