Figuring out What blockchain-based Decentralized Data Marketplace is and How it works

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

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.

What is a decentralized data marketplace?

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:

They don’t depend on a central server hosted by a third party

Resistant to data tampering

Minimal manipulation of ratings and recommendations

Zero monopoly power of market platform operators

Peer to peer data connections with seamless payments for streaming data

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:

Anonymity: The identity of the seller and buyer are never disclosed without their permission. Without the seller’s express approval, the data seller’s name is never disclosed to the data consumer.

Forward privacy: Even after the data exchange, the protection for data privacy of the seller is ensured.

Transparency: The data seller will still see if the customer is using his or her data.

Control: The data seller has full authority over data access rights. So it provides privacy control over the data.

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.

The main applications of these data marketplaces include:

Buying and selling of any type of data: Smart contract enabled transactions and trustless digital currency payments. It promotes less transactional costs and better secured transactions.

Verification and access: Decentralized identity, certified data, advanced data privacy, and autonomous networks. This would let to eliminate the privacy breach of data.

How it works?

The steps followed in a typical decentralized marketplace are:

The entities submit their data streams.

The marketplace stores encrypt and anonymize the access to the submitted data streams.

The buyer acquires the desired data stream through an automated smart contract.

Once the transaction is completed the tokens are distributed among the parties according to agreed prices.

The marketplace and an underlying data sharing protocol allow for aligned incentives for data owners and suppliers to share data and make it available to others.