Media Innovation: Lessons from the The Silk Road.
26th September 13
One of the more innovative corners of the Web, is a dark and somewhat unscrupulous place. That does not mean that it cannot contain a wealth of innovative thinking, once you scratch the surface.
Since it’s launch in 2011, The SIlk Road has pushed the value of bitcoins (the digital currency underpinning its operation.) by over 200 fold, to today’s worth which is over $100 USD. Since the rise of the Internet, no other online marketplace can boast so high a demand, that it lifts a digital currency to become the world’s most valuable. Aside from its huge product demand, there are a number of innovations on The Silk Road that will likely be adopted by the rest of online retailers in the coming years.
US Senator Chuck Schumer summed up the site nicely as “the most brazen attempt to peddle drugs online that we have ever seen… by light-years.” He demanded that the website be shut down in 2011, but the Drug Enforcement Administration has yet to find a way to do so.
To an outsider, how such a site still exists may not make sense: the buyer and seller are anonymous, they sell illegal drugs, and do so with an online currency. However, the mechanics to make this work so seamlessly are in fact, light years ahead of their time.
The transaction process on The Silk Road is one of the most innovative systems on the Internet today and the population’s trust in the economy allows for an extremely simple system.
Here is the user experience of a transaction:
A buyer decides to make a purchase, they notify the seller of the quantity and their bitcoins are transferred from their wallet to The Silk Road. Their bitcoins are then held with The Silk Road, which acts as an escrow agent for the transaction. The bitcoins are only released to the seller after the buyer has received the product and leaves a review on the seller’s page.
This very simple mechanic of mandating product reviews is an extremely smart step when dealing with a black market because the market becomes more intelligent with every single transaction. This mandate naturally lessens the risk of scammers and builds the trust in the market that it requires to operate. Quite simply, The sellers with the better products get the best reviews and buyers shop with more confidence.
Online retailers like Etsy, Airbnb and Craigslist could benefit from implementing The Silk Road’s review-dependent transaction system. A major barrier for small vendors is garnering enough trust, which usually takes years and several purchases to gain. Although notorious for it’s drug-trafficking, beneath the pavement of the Silk Road lie a number of amazing innovations. happening in this surreal environment that we can all learn from.