7 Ways Cryptocurrency Benefits eCommerce
The past ten years have been the most interesting for the eCommerce sector. One of the technologies that have taken centre stage in the field is blockchain technology, which gave birth to, among other things, the Bitcoin cryptocurrency.
Think of blockchain as three-part blocks of information stored in a digital database. The chain is the link between these blocks of data. Here is an illustration of how the technology works:
- The blocks store data about your financial transactions, such as the date and time.
- The block will also list down the other parties in the transaction. The data isn’t detailed in terms of what you bought but instead recorded using a unique digital signature.
- The unique signature distinguishes one transaction from another. This way, one blockchain can house several thousand transactions in one.
The Process of Blockchain Creation
- You make a transaction such as buying a book using Magento PWA or send coins to a friend.
- The system verifies the transaction by making sure it happened exactly how the store you purchased recording it.
- The system stores the verified information on a block.
- Finally, the system assigns a digital signature, called a hash, to the newest block. You can publicly view a block once it has been verified and added to the chain.
How Blockchain Technology and Cryptocurrency Benefits eCommerce.
1. Improved Transparency in the Marketplace
Research has shown that one of the main reasons people shy away from making online transactions is the fear that they will compromise their personal data. If you own an eCommerce store, your responsibility is to ensure the systems you use offer maximum security to consumer data.
Similarly, if you are at the top of the eCommerce retail supply chain, your merchants will expect transparency about policies, violations, and account deactivations or deletions.
Blockchain technology is the most objective witness to digital transactions. If the transparency of any transaction is in doubt, you can always refer to the database.
Unilever and IBM have already teamed up on a blockchain project which seeks to improve the advertising industry by eliminating cases of murky reconciliation. With time and further research, blockchain technology will make the digital marketplace a safe and transparent place to trade.
2. Better Payment Alternatives
The invention and use of Bitcoin and other cryptocurrencies helped the digital marketplace realise the possibility of free/cheap and secure transactions that can’t be traced back to the consumer.
Other benefits that Blockchain technology brings to the digital commerce space include:
- Decentralisation of transactions with no central authority to overlook them. Blockchain, therefore, can’t be devalued, inflated, or manipulated in any other way by geopolitical factors.
- Fewer transaction limitations: Currently, geographical and economic boundaries determine how many transactions you can make online. Blockchain technology does not rely on these boundaries, removing these limitations.
- Speed of Transactions: A transaction such as sending money from one country to another can take anywhere between three hours and three days using traditional methods. With blockchain, verification happens within seconds, which makes the transactions almost instant across the globe.
- Protection from identity theft: It is normal to have some transactions which you would prefer not to appear on your credit card. Cryptocurrencies allow you to shop safely and anonymously.
- Protection of data: One of the main threats eCommerce businesses face is the loss of data to cybersecurity threats, fires, and other disasters. Blockchain data is stored in a decentralised way, which minimises such risks.
3. Better Database and Supply Chain Management
Supply chain management is still one of the biggest challenges to eCommerce. Some of the most significant issues in supply chain management include tracking products in a verifiable manner, keeping records, and speed of information processing and retrieval.
Blockchain technology brings a decentralised way to manage the supply chain. With Blockchain technology:
- You only need an RFID tag to help you track the origin and movement of products throughout the chain.
- The security and speed of your transactions improve instantly. When you eliminate intermediaries, you reduce fraud risks, and your customers can make cryptocurrency payments as opposed to electronic ones.
- Blockchain technology is in itself an inventory management tool. This helps you avoid hiring staff to manage the inventory, which reduces your business costs.
4. A Source of Genuine Feedback
One of the best tools you have that helps you leverage brand equity is customer feedback. In retail, feedback also informs you about consumer habits and makes it easier for you to predict their retail patterns.
The nature and number of reviews you have determine the order that your eCommerce shop appears in SERPs and the marketplace. Fake reviews will get you penalised by search engines, which affects your website rank and rating.
With Blockchain technology, you can verify the truth of a review and create better ranks. Blockchain technology verifies data and links it to similar blocks of data, and verified data in Blockchains can’t be altered.
5. Easier Claims and Warranties
One of the things that always slows down eCommerce is its dependence on traditional retail processes like written warranties and manual signatures; when you shop online, the supplier ships the item to you together with the warranty documents, which you have to sign and send back.
Introducing blockchain technology eliminates these. The technology saves warranties and receipts online through data blocks that have cryptographic security. The system also simplifies the process of verifying claims.
Blockchain also makes it possible for you to introduce rewards for your customers. You can set up in a way that when a customer reaches a certain personalised threshold in spending, they access reward points. The blockchain keeps track of the transactions, which simplifies the reward system.
6. Reduction of Business Costs
Ecommerce was born out of the need to reduce business transaction costs. Some of the expenses that it reduces or eliminates include:
- Cost of renting a physical store.
- Cost of securing the goods you are selling.
- The cost of paying your staff.
- Cleaning, organising, and physical inventory costs.
However, taking the business online still leaves you with costs such as creating digital content such as product descriptions, images, and inventory management. These processes need you to have IT, staff, on retainer.
Blockchain technology, on the other hand, captures, classifies, and stores all this data automatically. It reduces the need to keep updating your database and eliminates the cost of hiring as many IT staff.
7. Creation of Smart Business Contracts
All eCommerce software aims to automate tasks so that you, as the business owner, can have more time to deal with other sides of the business. Smart contracts are programmes which run similarly to other business management software.
You can think of smart contracts like excel spreadsheets or macros. Excel stores text, images, and numbers while macros store pieces of VBA codes on excel sheets.
When smart contracts store this information, you automate certain transactions. Automation occurs when the customers meet certain preset conditions when transacting on the eCommerce platform.
These are only seven ways that you can use blockchain technology to improve your digital eCommerce store. With the right implementation, blockchain can transform your business into a massive profit-making venture.
About the author:
Jenny is a passionate writer & guest blogger. Writing helps her to improve her knowledge, skills & understanding about her industry. She loves to educate her audience about business strategies and bloggers outreach techniques via her writing skills. Apart from writing, she loves travelling & photography.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Last updated: 06/06/2020