Disintermediation

When the internet burst into the Business to Business (B2B) space, many predicted the demise of wholesalers and agents, believing that orders could simply be redirected electronically to the manufacturer, and goodbye middleman. Whilst this could be accomplished technically, it was the other roles that wholesalers and agents brought into the mix that retained their middleman status. Manufacturers in the main continued to do what they do best … make stuff. Wholesales and agents continued to do what they do best … managed customers, trading terms, delivery and returns.

Could the orders be passed through from the customer to the manufacturer? Yes they could, but the manufacturer did not know the relationship or credit status of the customer, or was in a position to sell them other stuff (items not from that manufacturer). So clearly there remained a case for these middlemen. These ‘extra’ roles were indeed valid functions of these intermediaries.

Through Smart Contracts, business logic can be activated that can automate these valid functions of intermediaries. It is likely a negotiation will follow as to which intermediaries will perform which functions, and it is reasonable to expect that a new breed of intermediary will emerge that will interoperate with blockchain networks and provide a range of services for the blockchain. Certainly the case with the Internet of Things. Reflect back to the rise of eCommerce and internet powered market places. New organistions arose to address online payment, order fulfillment and distribution, with orders driven from any web brower (online sellers). These new businesses remain valid today, however, as Smart Contracts take over activating applications within blockchain networks, the Smart contract will need to consider how to include these valid intermediary functions both on chain and off chain.

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