Cryptocurrencies have taken the world by storm, with Bitcoin leading the charge. A lot of their recent growth occurred at the height of the pandemic. For example, after its initial drop in price when COVID-19 first hit, Bitcoin rose sharply, and other cryptos followed suit. In a slowed-down economy with disrupted supply lines, crypto transactions’ speed, security, and anonymity became more alluring than ever.
As most people were stuck home during the pandemic, any shopping we did happen primarily online. In Q1 2021, eCommerce sales increased by 39% YoY, nearly tripling Q1 2020’s YoY growth.
To capitalize on this, an increasing number of market players propose the marriage of eCommerce and cryptocurrencies to streamline online shopping and shipment processes further. This initiative moves beyond simply using cryptos to buy or sell products but seeks to employ cryptocurrency’s underlying system – the blockchain – to take eCommerce to a new level.
What Is Blockchain?
All of the impressive features cryptocurrencies like Bitcoin boast result from the blockchain infrastructure they rely on. In layman’s terms, the blockchain represents a distributed ledger of transactions. The records in this ledger are called blocks; because they are interconnected, they’re referred to as the blockchain.
The first blockchain was devised and implemented by the mysterious inventor of Bitcoin, Satoshi Nakamoto. Miners use their computers or mining rigs to add new transactions and mint new blocks in the blockchain, while the network nodes verify the legitimacy of every transaction. Thanks to this system and cryptographic encryption, Bitcoin transactions cannot be tampered with and are usually near-instantaneous.
Nowadays, blockchain’s uses and applications expanded well beyond handling cryptocurrency transactions alone. When it comes to eCommerce, practically every aspect of the flow of goods online can be improved through blockchain technology.
What Can Blockchain Do for eCommerce?
All the perks the blockchain grants to cryptocurrencies can also be used to enhance the eCommerce sector. Let’s go through the possible applications and the benefits they provide for the market.
Quick, Safe, and Private Transactions
One of the main advantages of the blockchain is transaction processing speed. While online payments can take several business days to go through and often incur hefty fees, using blockchain to facilitate payments on your eCommerce platform will result in practically instant transaction times. Additionally, transactions on the blockchain are public and tamper-proof, meaning that everyone from buyers and sellers to suppliers can verify each of them.
Protection Against Cyber Threats
Businesses have always been a juicy target for cybercriminals, but it seems that high-level attacks against companies have massively increased in scale recently. Blockchain can help protect sensitive data on online database platforms, as the cryptographic encryption of data on the blockchain serves as a great deterrent.
Optimize Operations and Business Processes
As in the example above, the blockchain is not used solely for handling transactions. Practically any kind of data encrypted through a hash function can be kept safe and processed on it. In addition, so-called smart contracts can be used to set up automated workflows and if-then statements.
In practice, this means that your payment will be kept on hold in the blockchain until you receive the product you paid for and released to the seller only once the shipment has been completed. Additionally, things like receipts and warranties could be stored on the blockchain and used to verify ownership.
Review-bombing is a real threat in every industry, especially in the eCommerce sector. The blockchain solves this problem by creating unchangeable digital maps of verified purchasers and checking whether a prospective reviewer has actually used your service.
Another area the blockchain can help e-sellers in is inventory management. Through the blockchain, marketers can always have an up-to-date and ultra-precise assessment of the state of their stocks and automatically trigger resupplying when a certain threshold is reached (for example, when the number of sneakers at a Nike store falls under 500).
Supply Chain Control
When the resupply time comes, you’ll want to have a clear overview of the whole supply chain carrying your goods. Moving your supply chain processing to the blockchain will let you see where exactly in the pipeline your product currently is, whether the suppliers are adhering to the agreed-upon product quality and delivery criteria, and so forth.
A Brave New World
These are just some of the main applications of blockchain technology in the eCommerce market. As blockchain use outgrows cryptocurrencies, we’re sure to see it used in many other industries.
All in all, the union of blockchain and eCommerce seems to have a bright future: The implementation of this ever-more-pervasive technology in online trade can improve numerous eCommerce processes, cutting down costs and intermediaries, saving precious time, and promoting trust and transparency.