You may have heard of blockchain linked with Bitcoin, one of the most well-known types of cryptocurrencies. The blockchain is a public record of recorded and confirmed transactions. Management of the blockchain occurs through a decentralized system of distributed nodes that each contains a copy of the whole Blockchain.
People have speculated how blockchain could become valuable outside the cryptocurrency realm — specifically, how blockchain and e-commerce could work together surprisingly well. Let’s take a look at why that’s the case.
The Shared Ledger Eliminates Transaction-Based Errors
When customers buy things, records of the purchases may occur in several places because of the multiple entities that may be involved in the process. For example, the merchant might keep a record, but then the provider of the credit card used to purchase a product could have another.
However, because Blockchain is publicly accessible and holds all transactions, there is no need for multiple types of recordkeeping. As a result, one of the benefits of blockchain for e-commerce is that we should see a drop in errors in transactions made when too many parties keep individual records.
Blockchain Facilitates Following Items Through the Supply Chain
We live in an era when an increasing number of people want to know where the items they buy came from. To meet that demand for information, companies are pooling their resources and using blockchain for supply chain tracking purposes. It can follow real-time transactions between suppliers and confirm the origins of products to enhance consumer trust.
The Blockchain’s Data Integrity Is Verifiable
When instances of e-commerce fraud hit the headlines, consumers understandably balk at making purchases and wonder if they could be the next victims. A major advantage of the blockchain is how it enables checking for data integrity with cryptographic algorithms that confirm the information on the ledger is authentic and has not been altered.
Merchants involved in recording transactions on the blockchain have to digitally sign them with passwords first. The password prevents others from changing the content of transactions and potentially distributing false versions. The password serving as the digital signature also ensures the identity of the respective party and stops impersonation attempts.
If any member of the blockchain network determines a transaction appears altered by a third party or to have originated from someone who stole the original owner’s identity, the transaction is discarded. The interconnected nature of the blockchain means any effort to tamper with data breaks the chain and makes the information no longer valid.
Cryptocurrency Interest From Businesses Can Attract Favorable Attention
As mentioned earlier, many people immediately associate blockchain with cryptocurrencies. Recent news headlines indicate that when companies publicly show interest in adopting cryptocurrencies or the technologies associated with them — which include blockchain — the decision reaps stock market benefits.
For example, in mid-December last year, the fintech firm LongFin — which offers a foreign exchange arbitrage platform — announced the acquisition of Ziddu.com, a company specializing in blockchain-oriented solutions. LongFin’s plans related to Ziddu.com include using a cryptocurrency that empowers importers and exporters to take out microloans based on the goods they possess. LongFin was trading at $5 before the acquisition, but afterward saw its stock prices climb to $126.
If e-commerce retailers are proud they use blockchain technologies in their businesses and aren’t afraid to promote that fact, they might see similar momentum in the marketplace. Also, people who warmly embrace blockchain after having used it while dealing with cryptocurrencies could decide companies experimenting with blockchain are worth their patronage.
The concept of using blockchain for e-commerce is still evolving. However, the highlights described above are just some of the many reasons why forward-thinking retailers realize they should be open to using it in the future.