The disruptive blockchain technology is gaining significant traction across various industries globally. Many multinational corporations are investing in blockchain implementation to leverage the benefits offered by the technology, such as better security, transparency, speed, and cost-efficiency. Although blockchain can transform any industry, one area with significant potential for blockchain implementation is the MLM (multi-level marketing) industry.
Multi-level marketing, also known as network marketing or referral marketing, has long been a mainstay for companies offering MLM solutions, to earn money. These companies incentivize users (people participating in MLM programs) for promoting the former’s products and services by referring them to their friends, family, or anyone in their network. This leads to a win-win situation for both companies and users.
The common pain points for entrepreneurs and small business owners planning to launch their MLM projects include the following:
The traditional MLM process involves companies controlling and monitoring users’ accounts and funds, leaving users with limited control over their transactions.
For a start-up, it is challenging to build credibility among users. This holds back even the best of MLM projects.
Due to a centralized authority controlling the MLM platform, the conventional process lacks the transparency of information and transactions between users.
The companies offering MLM solutions can amend their incentive program anytime, leaving the users uncertain of their earnings.
The long settlement time leads to delayed transactions – it can take days for the transactions to reflect in users’ accounts.
Blockchain is a decentralized mechanism that enables a distributed ledger system. The technology facilitates the tracking and monitoring of transactions without the involvement of central trust authority. In addition, blockchain enables the peer-to-peer exchange of data and currencies through rules-based smart contracts.
A smart contract is a code that includes conditions and the actions to be performed when these conditions are met. The smart contracts execute automatically once the terms are fulfilled, without any human intervention.
Blockchain and smart contract can together revolutionize the traditional MLM paradigm, making it more reliable, transparent, and secure. The implementation of blockchain and smart contract can not only bring profound, positive changes to the MLM process but also address the pain points associated with the traditional process by enabling the following:
Blockchain brings everything on a distributed ledger that is accessible to everyone on the network. The transparency of information available to network participants enables real-time tracking of data. Owing to the transparency, smart contract based MLM software are gaining users’ trust and global adoption.
A smart contract is immutable, which means that once created, it cannot be changed by anyone – not even the person who created it. A smart-contract-based MLM platform prevents MLM companies from altering their business logic, once defined in the smart contract. Users are clear of their earnings from any MLM model.
The smart contract integrated into an MLM platform automates the calculation of users’ funds and drives real-time, peer-to-peer transactions between users. The funds are automatically transferred to users’ wallets with minimum latency.
Blockchain creates proof of ownership by using a digital signature that comprises a public encryption key known to everyone on the network and a private key known only to the owner. The consensus among users is achieved through complex algorithms. This helps maintain tamper-free transaction data, thereby mitigating the risk of fraud.
Blockchain-powered cryptocurrencies are creating a money revolution by making transactions more secure, accelerated, and transparent. Smart contract based MLM software that leverage cryptocurrencies for transactions offer the following benefits to users:
Blockchain is gaining significant adoption in the enterprise business landscape. Multi-level marketing, with the decentralized nature of projects, benefits users by offering better transparency, complete control over funds, accelerated transactions, and better security. MLM companies are harnessing the potential of blockchain and smart contract to ride the next wave of multi-level marketing. The early participants are certain to gain an essential competitive edge.