Trade is one of the industries that innovation and technology have affected over the years. Technology advancement has caused some big companies to transition or build their blockchain e-commerce businesses.
Among these companies are eBay and Amazon, which e-commerce platforms are both starting to accept cryptocurrencies as payments. These companies’ bold move to adapt to the unorthodox e-commerce type of business forces other big players to do the same.
However, some are skeptical about blockchain e-commerce and speculate that this business model will not work over time.
Today, we look into these speculations and address the possible issues that made most online merchants think blockchain e-commerce will not work over time.
How does blockchain e-commerce work?
People are consistently making a big thing out of the blockchain hype since 2008. From there, business people are beginning to understand how blockchain works. They see that blockchain e-Commerce is viable, and blockchain may become the future of e-Commerce.
They are starting to appreciate blockchain technology’s security which will help their e-commerce platform’s security in payments and data management.
Here’s an example to better understand how blockchain secures the e-Commerce payment system.
Say you want to buy a set of jewelry from XYZ, a blockchain e-commerce store. To complete the transaction, you must check and pay for the product. However, since XYZ is blockchain e-commerce, you decided to pay it in cryptocurrency.
Let us say you pay them using your Bitcoin wallet, and the transaction smoothly went through.
Now, you might be wondering what happens to your Ethereum. Where did it go? What if it won’t reflect on XYZ’s end?
Here’s what happens the moment you send XYZ the payment. Since Bitcoin uses a decentralized ledger, your payment will be recorded as a new entry to the blockchain. Blockchain servers as the storage for all transaction data related to blockchain e-commerce.
Take note: The transaction will not go through if your public key does not match the private key you need to send and receive Bitcoin. Then, your payment, as an entry, will then be shared on the ledger. But don’t worry, as it won’t be posted publicly.
Once the system confirms and verifies the transaction, it will encrypt and distribute it to the entire Bitcoin network. Since blockchain uses decentralized ledger technology, the system can easily detect fraudulent activities.
5 reasons why you must consider blockchain e-commerce
There are several reasons why business owners must transition to blockchain e-commerce platforms. But the main reason they should do so is that blockchain e-commerce platforms ensure that both the seller and the customer will benefit from the transaction.
Also, the innovative Decentralized Ledger Technology guarantees blockchain e-commerce to top its competitors. Here are the reasons why.
1. Peer-to-Peer Transaction through Smart Contracts
Unlike other e-commerce platforms with third-party plugins that will take care of the payment system, blockchain e-commerce directly secures transactions through its decentralized ledger technology. It doesn’t need third-party apps or plugins, so you don’t need to pay extra for the transaction.
This means that you will be saving tons of money by not using third-party plugins and apps.
Smart contracts also help your blockchain e-commerce business speed up transactions. These smart contracts or programs are usually used to run, automate, or trigger the next transaction if the smart contract conditions are met. Because of this program, the transaction’s efficiency rate is around 90%.
2. Transactions Are Transparent and Easy to Trace.
Transactions are entered into public blockchains. Once the entry is published into the public blockchains, it will be available and accessible to the public. People with access to that information can easily inspect and analyze the transaction.
They can keep track of where their digital asset is at. However, some users cannot access their transactions in some instances if the merchant’s platform where they are buying the product or getting the service has an anonymous transaction payment set up.
3. Almost Impossible to Hack.
One of blockchain e-commerce’s selling points is its security. Once the blockchain technology is incorporated into e-commerce, it will automatically adapt the usage of the decentralized ledger and the blockchain networks.
Blockchain networks use asymmetric cryptography where public and private keys are needed for the transaction to go through. Apart from that, these keys have a special relationship. The public key carries the encrypted message while the private or secret key decrypts the message.
The transaction will not go through if any of these keys are missing.
Another security measure that blockchain e-commerce will benefit from the blockchain technology is it needs at least 51% to add a new block to the chain and perform fraudulent transactions.
Unless there are around 51% of users or validators who will approve adding new blocks and transferring digital assets or any fraudulent activity, transactions are almost impossible to hack.
4. Blockchain Uses Decentralized Network Structure
Blockchain is operated under a decentralized network structure and is maintained by miners. Miners refer to the number of people who validates the transactions or entries entered into the blockchain system.
These entries are added to the decentralized ledger and are stored on several servers across the entire blockchain network. Thus, unlike that system that uses a centralized structure, e-commerce can benefit from higher security from the decentralized network structure.
5. Distributes Real-Time Data Instead of a Copy-Transfer Process
The real-time distribution of data feature completes the list of why you must try blockchain e-commerce platforms.
Contrary to the traditional way of transmitting data, where specific data is copied and transferred to another recipient, the blockchain network’s data are distributed to the whole network.
This means that the original data is shared with all participants. Since the original copy is shared, participants, users, or miners can change it.
They may add a block to the chain or alter it. However, they must do it in consensus since the system needs at least 51% of people to alter the blockchain’s sequence.
Take away on blockchain e-commerce
The blockchain’s success since it was founded in 2008 has led to an estimated market size of around $40 billion by 2025. The rapid growth of the blockchain serves as a call to major e-commerce companies to start working on incorporating the structure into their e-commerce platforms.
Aside from that, the five features listed above can help the e-commerce platform to be more competitive. Moreover, some big companies like Visa and Microsoft are developing programs where they can integrate the blockchain network into their e-commerce platforms. Clearly, blockchain e-commerce is the future of the trade industry.