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Implementing decentralized auctions using blockchain smart contracts

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  • Omar, Ilhaam A.
  • Hasan, Haya R.
  • Jayaraman, Raja
  • Salah, Khaled
  • Omar, Mohammed

Abstract

Rapid advances in ecommerce and changing consumer preferences have contributed to the growing popularity of online auctioning platforms such as eBay. Online platforms provide some advantages to consumers such as product variety, deals on prices and mitigate geographical barriers. Nevertheless, existing auction platforms are centralized and depend on third-party intermediaries for transaction settlement. As a result, online platforms raise critical concerns regarding data integrity, security, transparency, and traceability as potential bidders have to trust the organizer for legitimacy of bids. Thus, adopting a decentralized approach using blockchain technology can transform the auction process, eliminating intermediaries, ensure transparency and reduce transaction costs. In this paper, we propose a general framework for decentralized auctions leveraging (i) Ethereum smart contracts to trace and track bids, (ii) decentralized storage systems to upload documents related to bidding and (iii) trusted timer oracles that act as gateway between smart contract and external data feeds. In the proposed solution, we develop detailed algorithms that define the working principles of the Smart contract for the auction process. We present detailed cost analysis of the solution to demonstrate economic feasibility, providing a secure, transparent and reliable approach to online auctions.

Suggested Citation

  • Omar, Ilhaam A. & Hasan, Haya R. & Jayaraman, Raja & Salah, Khaled & Omar, Mohammed, 2021. "Implementing decentralized auctions using blockchain smart contracts," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    • Handle: RePEc:eee:tefoso:v:168:y:2021:i:c:s0040162521002183
    DOI: 10.1016/j.techfore.2021.120786
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    References listed on IDEAS

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    1. Pereira, Joana & Tavalaei, M. Mahdi & Ozalp, Hakan, 2019. "Blockchain-based platforms: Decentralized infrastructures and its boundary conditions," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 94-102.
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    3. Chang, Shuchih Ernest & Chen, Yi-Chian & Lu, Ming-Fang, 2019. "Supply chain re-engineering using blockchain technology: A case of smart contract based tracking process," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 1-11.
    4. Alex Pazaitis & Primavera De Filippi & Vasilis Kostakis, 2017. "Blockchain and Value Systems in the Sharing Economy: The Illustrative Case of Backfeed," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 73, TUT Ragnar Nurkse Department of Innovation and Governance.
    5. Ahluwalia, Saurabh & Mahto, Raj V. & Guerrero, Maribel, 2020. "Blockchain technology and startup financing: A transaction cost economics perspective," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    6. Alex Pazaitis & Primavera de Filippi & Vasilis Kostakis, 2017. "Blockchain and value systems in the sharing economy: The illustrative case of Backfeed," Post-Print hal-01676881, HAL.
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    Cited by:

    1. Chung, Kenneth Hsien Yung & Li, Dan & Adriaens, Peter, 2023. "Technology-enabled financing of sustainable infrastructure: A case for blockchains and decentralized oracle networks," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    2. Giulio Caldarelli, 2022. "Overview of Blockchain Oracle Research," Future Internet, MDPI, vol. 14(6), pages 1-38, June.
    3. Bartsch, Devis & Winkler, Herwig, 2022. "Smart order as a new instrument for production control," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Kersten, Wolfgang & Jahn, Carlos & Blecker, Thorsten & Ringle, Christian M. (ed.), Changing Tides: The New Role of Resilience and Sustainability in Logistics and Supply Chain Management – Innovative Approaches for the Shift to a New , volume 33, pages 149-175, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.

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