How Blockchain Addresses the Problem of the Traditional MLM Market?

Multi-level marketing or MLM was established as an industry in the 1920s. Since then, the industry has exhibited phenomenal growth. According to the World Federation of Direct Selling Associations (WFDSA), the global revenue earned by direct selling companies in 2020 crossed $180 billion. Interestingly, the industry is poised for even higher growth only if it overcomes the operational challenges that impact its credibility.
 
Existing challenges of the MLM industry and how Cryptocurrency MLM software addresses them

Problem #1 – Legality challenges
MLM organizations of the repute of Amway, Herbalife, and more face challenges to date to prove to the regulators that they are operating in legal ways. This is because the MLM industry is primarily run by a distributed network of independent agents. Keeping a track of the activities of each independent agent in massive networks that are spread across the globe is a challenging task.  Overtime regulatory bodies have set up countermeasures e.g. “The ten-customer rule”. However, to ensure this data is recorded and preserved in an immutable manner of a distributed network is a challenge.
 
Solution #1 – Immutable ledger
Blockchain MLM software has a distributed ledger to build a single source of truth. Interestingly, the data recorded in blockchain is immutable. As a result, if an MLM operator has to prove to the regulatory body or its network participants that it is following the ten-customer rule or any such countermeasure, it can do so in a transparent manner. That’s because all the data is available in an immutable manner on the blockchain.
 
Problem #2 No truthful representation of the opportunity
In an attempt to recruit more people in the network, the existing participants often misrepresent the opportunity and make MLM seem like a get-rich-quick scheme. Unfortunately, the MLM operators do not have much control over it. That’s because there is no single source of data and information that the recruits can trust. To establish this, the MLM platform requires an effective and efficient monitoring program implementation.
 
Solution #2 – Decentralized and Scalable infrastructure
Smart contract based MLM software with blockchain as the underlying technology has access to high-speed scalable infrastructure which is decentralized in nature. As a result, an operationally efficient monitoring program of every independent candidate is possible.
 
Problem # 3 Transparency and accountability
The independent representatives often misrepresent their income to recruit more participants and earn a higher commission. Because of this lack of transparency, the industry credibility is severely impacted.
 
Solution #3 Public records
All the transactions on blockchain MLM software are public in nature. As a result, any recruit can look through the earning records of individuals and assess the size of the opportunity.
 
Problem # 4 Delays in commission payouts
The independent participants of the MLM network earn a commission for different hierarchies, direct commission, referral commission, and more ways. However, an efficient infrastructure is required to ensure that all commission-related transactions are taken into consideration and commissions are paid out in time.
 
Solution #4 Smart contract MLM for automated executions
To ensure a blockchain platform operates in a completely decentralized manner, smart contracts play an important role. They are basically pieces of code that help in the automated execution of a contract between the MLM platform operator and the independent network participant.

The smart contract is programmed in a way that automatically calculates the correct commission and triggers payouts in a timely fashion.

 
Why Blockchain?

Blockchain technology holds the potential to revolutionize the network marketing industry. That’s because it helps establish a decentralized model which basically cuts out the middlemen who tend to practice in a way that the industry earns a bad name. Along with that, the smart contract ensures that no one controls access to funds. As a result, the commissions on a smart contract MLM platform are paid out automatically without any delays.

Key Advantages of using smart contracts for MLMs are

• Decentralization – With no centralized control, there exists no central point of failure that can lead to an operational or financial crash of the network.

• Transaction automation – As there is no manual intervention or involvement of less scalable infrastructure, the end-to-end process of MLM business lifecycle becomes efficient and credible

• Complete transparency – Blockchain puts every transaction on an immutable public ledger. As a result, every network participant can trust the business ethically.

• High-end security – Blockchain is a hack-proof technology. Thus, the network participants can trust the platform with their data and transactions.

• Timely payouts – As the smart contracts automate the transactions, the network participants receive timely commission payouts.
 
Different types of smart contracts for MLM platform

–>> Ethereum Smart Contract for MLM
–>> Tron Smart Contract for MLM
–>> Binance Smart Chain contract for MLM.
 
Tron and Binance Smart Chain contracts are becoming increasingly popular to operate an MLM platform. That is because these smart contract based MLM software are highly efficient, attract lesser transactional fees, and are very fast.
 
If you are planning to build your blockchain MLM software, Antier Solutions can help. We provide a white label smart contract based MLM solution that accelerates deployment, enabling you to launch your MLM software in just 7 days.

In addition to providing a white label software solution, we specialize in building custom blockchain MLM software from scratch, while leveraging different blockchains like TRON, Ethereum, and Bitcoin.

Schedule a free demo of our white label smart contract MLM software or connect with our subject matter experts to share your needs for custom-built software.