How have auctions changed over the past 50 years? Aside from going online in the form of household names like eBay and Christie’s, the basic mechanics of today’s auctions have stayed more or less the same — a seller puts an item on offer and potential buyers place their bids. Whoever places the highest bid at the end of the day purchases the item for that amount. There are limitations, though, on the effectiveness of today’s auctions. Sellers, for instance, often list their items in an auction and can only hope that the most interested parties find them. Buyers, in turn, need to seek out the right auction for whatever it is they’re looking to buy. When these two incentives align, auctions are mutually beneficial for buyers and sellers alike. At nCent, though, we think that tapping into the potential of under-appreciated incentives can revolutionize the world of online auctions.
An inefficient feature of auctions today is that buyers seek out sellers. When Alice tries to sell her collectable Beanie Baby on eBay, for example, whoever buys it will ultimately come from the pool of people who search for Beanie Babies and related collectables on eBay. But all of the Beanie Baby collectors who aren’t checking eBay at the right time fly under the radar. A more efficient auction would have the market itself find the ideal buyer for each seller. Suppose, for instance, that Alice lists her item on an application called “auctionCent.” She shares her auction page with her immediate network, distributing nCent tokens to an initial group of participants. Bob is in Alice’s network and knows that his cousin Carol is an avid Beanie Baby collector, so Bob refers Carol to Alice’s auctionCent page. Carol buys the Beanie Baby at a discount due to the referral, Bob receives an nCent reward for finding Carol, and Alice has her collectible sold.
Unlike the hit-or-miss method of traditional auctions, incentive markets search out the perfect buyer, and everyone involved in price discovery benefits from the collaboration.
The evaluation of listed items, which is the purpose of an auction, is accelerated. What’s more, the expiration date of the stamped token provides an easy way to enforce a time limit on auctions. Exchange would happen organically, and users would benefit from a “network of trust,” cashing in on rewards from referrals that trace back to different people. The nCent protocol deters scammers and Sybil attacks while retaining scalability and auditability. It’s a natural fit.
Auctions are extremely useful for the fair exchange of items of unknown value. The problem is that auctions are often not as effective as they could be because there isn’t any infrastructure that connects buyers and sellers independently of the buyers’ own efforts. nCent provides a simple scheme to attract the right people to the auction room and return benefits to everyone who participates.
If you would like to learn more about the business model breaking work we do at nCent Labs feel free to mail me at kk@ncnt.io
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