Intermediary refers to financial institutions such as cryptocurrency trading platforms (exchanges), banks, and financial advisors. An intermediary may also include investment trusts and investment funds. Intermediaries play an important role in the buying and selling of products from producers to buyers and charge a fee or commission for their services. Intermediaries can provide people with advantages such as high liquidity and enhanced security. One of the advantages of using an intermediary is low costs. Examples of intermediaries include cryptocurrency trading platforms. Many intermediary platforms can add a margin for more profit. One of the disadvantages of intermediaries is that when an investor stores their funds on an intermediary platform, the funds are at risk if there is a cyber-attack on that platform. Before identifying an intermediary, it is better to do your research. Intermediaries establish the link between the parties and manage the transaction processes. Intermediaries are responsible for ensuring the security and integrity of transactions, but intermediaries can increase transaction costs.
Blockchain technology has the potential to replace or interoperate with intermediaries. Blockchain can enable more efficient transactions with intermediaries. Blockchain enables transactions to be carried out directly and therefore allows transactions between parties to be faster, more secure and transparent.
What Are the Features of Intermediaries?
Some of the functions and features of intermediateries can be as follows:
- They provide feedback to producers about consumers.
- Instead of producers, intermediaries offer goods or products to consumers.
- Provides goods and services to customers more accurately.
Why Are Intermediaries Important?
Intermediaries play an important role in almost all sectors. Producers and consumers benefit from intermediaries. Intermediaries constantly monitor the supply and demand ratio in the market, providing feedback to producers on market offers. Through intermediaries, buyers can access the product or service they are looking for.
What Are the Advantages and Disadvantages of Intermediaries?
Intermediary/Middleman refers to a person or organization that acts as an intermediary for the commercial relationship between buyer and seller. Intermediaries make transactions between producers and consumers simpler.
The advantages of intermediaries can be listed as follows:
- Intermediaries are generally knowledgeable about the market and share this knowledge with customers.
- Intermediaries speed up the process between buyers and sellers, allowing transactions to be more efficient.
- Generally, brokers take some security measures to protect users' assets.
The disadvantages of intermediaries can be as follows:
- Intermediaries charge a fee for their services. Transaction costs for buyers and sellers may increase due to intermediaries.
- Intermediaries may cause problems in communication between the parties.
- Some intermediaries may fail to keep users' information about the transaction confidential.
Relationship Between Intermediary/Middleman and Blockchain
Intermediaries are organizations or individuals who manage transactions between parties. Blockchain technology allows for direct transactions between two parties. Blockchain is generally public and utilizes distributed ledger technology. By allowing individuals to transact anonymously, blockchain helps to eliminate intermediaries. Blockchain is a decentralized structure that allows transactions to be made directly and transparently. Blockchain technology is a high-potential technology that can be used in many areas such as supply chains, health, and finance.
Blockchain allows transactions to be monitored transparently and allows transactions to become faster. To give a simple example of using blockchain; when you want to send money to someone with cryptocurrencies with blockchain infrastructure, you can make a direct transfer instead of dealing with intermediary institutions such as banks and paying commissions.
