Most business transactions involve not just the buyer and the seller, but also a number of intermediaries. Intermediaries are typically “go-between” actors such as bankers, lawyers, shippers, brokers or wholesalers. It may also be useful to look at classifying these between those that are truly intermediaries to the transactions and those that simply provide services that “move the transaction along.” True intermediaries such as wholesalers or certain types of agents and brokers, are entities that legally take ownership of the traded goods and then “resell” these to the buyer. Facilitators also help the transaction, but typically provide ancillary services such as bankers transferring the remittances, layers who draw up contracts or shippers moving the goods on behalf of either the buyer or the seller.
Similarly, services are traded with the help of intermediaries and supported by facilitators. Music platforms such as iTunes, Pandora, or Spotify host the music of artists around the world on their platforms. The listener pays a fee to gain access to the music and the platform provider pays a royalty to the artist when a listener plays his or her music. Your broadband or wireless service provider acts more as a facilitator when you use their network to access the platforms trading in content.
In a global economy there is a host of intermediaries and other enablers supporting the purchase transaction. These include layers, bankers, shippers, insurers, customs brokers, translators, and often chambers of commerce and governmental agencies supporting exports and trade.
An important component of almost every business transaction is the financial intermediary or facilitator. This is the party that remits the payment for the purchase from the buyer to the seller. The financial services sector has created a host of instruments and processes to enable payment and ensure that the conditions of the transaction are met before the funds are transferred to the seller, including letters of credit, documentary collections, and networks of corresponding banks as well as international wire transfer services.
Because the typical global purchase transaction for goods also involves a time delay while goods are transported over long distances, financial facilitators often support the buyers and sellers by financing the transaction during this delay, either by advancing working capital in the form of lines of credit or by discounting the invoices.
All along this chain between the seller and the buyer a number of entities play a role, ensuring the safe passage of the goods, proper transfer across national borders in compliance with administrative procedures, storage, and delivery to the buyers. As this process unfolds a number of legal frameworks my apply as the goods or services pass through different jurisdictions. Typically, both the seller and the buyer engage legal services to protect their respective interests.
However, the bigger the distance between the parties to a transaction, the more important the intermediaries and others supporting the transaction become in establishing trust and accountability.
Federal Reserve Bank of St. Louis –Bitcoin: Money or Financial Investment? by Scott A. Wolla
As in many other areas of contemporary life, technology offers new ways of solving old problems and for automating processes. The invention of cryptocurrencies offers an opportunity to bypass most, if not all, of the existing facilitators and intermediaries while simplifying and accelerating the processes.
Cryptocurrencies are designed to ensure that trust is established in ways similar to how intermediaries do it in traditional business transactions. Cryptocurrencies or blockchains, further promise new ways of creating value and may profoundly transform your business in the process. The impact on the financial sector would be profound as blockchains disintermediate transactions but also as blockchain asset bases transform and replace other types of assets.
TED Talks – Don Tapscott blockchain, the second generation of the internet and holds the potential to transform money, business, government and society
Blockchains could further transform a number of social and regulatory frameworks used to protect the reputation and integrity of not just the buyers and sellers, but also the supply chain itself.
Eachmile Technologies – Fishcoin – Blockchain Based Seafood Traceability