A blockchain is a public electronic distributed ledger that contains data, originally designed for cryptocurrency transactions but increasingly used for other purposes. You do not need to perform any central bookkeeping with blockchain because the system expands as additional data blocks are logged and incorporated within the system, lined up in order of entry.
Stemming originally from the development of Bitcoin, the distributed ledger technology (DLT) of a blockchain is now used in numerous ways within business and other organizational settings. You can put just about any file or type of data within a blockchain, and doing so produces an immutable record. As an additional check, there is no central administrator of a blockchain system; rather, the whole community of users verifies the authenticity of the data.
Blockchain is set to have a profound impact on online sales. This article looks at a dozen key ways in which the technology will disrupt ecommerce:
Impact #1 – Information security
Data storage is a problematic issue for current ecommerce platforms. Retail companies and customers that have user accounts on ecommerce sites generate vast volumes of data for these ecosystems, and it is tricky to figure out how to safeguard it effectively.
The data security advantage can be understood in terms of centralization vs. decentralization. Large swaths of data have been taken from ecommerce firms when attackers have accessed centralized servers. Blockchain is a distributed ledger, so all your information is decentralized – making it is extremely challenging for someone to succeed with an attack.
The security of information within blockchain is high in large part because of the distribution, which requires a nefarious party to infiltrate every one of the system’s nodes. The strengthening of security is an obvious plus.
Impact #2 – Regulations
May 25, 2018, was a major day for data privacy regulations that effect any organization that sells products to or allows user account creation by European citizens. On that day, the European Union (EU) began enforcing the General Data Protection Regulation. GDPR compliance is critical for all organizations that do business (even if it’s entirely virtual) in Europe. Failure to meet its guidelines could result in fines as high as 4% of the firm’s prior-year annual global revenue. Since the protections of the GDPR are mandatory and are hence the subject of audits and potential investigations, it will have a major influence on ecommerce. The optimal security of blockchain could increasingly be seen as a go-to best practice.
Impact #3 – Simpler receipt and warranty access
One other advantage of the transition to blockchain has to do with access to and storage of receipts and product warranties, as indicated by managing consulting company Accenture. As a consumer, you may not be able to find warranty paperwork for a repair or a receipt for a return. We would no longer have to worry about this paper trail (except as a hard-copy backup) once all of these files are within the blockchain. It would be simple to verify proof-of-purchase, because everyone would be able to see these files with the right login and permissions, and it would be a location for central information access usable by everyone involved, from customers to retail stores to manufacturers.
Impact #4 – Future-proofing
Blockchain is becoming prevalent in part because it is seen as the wave of the future – as a necessity really – given the increase, over time, in threats to the industry. Quite literally millions of people worldwide could be affected if the world were to fail to adopt a stricter security paradigm; needless to say, retailers would be hurt by lack of security foresight as well.
When we talk about blockchain, we are not just discussing something for the era ahead, of course. It is essential for organizations to understand that business-as-usual with data security will not cut it moving forward. DLT companies will continue to come up with new innovations that will likely boost the number of blockchain implementations – allowing ecommerce to maintain safety for the years ahead.
Impact #5 – Lower expenses
According to retail content firm Total Retail, an ecommerce firm can benefit from efficiencies produced through introducing blockchain to their provider network. Partnerships with vendors today take place within disparate environments. Many of the expenses of conducting retail online will drop as secure and private engagement becomes possible via the deployment of a unified blockchain platform.
Impact #6 – Multi-retailer loyalty programs and personalized promotions
If you currently belong to any loyalty programs as a consumer, you can probably appreciate the better freedom that would be allowed by connecting the programs of different shops, allowing you to decide any of them where you would rather collect a reward, noted Accenture. With blockchain, you could garner both those benefits. Your loyalty points and purchase record would all be stored within the blockchain. You would control your loyalty data and determine which ecommerce companies you wanted to see it.
Impact #7 – Transparency
Ecommerce companies have increasingly criticized their competitors for being too opaque with their customers. Some new platforms are using blockchain as their centerpiece. Transparent transactions are inherent to distributed ledgers. Unilever, Walmart, eBay, Alibaba, and Amazon are all investing in blockchain research – recognizing its manifold benefits.
Impact #8 – Payments
The improvement of payments is also a central focus of the distributed ledger model. There is approximately $9 trillion in coins, paper, checking accounts, and other traditional currencies worldwide, per Accenture. The use of cryptocurrencies is currently at 6% of that total and increasing.
You could make payments straight to machines, as with a car rental service. If a digital wallet were in use for the vehicle, you would not need any human help and could simply pay and get into it. You could minimize fees by intermediaries. It would not be necessary to pay beforehand, and you would not have to wait.
Impact #9 – Reducing fraud and improving quality
Consumers can get hurt when they use unsafe counterfeit products. These products also take profit away from legitimate businesses. Early adopters of blockchain within the food industry are using it to thwart the health issues of eating illegal renditions of products; other retailers simply want to maintain the integrity of their products. With DLT, people throughout the supply chain will be able to validate the integrity of goods prior to sending them out to customers and stores – enabled by the transparent community sharing of quality and authenticity data.
Impact #10 – Content payment
You can now directly receive compensation for payment through sharing of ad revenue on some platforms. In these scenarios, the users of the social media site can give each other upvote rewards that are equivalent to cash. Steemit is a system that currently is designed in this manner (although there are other options in this category as well, as recommended by steemit user sature and offering somewhat different models – including AKASHA, e-Chat, Minds, Nexus, Qbao, Sapien, Scryptio.io, Sphere, Synereo, Yours, and YOYOW). Proceed with due diligence: research these companies carefully since some may rise to the top while others go belly-up.
The way Steemit works is that users help to curate the site and bring more valuable posts to the top. The service in turn hands electronic tokens to the users. As the process continues, e-wallets are used to create a blockchain transaction. You can take payment in whatever currency you want. Also, there are no delays or extra processes with intermediaries (as noted above), so everything moves more quickly and seamlessly. The alternative platforms to Steemit are also integrated with the blockchain and have the same basic benefits for users.
Impact #11 – Review credibility
It is very important to consumers that they be able to know the quality of review platforms when they are trying to assess functionality, support, and other aspects. The basic problem with the way that review platforms have operated thus far is that user legitimacy is validated but not to any rigorous degree (referring to checks and balances for the true identity of any user, not the access controls for any established user account).
Since that is such an issue, the objective of these innovative platforms is to do away with fraudulently created reviews, whether poor ones written by rivals, gushing ones written by the business itself, or of other types. Zapit is an example of a blockchain platform that works to better validate reviews by leveraging the DLT. In order to make the setup as mutually beneficial as possible, these systems incentivize credibility by paying moderators and review authors alike. Some purists believe that the Bitcoin blockchain is the only truly relevant one through which the blockchain is expressing its full benefits; after all, its community is huge at 22 million Bitcoin wallets established worldwide as of July (per Bitcoin Market Journal), which makes it extremely difficult to conduct fraudulent mining.
Impact #12 – Greater respect and directness with ads
The gap that exists in between consumers and online stores should be minimized as possible to allow for stronger efficiency, better speed, and easier management. Again, many people appreciate this type of system because of lack of intermediaries when sending advertising to browsers. One way that blockchain is used in this way is the Basic Attention Token – which confirms the views of ads that are engaged and monetizes them.
Your blockchain system
Securing and validating ecommerce transactions is challenging. However, with the advent of blockchain, identity and data safety and integrity are getting a huge boost. By integrating the blockchain into your online sales approach, you are able to store your data in immutable form and in a manner that is validated by all users within the community. Beyond concerns with the blockchain, you need servers to run your ecommerce systems; and that infrastructure must also be highly secure. At Total Server Solutions, our data centers are certified to meet the parameters of the gold standard in ecommerce, SSAE 16. See our ecommerce solutions.