Businesses and organizations worldwide have realized that data-driven decisions are far more effective than the traditional trial and error methods and intuitions. As a result, they started generating data out of every operation and started analyzing the data to figure out opportunities to perform better, accelerate growth and enhance operational efficiency.
But, once used, these data are often kept in data silos. The data owned by one organization can be useful for another, but unfortunately, sharing data between organizations is not an easy task. Several challenges are involved, such as data privacy, usage rights, anonymity, etc.
However, blockchain-based Decentralized Data Marketplaces offer a solution to this problem by allowing businesses and organizations to sell private information while providing privacy, anonymity, transparency, and access control. These platforms often possess an in-built trust layer which enables data providers and consumers to build value on top of a trustless and censorship-resistant protocol, which promotes an open platform where anyone can join and add value to the network and community.
In essence, decentralized data marketplaces run on a secure, smart contract blockchain that allows consumers to maintain absolute control over their data. In this article, we’ll learn about the Scope of Decentralizing Data Marketplaces using Blockchain
Decentralized data marketplace or exchange is a network based on a secure, smart contract blockchain that allows users to regain ownership of their data and monetize data properties without the need for a centralized framework. Some of the key characteristics of a decentralized data marketplace can be seen as follows:
In simple words, it is a decentralized network where organizations can participate to sell or buy data. The smartcontract driven marketplace operations ensures that the data provider can safely sell their data to data buyers with out compromising data privacy. Decentralized data marketplace, enables consumers to sell private information while making the following guarantees:
Decentralized data marketplaces operate very similarly to their centralized counterparts. The blatant difference here is the level of privacy and security that you can achieve with decentralized networks.
A decentralized data marketplace can give researchers, firms or private entities the most secure and smooth access to data while respecting the data owner’s privacy and confidentiality. Additionally, these marketplaces enable the input of various forms of data, and allow for user control of the stated data assets. Here, the data creators get paid for the data, not the middlemen. Furthermore, since the storage of data is not controlled by one single entity, the data is completely secured and encrypted at the source itself. Distributed nodes that are present on the blockchain offer the required processing power and capacity for storage of data and other files. The stored data may further be shared with authorized users for a certain fee.
Decentralized data marketplaces are dependent on blockchain-based smart contracts that allow data sellers and buyers to exchange information with each other directly. If required, there are also provisions to maintain the anonymity and privacy of the participating individuals. Each entity can ask for data access, bid for data, and buy and sell data. During a transaction, an ID is hashed onto the blockchain for future reference. The user who is in control of the data has the provision to trace whoever accessed their data at any given time since this information is recorded on the blockchain permanently. After the transaction is complete, the reward tokens are distributed among the parties according to the agreed prices as specified under the smart contract. This, in turn, empowers users by regaining control of how their data gets used and shared.
The main applications of these data marketplaces include:
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The steps followed in a typical decentralized marketplace are:
Despite its numerous benefits, there are a few key challenges that are faced by organizations that try to implement decentralized data marketplaces in their operations. Some of the key problems that need to be considered are given below-
Generally, in a traditional data marketplace, both the buyers and sellers are operating in good faith while offering data. This can’t be seen in a crypto-driven marketplace as you have absolutely no clue as to who the real sellers are. There is a very large possibility that the data you buy may be faked or manipulated in some way so that it looks like real data.
A lot of the data that is available on the internet has been acquired illegally through cybercrime. Unfortunately, it is nearly impossible to identify this stolen data so that it can be removed from the decentralized system.
In centralized data marketplaces, buyers generally license data for a particular purpose under legal contract. They cannot resell this data, make it public or use it in an unauthorized manner. However, on a decentralized marketplace, buyers can easily copy the data and resell it at lower rates. They can also misuse it, and since the marketplace is decentralized, it would be impossible for the organization to trace back to who they are.
All of the data that is collected from the internet is constantly evolving and growing. Currently, data marketplaces sell static data, that is, data that isn’t dynamic and evolving. This is because it isn’t practical to execute a blockchain transaction for every new piece of data.
Data quality is always a problem, even in a trustless system. When a data marketplace is large in size, it is very difficult for a buyer to verify the quality of the data that they are purchasing.
Although there are challenges that need to be faced when it comes to decentralized data marketplaces, it is evident that these marketplaces are quickly revolutionizing the existing data market where data creators are rarely paid for the data and the monetization happens by middlemen who do not add any value. This is why it is important to consider these upcoming entities for your data management needs.
Decentralized data marketplace would combine the best aspects of blockchain technologies with characteristics that satisfy the realistic demands of storing large amounts of data. Decentralized storage, as the name implies, operates by spreading data through a network of nodes, equivalent to the distributed ledger technology used in blockchain.
If you have any questions regarding how to implement a decentralized data marketplace in your own organization, do not hesitate to reach out to us.
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