In 2017, blockchain has emerged as the latest technology in e-commerce growth. It is fast gaining popularity by virtue of being able to address nearly all of the concerns faced by following current traditional eCommerce methods.
What is Blockchain?
Blockchain was invented by Satoshi Nakamoto in 2008 to serve as the cryptocurrency Bitcoin’s public transaction ledger. Though conceptualized in 2008, it became mainstream only by 2017.
Blockchain can be defined as a centralized database of uneditable blocks. It is made up of a continuously growing list of records, called blocks, which are linked and secured using cryptography. Blockchains are secure by design and are resistant to modification of the data.
In summary, a blockchain is a decentralized, distributed and public digital ledger used to record transactions across computer networks so that the block cannot be altered retroactively without the alteration of all subsequent records and the consensus of the network. Blockchain has created a paradigm shift in technology and is continuously innovating and improving a variety of industries.
Types of Blockchains
Blockchains are categorized into three verticals based on the access restrictions:
- Public Blockchains – no access restrictions; anyone can be a participant and validator. Eg. Bitcoin, Ethereum
- Private Blockchains – access is restricted for the participant as well as the validator
- Consortium Blockchains – semi-decentralized; permissions with multiple organizations controlling access instead of a single one
- A World Economic Forum report from September 2015 predicted that by 2025, 10% of the global GDP would be stored on blockchains.
- By 2020, the blockchain business is predicted to expand by 42.8%.
- Blockchain related LinkedIn jobs tripled from 2017 to 2018.
- Blockchain related global spending has hit 2.1 billion dollars and counting in 2018
- Google Trends has reported an increased interest in searching Blockchain from the year 2016.
10 Significant Areas of Blockchain Application in the Future
Blockchain emerged as the buzzword in 2017. The technology can be integrated into an array of areas as below:
- The primary use of blockchains today is as a distributed ledger for cryptocurrencies, most notably Bitcoin.
- Blockchain has proven effective at speeding land sale deals by ruling out the necessity for trusted third parties, thereby closing mortgages for a fraction of the cost, in a fraction of the time, with substantial higher degrees of trust.
- Blockchain-based applications are said to have significant use in the medical field, financial, insurance, and e-commerce sectors.
- It has an enormous potential to transform business operating models in the future.
- Blockchain is said to bring significant performance to global supply chains, financial transactions, asset ledgers and decentralized social networking.
- Blockchain technology is implemented to create a permanent, public, transparent ledger system for compiling data on sales, storing rights data by authenticating copyright registration.
- It is said to boost cybersecurity for programs like self-driven cars – protecting them from spyware, viruses, and hackers. This decentralized distribution of blockchains would ensure that every driverless car on the road is essentially cyber-attack proof.
- Blockchain-based lists will allow online retailers and financial organizations to vet their customers and fight against fraudulent activities.
- Blockchain ensures a secure Internet environment free of phishing, malware, DDOS, spam, and hacks.
- It is said to change the face of Digital Advertising by doing away with bot traffic, domain fraud, lack of transparency and lengthy payment modes.
In short, we can easily say that Blockchain is potentially changing the way wealth is distributed globally.
What is E-Commerce?
E-Commerce or Electronic Commerce or EC is simply put, any type of business or commercial transaction that involves the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, majorly online using the Internet. These transactions cover a range of businesses, from consumer based retail sites, through auction or music sites, to business exchanges trading goods and services. It occurs either as business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C) or consumer-to-business (C2B) and is one of the most important rising trends on the Internet for the past five years.
The emergence of eCommerce has defeated the barriers of time and distance and has blurred the lines between traditional and electronic commerce as more and more retailers are strategically moving their operations online. According to media forecasts, the U.S. online retail market is touted to reach 1.2 trillion USD and according to eMarketer, global ecommerce sales are anticipated to top $27 trillion by 2020. BigCommerce site states that eCommerce is currently growing at 23% per year just in the retail sector. With the eCommerce business growing in such humongous proportions, equal setbacks are happening around.
Major Issues faced by B2B Retailers in E-commerce
- Those who create digital assets don’t own them. The products, as well as the sales information and user behavior patterns stored on E-commerce platforms, belong to the E-commerce platform the merchant is selling on.
- E-commerce platforms take a 10-50 % of the total sale revenue from retailers and often charge a per-sale fee as well, which forces retailers to increase the price with both retailers and consumers losing out money. The platforms acting as the middlemen results in loss of revenue and time.
- The customers are presented with an illusion of lower costs by the e-commerce stores, compared to brick and mortar structures, when in reality they are making a profit out of it.
- Currently, e-commerce sites do not give buyers any incentives for taking the time out to give out a review, in-depth write-ups or feedback on products they bought.
- Customer data is more often than not compromised due to the outdated technologies the platforms deploy. This leads to the leak of sensitive data which makes current platforms untrustworthy to the consumers.
- No transparency in processes and managing the intermediaries become an ultimate challenge to the sellers since e-commerce is the net of a series of operations including supply chain, logistics, payments, and more.
Impact of Blockchain on E-Commerce
With blockchain flourishing as the next big thing, the dominant e-commerce players across the globe have started to invest heavily in blockchain R&D. E.g., Alibaba. Some others have entered into blockchain collaborations with tech companies. Eg. Walmart and Unilever are collaborating with IBM. The blockchain is a paradigm-shifting technology, and it will continue to innovate and improve a variety of industries. The blockchain is said to affect the traditional e-commerce industry in more ways than one.
1. Decentralized Platforms :
Blockchain will allow for decentralized marketplaces to emerge, and with the lack of a centralized controlling team and the inherent costs, it will provide lower prices for consumers and better rates for retailers. Early blockchain projects such as Syscoin had created online marketplaces, but still hadn’t managed to impact the real potential of blockchain up until now.
Bitboost is a blockchain marketplace facilitating seamless transactions for B2B, B2C, and C2C customers. ECoinmerce is another emerging blockchain based e-commerce platform and decentralized marketplace. Shop is another blockchain based eCommerce platform that gives control to its consumers to control their encrypted data. These marketplaces come with the following benefits:
- Aids e-commerce retailers to sell at less than 0.1% of cost price, substantially reducing the cost of selling. This, in turn, reduces the pricing and helps the consumer get goods at a much lower price than average.
- A decentralized database that gives complete ownership of all digital assets including their digital storefronts, product photos/videos, and reviews. The blockchain records the ownership, rendering these assets wholly reusable and resellable. The customer thus becomes the controller for all their data.
- Helps build brand affinity by tokenizing the store by launching Initial Coin Offerings directly on ECoinmerce. This boosts brand affinity and enhances profit by enabling them to sell the tokens along with their products.
- Customers get higher discounts, access to daily deals, and get incentives for writing reviews, referring friends and sharing details on their social media pages.
Visit the site https://www.ecoinmerce.io/ for more info on ECoinmerce.
2. Secure Payments
We can all agree that though there is a vast array of payment solutions available for eCommerce, all of them are far from perfect. This is where a fool-proof technology like blockchain comes into play, with almost zero chances of error and no compromise on security.
Request Network is a blockchain based decentralized platform that aims at creating easy, fast and secure transactions for B2B, B2C, and C2C interactions by providing automated methods for invoices, accounting, and auditing. It can disrupt the existing payment methods by delivering faster high-security standards and low costs for executing transactions.
Moreover, the country and currency agnostic cryptocurrencies would soon be prevalent owing to providing lower transaction charges for the sellers and more payment options for the buyers by ruling out the need for third-party payment solutions.
3. Transparent Supply Chains
Since blockchain is a series of uneditable recorded data, there is an easy visualization of the supply chains. This is still in its developmental stages but would soon be mainstream once blockchains become established. The feature will provide consumers with a complete rundown of the origin, processing, and components of the products they are buying.
4. Secure Back Ups and Applications
Blockchain will help in substantially reducing the overhead costs of managing businesses by enabling automation of mundane processes. Traditional eCommerce systems have always been an easy target for cyber attackers. Blockchain, on the other hand, will help create a secure, fraud-proof backup system for companies and can also be implemented in multiple processes like accounting, logistics, payroll, etc.
5. Data Security
E-commerce sites are privy to extremely sensitive customer information including coordinates, contact details, payment details and credit card information. The catastrophic Ebay hack of 2014 and Target hacking in 2013 compromising nearly 150 and 110 million user data respectively, proves to us precisely how vulnerable our current systems are concerning the protection of our data. In light of the social media giant Facebook’s crisis with data breach through Cambridge Analytica, blockchain looks significantly handy for future business.
Enabling blockchain based systems will prevent hackers from breaking into systems and getting access to sensitive information and databases of companies. Since blockchain is decentralized, its data is also decentralized, making it next to impossible to hack into an entire data system.
With secure, decentralized platforms, blockchains are sure to take over the conventional eCommerce solutions. Though still in its infancy, blockchain has enormous potential due to the lack of intermediaries in completing any given transaction, which makes it a faster, fuss-free and economical option for traders.
Ethereum, NEO, and Stratis are excellent platforms to start off your business to get a feel for the applications if you want to try your luck at applying blockchain in your business. It will be advisable for e-commerce retailers to think about shifting to blockchain based platforms and significant e-commerce brands to focus on blockchain based developments so as not to get pushed back in the rat race for commercial success.
Contact our experts to know how the Blockchain Technology can take your eCommerce business to the next level