The transparency of identity on the internet is one of the biggest components of the massive success of online markets. While in the real world someone has to rely on word of mouth in order to eventually come to understand how good of a person they are doing business with, the internet has made it easier than ever for buyers to look into the history and past of the person who they might do business with.

Marketplaces in the 21st century now often have their own, build-in review and rating systems. Buyers of a certain product can leave their two cents on the page, reviewing everything from the quality of the product to the promptness of seller communication and delivery. Because of this, it has become easy for sellers and buyers alike to look into the (somewhat) verified history of the person on the other end of the deal. In fact, it has become so much of an industry standard that some people won’t even do business with sellers that do not have the requisite amount of reviews.

Because of the necessity of reviews to the online businesses of 2018, the manipulation of current centralized systems should come as no surprise. Using a variety of methods, cheats, and loopholes, sellers and buyers alike are able to trick consumers into believing that they have certain reviews, responses, and financial interactions that they simply might not. While some businesses set up false review sites complete with consistent five stars on their own products, some sellers on popular online marketplaces simply pay writers to come up with perfect and false reviews for their top products.

The Decentralized Reputation System

As is often the case in the fast moving fintech world, the blockchain community may have found a way to combat the massive trust issues created from the easy manipulation of reviews in the traditional online financial status quo. Though the system has not been officially rolled out yet, the core components of a blockchain-based reputation system are relatively intuitive, and several startup companies have begun progress on the concept.

Using the blockchain, this system would associate reviews with a unique digital identity for sellers and buyers alike. This means that reviews would help to create an immutable, or unchangeable, trail of interactions, or a reputation, for members of a particular marketplace. This would help to restore trust and transparency in the online marketplaces, many of which are currently overrun by sellers and buyers with false reviews and testimonials.

Restoring Digital Trust

Verification in the public ledger process might be the most important aspect of a decentralized reputation system. Under this paradigm, each sale and review would be verified from a number of sources before being stored permanently on the blockchain. This means that while sellers cannot delete or petition to delete reviews they find unfavorable, the reviews have been verified in a way that speaks to their legitimacy.

Though there are naturally still kinks to be worked out in the largely theoretical system, the blockchain could be used to restore trust in this industry that desperately needs it.