Blockchain has long been associated with cryptocurrency activities, but its potential is now recognized by other industries as well. Because security and effectiveness have become an important part of today's business world. Most of the people from all over the world are diverging into e-commerce for its easy and effective services; however, security is the major concern that prevents the development of growing e-commerce business. To overcome this, the solution is blockchain security which can enhance the reliability of the e-commerce services. E-commerce has drastically grown over the last decade, but the blockchain is showing the potential to transform the industry beyond recognition.
What Exactly is Blockchain?
Blockchain is a way to make purchases/sales and transfers online without the use of any intermediary. Rather than trusting a third party to keep the transaction history safe and reliable, blockchain seals each transaction with a key code for security. The most recent transactions, which are called “completed” blocks are recorded and stored in consecutive order. This allows market participants to keep track of digital transactions without central record-keeping. Since these transactions are immediately dispersed over the network and are visible only for authorized users, it becomes almost impracticable to forge them.
Today, every industry leaders are continuously investing in the research and adoption of blockchain technology. For instance, Walmart and Unilever, have already started their collaboration with IBM. They see the new technology as a chance to upgrade their data management process and keep digital records more secure. Thus, the power of the blockchain cannot be underestimated any-more.
How Blockchain Change Traditional e-Commerce?
Blockchain technology is a public distributed ledger, which keeps the record of all completed transactions in regularly expanding the chain of blocks which bring the authorities to track their digital transactions.
The major advantage of blockchain in e-commerce is to secure transactions during online shopping. Buyers can purchase online without disclosing their credit/debit card or bank account details. Despite many technical and security challenges, blockchain cryptocurrency is heading forward for the required resources for the buyers to take over traditional e-commerce processes.
1.1 Blockchain Business Process
Blockchain means a chain of secured blocks carrying digital transactions. It holds complete information of user locations from the first block till the last finished block. Each block contains hash pointer linked to the hash pointer of the previous block in a chain, with validated transactional data and timestamp. This block then added to the blockchain after its finish. Then a new block is created with a copy of the already finished blockchain and relayed sequentially to the blockchain as a distributed database. The already entered transactional data within the block is stable as it needs massive computing power to capture the whole network of linked devices. Blockchain will become more robust with the increase in the number of connected devices on the network.
The blockchain-based e-commerce application provides a decentralization process, where no middle person involved between consumers and merchants. All transactions performed by the buyers are stored in a blockchain with the encrypted and unaltered format. The blockchain-based e-commerce platform has an algorithm that makes an open database that contains evaluated quality data.
1.2 Allow for Faster and Cheaper Transactions
Several digital payment methods facilitate transactions, including 3rd party payment processors and banks. These mediators come with high transaction fees and limited payment options. When using blockchain technologies for payments, such as with cryptocurrencies, there is no need for financial mediators.
These solutions skip transaction fees and minimizing costs for users. These transactions also provide immediate access to all applicable details and documentation, minimizing the downtime buyers would typically spend requesting this information from intermediaries. Fortunately, blockchain-based payments don’t require buyers to provide sensitive information to third-parties.
Transactions via blockchain occur directly between buyers and merchants, without any need for transaction costs. This benefits buyer, who usually carry the extra transactional costs, and sellers, who can offer products at a more competitive, lower price. The only fees necessary are for the network behind the blockchain, which validates transactions and secures the network. As of now, these fees are notably smaller than those charged by other traditional digital payment providers.
1.3 Easier access to Receipts and Guarantees
E-commerce companies have, due to their online nature, provided digital copies of receipts and guarantees. These are usually digital copies sent to buyers via email. Using blockchain technologies allows for receipts and guarantees to be stored in a shared ledger. Both buyers and merchants can directly update all buying information, as well as to transfer information if necessary. This can save e-commerce companies' managerial work if buyers return products or need to use a guarantee. They can easily follow-up, seeing a product’s value and guarantee terms. This can ultimately save e-commerce companies time and money, as well as help the process for customers.
1.4 Optimized Supply Chain Management
The e-commerce supply chain engages includes multiple parties. These may include suppliers, manufacturers, wholesalers, retailers, and many others. Activities involved with, for instance, ordering, shipment tracking, logistics management or pricing are conducted independently in different in-house systems by each party. It takes a lot of effort to combine all this data and ensure its integrity. With blockchain, an order placed details, payment done and mode of payment and other critical data can be stored securely on a single ledger. This way, each supply chain member can make necessary data visible to others easily. Such visibility improves inventory management, as well as overall monitoring and forecasting, eliminating the risks of stock-outs, delays, and disorganization.
1.5 Secure Data
India is the most targeted country for cyber-attacks, accounting for more than 40% of the world total attacks. E-commerce platforms are often targeted since they collect highly sensitive information from customers, such as address and contact details, credit/debit card and other payment information.
One of the main benefits of blockchain, irrespective of business, is increased security. In traditional commerce, most data are stored in a central location, making it more vulnerable to hackers. When using a blockchain, data are entered in a shared ledger that is protected by cryptography and mostly impossible to hack.
1.6 Complete Product Transparency
Product transparency is one of the main aspects of influencing customers’ decision-making. Buyers want to know where products were produced and what are they made of, whether they produced ethically, and so on. So, if a company fails to provide appropriate and trustworthy information, it will most likely lose its buyers. The blockchain ensures higher transparency, allowing every supply chain member, mainly the buyer to keep track of the product’s journey.
Blockchain and the Future E-Commerce
Blockchain technology has just touched the surface of the business world, however, it is growing constantly in the e-commerce world to upgrade its existing system to Blockchain world. The decentralized marketplace will capture the traditional market keeping records in the distributed ledger and the resulting reduction in transaction charges. The buyer will confident to keep their financial and personal information with a merchant or suppliers in the blockchain network that will create a simple transaction using blockchain-based platforms.
Surely, this technology will be a crucial part of business or e-commerce in the upcoming time which will lead the market world.
Blockchain operates on the principles of security, verification, transparency, and decentralization. This new system will break down the barriers between buyers and sellers, creating a more immediate and productive experience. Anyone can verify the authenticity of the openly accessible information, and there’s no way to forge it. It’s only a matter of time before this system is fully utilized, and we can expect to see big changes in e-commerce once it starts to take hold.
Having the appropriate technology partner is a must if you are looking to explore this futuristic technology to take your e-commerce business to the next level. At Techmango Technology Services, we build advanced e-commerce solutions that leverage the potential of Blockchain to present immense opportunities for your business. Connect with us and unleash the potential of this innovative technology to take your e-commerce business to the next level.