With the ever-growing success of online shopping, it’s no surprise that e-commerce websites are booming more than ever before. Technology has revolutionized how we do business, and that’s not about to change any time soon.
Among the most innovative technological advancements to date is the blockchain. This development has the potential to change virtually almost every sector it touches, including e-commerce.
But what exactly is blockchain? And how will it impact the world of e-commerce? Here is a little insight into the technology.
What is Blockchain Technology?
Blockchain technology is a means of recording transactions without central oversight or third parties. Simply put, records are added to blocks linked together chronologically using cryptography.
These blocks aren’t stored in any central location. Instead, they exist on multiple computers around a network that work together to ensure data integrity. Once recorded in a block, information cannot be altered retroactively.
For example, if you purchase something from an e-commerce website built with blockchain technology, and the transaction is added to a block, every computer on that network would see that record for eternity.
Types of Blockchains
Depending on the size of your business, you may want to build your blockchain network or use a service that has pre-made blocks to fit your needs. Here are four significant blockchains you can find on an e-commerce website.
These are the most popular blockchains. Anyone willing to expend enough computing power to compete with others in mining new coins can become a node operator on these networks. An example of a public blockchain that has found success in e-commerce is Ethereum.
Also known as managed blockchains, these networks are authorized databases that can be accessed by a specific, closed group of people. E-commerce websites often use private blockchains to power their digital wallets, cryptocurrency exchanges, and escrow services. These types of blockchains are helpful in online retail because they offer more privacy than public networks.
These blockchains are run by several entities that collectively manage and maintain them. That said, members can all interact with one another, but they might not be able to add blocks themselves. Some companies use consortium blockchains instead of other kinds because they require fewer resources and focus more on speed than decentralization.
A hybrid blockchain is a combination of two or more types of blockchains. Hybrid blockchains are utilized for their benefits in conjunction with other technologies. An example of a hybrid blockchain is R3’s Corda platform, which runs on IBM’s Hyperledger Fabric. It can be used for authorized enterprises and public blockchains alike.
Blockchain Impacts on E-Commerce
Blockchain technology can impact e-commerce in myriad ways, from how we manage digital assets to how we handle payments. Here is how.
Faster Payment Processing
With traditional payments, both merchants and consumers often have to wait for days for payment, as it goes through a lengthy approval process. Blockchain payments eliminate the need for a third party to verify and approve your transaction.
When there’s no delay in payment approval, more businesses will be willing to use cryptocurrency as a form of payment. This can be huge for companies on tight budgets who don’t want to pay credit card fees per transaction.
Security On All Sides
The blockchain is decentralized. There’s no one place where data is stored. The distributed ledger operates on multiple computers. Even hackers would have to break into several systems to corrupt it. Even better, the technology continues to take steps to protect consumers by keeping personal information off-limits and allowing digital identities for people who may otherwise not have one.
Transparency in the Marketplace
Blockchain technology allows for complete and total transparency in a marketplace. Because no one party has control over data, it can be verified by each user. There is no room for dishonest merchants or buyers trying to take advantage of one another.
Everyone feels comfortable doing business knowing that their rights are protected, and their products are authentic. It also makes international transactions much easier as all parties involved in a transaction see what they’re getting exactly.
Genuine Reviews and Offers
Today’s customers are more skeptical of reviews and product recommendations than ever before. While there are many reasons for that skepticism, many customers simply don’t know who to trust. With its transparent system for recording product reviews and purchases through smart contracts, blockchain helps assure that honest opinions are being shared.
The impact of blockchain is hard to ignore when it comes to E-Commerce. The marketplace has seen its fair share of security concerns, particularly in recent years, as online shopping is becoming a common trend. Blockchain technology could be an innovative solution that will continue to shape how people shop online, and the evidence is undisputed.