How Is The Blockchain Influencing The E-Commerce Market?
The blockchain is a digital and distributed ledger of cryptocurrency transactions. Transactions are batched in a block and blocks form a chain (hence the name Blockchain) with the historical track record. These blocks are a continually increasing list of completed most recent transactions which are added and recorded in chronological order. As it is a form of open data and also is distributed and decentralized, the market participants can keep track of the transactions which obviate the need for a central recordkeeping requirement.
Once a transaction is stored it can’t be removed so with every transaction the blocks grow larger. Due to this, the whole history of any deal from the start till most recent is always available for verification. The data entered into the ledger is protected with the help of complex cryptography. Users can quickly get access with a key, but without one it is impossible to break through this security system. These blockchains are highly secure and safe due to their distributed nature.
How does Blockchain Work?
The entire blockchain is based on nodes. These nodes are just electronic devices. These devices use a client to connect to this blockchain network. This client is responsible for relaying and validating transactions. When a new node is introduced to the network, it automatically downloads the entire blockchain copy. Every node can be referred as an admin of the blockchain network. To know more about Blockchain, one can always refer to several blockchain tutorials online to level up in this area.
Why is Blockchain Important?
Blockchain doesn’t have a centralized data point. Due to this no individual party can tamper or modify the data. It removes the requirement of any third party to process or authenticate p2p transactions thus increasing the transparency of the processes.
Impact of Blockchain On E-Commerce:
Blockchain can have a significant impact on e-commerce. But before that, it is essential to know about the different challenges associated with e-commerce.
Sellers and buyers use intermediaries as they don’t trust any other party for transactions and they trust the intermediary for successful completion of the transaction. But this trust comes with a price as the intermediaries charge a certain amount of fee to complete the task.
- The Slow Transaction
The supply chain in e-commerce involves various parties that have negotiated shipping rates and commissions. And also ordering, shipment tracking, tendering, confirmation of delivery, cost settlement and the charges can make the process of the transaction very complicated and slow for a long time even for months.
E-commerce companies most of the times face problems with substandard or counterfeit products due to the lack of regulation and difficulty in the selection of vendors. This affects their brand image also.
- Other Prices
E-commerce at present support various payment modes like COD or cash on delivery, mobile wallets, bank transfers, debit card or credit card, etc. But each of these processes draws from buyers a specific nominal fee. Other than fees there are also other risks associated like delay in settlement, counterparty risk, etc.
Impact Of Blockchain
Blockchain can have a huge impact and can solve these challenges or issues by:
- Reduced Transaction Costs
Blockchain promotes smart contracts which are software programs that can self-execute the instructions in the agreement. Due to this the complexity of the transfer process and their cost can significantly decrease.
The blockchains can store the entire history of the owner within them. They can contain all the info about how many times the product is bought and where it goes. This can eliminate the chances of frauds and can bring complete transparency to both merchants and consumers as they are incorruptible. Whether a product is authentic, fair trade, organic or contains chemicals can be seen on the product’s blockchain.
- Faster Transactions
The transactions, commissions, and order details in the form of contracts can be used to save documents, delivery, shipping and other events associated with financial settlements. Thus the companies or individuals involved in the supply chain can make some vital data visible to others. Due to this, the dangers like delays, disputes, disorganizations are reduced, and the transaction speed is increased.
Due to the overall security provided by the cryptography and the network, blockchain provides a very safe and secure system through which businesses and individuals can directly transact and interact with one another without any requirement of intermediary. It only requires minor fees for behind the blockchain networks that secure the networks and validate the transactions. There is no need of paying any money or fees to any marketplace company by the sellers and buyers as there is no such company.
There will be blockchain apps that will conduct e-commerce. As blockchain is decentralized, there are no central companies or parties that set rules for the transaction process. So the development and function of the platform depended upon the businesses and individuals. Developers are there to continually upgrade the blockchain only with the consensus of the community.
Another way in which blockchain will offer help in the growth of e-commerce is by creating secure, fraud proof, efficient backup system for companies. Blockchain apps can be used for various tasks including:
- They can be used for accounting.
- They can help in inventory control.
- They can be used for logistics.
- They can assist in budgeting.
- Also the payroll system.
Most of all everyone wants their data to be safe and secure which is one of the major flaws. As of currently these data are stored centrally and are also controlled centrally by a central party. Cybercriminals are very curious about these data. They always try to steal them. But blockchains are decentralized, and the data are stored in that way also. Hackers can’t steal data, and this can save a load of headaches and investments in the e-commerce industry.
The blockchain is the new revolution of transaction system and digital currency the e-commerce industry needs. Here every transaction, process, and agreement can have their digital signature that can be validated and identified by anyone at any time. The contracts in the code are transparent and are protected from loss, tampering or modification or deletion. The Blockchain world may not require intermediaries like lawyers or brokers and can save a lot of money for companies as well as individuals.