Blockchain In E-Commerce
Blockchain technology acts as the backbone of a special category of the internet. Holding a wide range of use cases across digital platforms and a lot more, and blockchain is being adopted by e-commerce giants to SMB. Blockchain In E-commerce businesses is becoming to have a huge impact in the digital world.
Let’s take a look at what exactly is ‘Blockchain In E-commerce’ and how does it disrupt the existing structure!
The hefty e-Commerce sector is disrupted by blockchain. This pandemic industry has positively messed our lifestyle in a lot number of ways and blockchain has already started to disrupt the e-commerce businesses. Blockchain-based e-commerce will provoke a dynamic shift by establishing a decentralized economy. Blockchain e-commerce solutions offer greater potential for businesses across the globe. Blockchain technology offers much potential for ecommerce businesses. Transactions, Supply Chain, and Decentralized platforms are the three main fundamentals that are behind the successful running of the e-commerce sector.
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What is Blockchain?
In short, a blockchain is a chain of transactions. They are generally in the form of digital currencies and stored as a distributed ledger across a network of computers. There are no possible ways to modify or delete the data stored in a blockchain. Cryptography plays a pivotal role in a blockchain network. Yes, the blocks that store the data follow cryptographic hash principles. Besides Quantum, Blockchain technology is considered one of the greatest technological advances in recent years.
What is Blockchain used for?
Blockchains are potential enough to structurize the way society functions. They possess limitless applications and a lot of use cases across various areas such as online retail, money transfers, supply chain management, digital identities, real estate, data transfer, food safety, immutable data ledger, tax regulations, and digital voting applications.
Blockchain Technology On Ecommerce
Integrating blockchain technology on eCommerce businesses offer greater security and anonymity, and e-retail platforms built using this distributed ledger technology open up a number of consumer protections. There is no governing body to observe and collect data on the blockchain. By giving the users, the ultimate power of data control, they are free to either sell that data to third parties or simply store it.
Generally, E-commerce businesses put forth some peculiar challenges and risks to the financial industry that must be administered. The rapid growth in e-commerce indicates that users continue to prefer over self-service methods rather than participating directly with customer representatives to ease transactions. The security measures protecting these e-commerce systems must be of higher standards and hack-proof.
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Benefits of Blockchain in E-Commerce
Blockchain adoption is spreading rapidly in the digital realm. Many tech giants are researching on how to extract the maximum efficiency of this technology. The benefits of implementing blockchain technology could potentially be a game-changer and it’s no surprise.
Transactions Made Cheaper
Transaction costs in a blockchain are comparatively lower than the costs in a conventional ecommerce. To be more precise, transaction cost in a public cost is usually 0.01 USD. Private blockchains offer even lower charges. This paves the way for blockchain to be highly preferable for online transactions.
Along with that, the lower charges incurred in blockchain transactions have eventually opened the gate for dynamic micropayments. By eliminating the payment processing fees levied by gateways, card companies, and banks, online sellers would be able to transfer the savings to customers via cheaper production costs.
Transactions Made Faster
Blockchains allow quicker transactions when compared with traditional payment systems. Traditional payment systems involve 16 different phases. This includes a transaction fee, usually between 2% and 6% of the total amount. This results in far more expensive and huge processing time than transactions on a blockchain.
Intermediaries have no role to play for the transactions in blockchains because of the peer-to-peer mechanism. Transaction speeds are always limited by the capacity of the network. For example, Bitcoin can handle up to seven TPS while Ethereum’s ‘Lightning Network’ platform can handle up to one million transactions per second.
Standardized Data Security
By having information shared among a network holding more than a million systems, blockchain technology is both reliable and immutable. Blockchains are decentralized, i.e., no third-party will have permission to enter or hack into their data and perform restricted actions.
As the data in a blockchain network is encrypted and cross-verified by multiple nodes, modifying or infiltrating the network will be extremely difficult and expensive since every single node on the network would resist any attack from unauthorized access.
Blockchain Application For Ecommerce
Revamping the Payment Systems
The primary blockchain application for ecommerce is replacing the current payment methods with an efficient & dynamic payment method. Crypto payments offer a hefty advantage over fiat currencies that benefits both consumers and merchants. Blockchain-regulated cryptos do not reveal the identities of the parties involved and also the processes are automated.
- Incorporating crypto payment gateways in every line of business to accept payments via digital currencies.
- Blockchain reduces the additional costs levied on the transactions and puts an end to the payments messing up.
- With blockchain’s dynamic authentication systems, peer-to-peer payments will become easier and transactions will be more secure.
- Blockchain automates payments between merchants and credit card companies with complete control by algorithmic processes.
- Blockchain affords steadily-accessible accounts, high-security measures, lowered transaction charges, and international access.
10 Possible Use Cases
Acceptance of Crypto Payments
With blockchain enforcement, its child crypto payments can be easily adopted into the e-commerce business platforms. Reduced fraudulent activities, transaction costs, and devoid of intermediaries become the fruits of accepting crypto payments in e-commerce. User-friendly, secure digital wallets can enhance the payment transaction for the merchandise in e-commerce platforms.
Preventing Fraudulent Chargebacks
E-commerce platforms face the most cumbersome and massive chargeback requests every year. These messy chargebacks can be avoided by implementing the traceable and immutable blockchain solutions in the process. Crypto payments are immutable and irreversible, and thereby the e-commerce businesses can take a deep breath. Only legitimate chargebacks can be claimed for damaged products in blockchain e-commerce platforms. Credit cardholders claiming for chargebacks through banks can also be banned with this streamlined process flow.
Restoring Control and Ownership of Data
E-commerce business platforms are prone to be exposed to third-party sites with the information of consumer’s interest. Cookies and other third-party interventions collect the consumer’s purchase and personal data to enhance their services. However, the privacy of consumer’s data in the e-commerce sites is not complete.
Third-party service providers grab the purchase data and analytics from the e-commerce sites and leverage them for marketing purposes. With blockchain technology implementation in e-commerce platforms, consumer’s purchase, personal, and analytics data can be secured and accessed only by the consumers and business platforms.
Direct Transactions
Blockchain e-commerce applications promote direct transactions between businesses and peers. Be it a B2B or P2P transaction; the blockchain e-commerce platform allows the direct transfer of money without the intervention of intermediaries. Traditional payment service providers like credit, debit cards, bank transfers incur charges up to 15% for international transactions. Small, medium-sized businesses are the most affected by huge transaction charges. On implementing blockchain solutions in e-commerce sites, the cross-border transactions become ergonomic.
Swift & Simplified Payments
When there is an intervention of third-party payment service providers, the process becomes messy and long. In blockchain e-commerce applications, the direct transfer of money between businesses and peers makes the payment process simpler and quicker. With blockchain applications, digital wallets can be integrated into e-commerce sites where distinct payment options like credit, debit cards, bank transfers, and crypto payments can be enabled. A variety of payment options without intermediaries enhances the payment process in e-commerce platforms.
Decentralized Trade
In blockchain e-commerce platforms, the decentralized network of transactions can be achieved. This promotes cross-border trade transactions with quality product traversing. The decentralized trading of products through e-commerce platforms reduces commission charges or high production costs. The difference in product costs or local currencies can be devoid of a decentralized e-commerce platform.
Reduced Costs
When there are less or negotiable transaction charges and manufacturing costs, both consumers and retailers gain benefits. In the blockchain-based e-commerce applications, the negotiable transaction costs pave the way for quality products at low or affordable prices. As the transaction charges are included in the profit percentile, the retailers grab higher profit rates with the blockchain e-commerce solutions.
In addition, with automated smart contract protocol quality inspection, the workforce in e-commerce businesses can be reduced to a greater extent. Thereby, the operational costs for manufacturing or traversing of products become low. This is beneficial for the entire wheel of e-commerce users.
Cutting-off Intermediaries
Implementing blockchain technology in e-commerce applications completely cuts off intermediaries, third parties, or central governance in the process line. Right from raw materials to factory outlet, to the consumer, a single blockchain e-commerce platform can effectively track and manage product traversing within peers. The consumers can directly trace the provenance of products through e-commerce portals. Blockchain e-commerce platforms are designed to perform peer to peer transactions, thereby cutting off the middlemen interventions.
Borderless, Secure, Verified Payments
Cryptocurrencies are globally accepted for merchandise and services with standard price value. Lower transaction charges, borderless transactions, and secure payment mode are the boons of blockchain e-commerce applications. The crypto payment gateway service providers render huge services like swapping of cryptos to fiat and vice versa. With a single blockchain e-commerce platform, distinct payment options can be enabled for consumers and merchants.
Automated Repayments
E-commerce platforms can afford the easy payable options to its consumers at low-interest rates when blockchain smart contracts are implemented. Third-party services like banks incur high transaction charges for EMI payments from consumers. Instead, the e-commerce platforms can reduce the interest rates for EMI options that are available for expensive products.
Supply Chain Management
Supply chain management is the most pressing concern every eCommerce business deals with. Blockchain implementation in the supply chain will eradicate numerous issues. Blockchain is a better alternative to a centralized database and can be leveraged to overcome issues such as record or bookkeeping, unreliable product tracking.
- Crypto payments are facilitated with the aid of blockchain technology and because of that, there are no payment reversals.
- Blockchain allows banks and financial institutions to conduct cross-border independent transactions; thus lowering the costs.
- Avoiding middlemen is the key concept of decentralization. Blockchain paves the way for P2P & B2B services with high security.
- Blockchain opens up a decentralized environment where any illegal activities or wrongdoings can be efficiently monitored.
- With its automated nature, blockchain is capable of reducing overall costs for retailers and consumers at a much lower rate.
B2B ECommerce On The Blockchain
The deployment of cryptographic signatures forbids counterfeiters and makes blockchain-depended transfers the most secure among all online transactions. This featurette has already started to attract the existing financial sectors, forcing them to propel into digital currencies and blockchain networks.
Besides monetary transactions, the application of blockchain extends furthermore. For B2B entrepreneurs, blockchain can simplify ‘n’ number of things, ranging from issuance and transfer of financial securities to gift vouchers/coupons, loyalty points, energy credits, and even mobile minutes.
Generally, B2B businesses deal with high-value & high-volume orders that include multiple layers like producers, suppliers, distributors, and consumers. So, the friction would be high in those cases. B2B ecommerce on the blockchain aids businesses in reducing friction points and allows the entrepreneurs to utilize smart contracts, thus reducing inefficiencies at most levels of a deal-making process.
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