Convertible Notes and Startup Funding
February 12, 2025
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The internet has enabled the functioning of various new types of business models. The peer-to-peer business model is one such business model which has recently come into existence. Companies such as Outdoorsy and BlaBlaCar have transformed the way in which individuals and small businesses interact with one another. LinkedIn is one of the biggest names which has emerged from the peer-to-peer model.
It is important for any budding entrepreneur to be aware of what a peer-to-peer business model is and how it actually works. In this article, we will explain the functioning of this business model and also explain its pros and cons.
The peer-to-peer business model is a type of business model in which technology is used to connect multiple individuals to each other. The idea is that technology is used to connect different people who belong to the same homogenous group. Since people belonging to the same group are called peers, the technology is called peer-to-peer technology.
The buyer and the seller are generally private individuals who sell goods and services on their own. These platforms are not very useful for larger companies that own the means of production. The only company which is involved in the entire process is the intermediary company that connects both sides. More often than not, the intermediary company is just a technology interface.
The intermediary company facilitates the transaction by making it quicker and safer. Also, the intermediary plays the role of a middleman when it comes to facilitating payments.
The peer-to-peer business model is multi-faceted. It allows companies to create several types of businesses such as marketplaces, crowdsourcing, and multi-sided platforms.
Different peer-to-peer companies make money in different ways. The revenue models which are most commonly used by such companies have been listed below:
The various advantages of the peer-to-peer model which are commonly mentioned, have been explained below:
The fact of the matter is that peer to peer model is quickly catching up. Right now, this model has not created as many unicorns and billion-dollar companies as some of the other models. However, more start-ups are innovating using this business model. Hence, it is likely to witness high growth in the immediate future.
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