Auction model is popular in different industries, from Fine Arts to commodities trading or Ebay P2P marketplace. The concept of blockchain in auction model is not a new idea due to the multiple types of potential misbehaviour and lack of trust in this form of trade. For example the malicious counterparties can start the collusive bidding in order to submit phantom bids and split the spoils. Cartels can form within auctions to suppress pricing, and these cartels can include bribed auctioneers.
Another type of misbehaviour is Shill bidding which is the submission of phantom bids with the intent to inflate the price. On Ebay sellers may create fake accounts to make bids and increase the price in order to make the auction more competitive for other bidders.
Although not all of these types of misbehaviour could be simply avoided by the emerging blockchain technology, there are a lot of features in blockchain that can decrease the human factor. For example, the time-stamp that allows exactly to identify the order of bids or instant transactions that allow to reduce “fake” bids, when the bidder wants just to pump the price and does not have an intention to enter the deal.
Although many advantages of blockchain auction look obvious, not too many real use cases have been introduced so far. Among such proof-of-concept there is a DEEX Auction solution. DEEX Auction is a service that allows to buy and sell items through the auction model based on Bitshares protocol and DEEX Invoicing.
At the moment there are two items available on the auction: Original painting that is the cover of the Red Elvises album and the DEEX relaxation capsule. For every item there are certain auction rules: Minimum deposit, Bet’s price, Maximum and Minimum Bet step, time when the bet is considered to be won.
After the bidder identifies own details (e-mail and phone number) he is invited to put a bid, which is sent through DEEX Invoice to the respective deposit address.
The invoice has to be paid in a special DEEX Invoicing form that we wrote earlier about – link.
After the invoice is paid the bid is accepted and the bidder just waits if no one outbids it.