The Future of Blockchain and Cryptocurrency in E-commerce
Blockchain and cryptocurrency may only be vaguely familiar terms to most people right now, but everyone is going to become much more familiar with them as they become more “mainstream”. They’re new concepts and they’ve only recently been put to work, but the expectation is that they’re both here to stay. Eventually, they could have a huge impact on the way we conduct business; an impact so huge that banks have serious cause for concern.
Change is inevitable, and in this case, it appears to be for the good. Blockchain and cryptocurrency are making waves because of the radical advantages they can offer. When used properly, they can make business more efficient, secure, and transparent. We can look forward to better accountability and a free decentralized system for exchanging funds. Get ahead of the game and find out what blockchain and cryptocurrency could mean for your business.
image via Cisco Newsroom
Blockchain constantly duplicates and updates its database, which is stored across many different computers, so that transactions can be done securely and efficiently. As of now, it has primarily been used for trading cryptocurrencies like Bitcoin. Incorruptibility, transparency, and a secure form of verification make this an appealing system that could have practical applications in the business world, and to top it off, it’s free. Here’s what blockchain brings to the table.
- Incorruptibility — Data from a blockchain is completely incorruptible by nature. Each transaction manifests as a block, which is added onto the chain. Each block carries transaction data and timestamps of the previous blocks, essentially creating an incorruptible receipt over and over again. Since you’d have to hack every copy in order to effect any change, the system isn’t prone to the same cybersecurity risks as our modern practices.
- No Central Authority — When hackers get access to a centralized database, they score valuable information that they can sell on the dark web. Blockchain is copied and shared continuously, and there is no centralized database to break into. It uses outside verification from other computers (and not just one or two others; more like thousands) that host the public shared data. Rather than trading information back and forth and locking it in between, multiple parties have copies of the same exact information.
- No Transaction Cost — Banks, marketplaces, and any third party source that makes money off of transactions has a lot to lose with the rise of blockchain. Although it’s not fully implemented yet, blockchain will have revolutionary effects on the market thanks to its free use. Once blockchain is completely understood and further rolled out, the middleman will become obsolete.
Cryptocurrency is a digital form of currency based on cryptography and blockchain, and it is also decentralized and immutable; many of the advantages of blockchain that we just discussed apply to cryptocurrency. This method of transferring data relies on “miners” to confirm transactions. As compensation, they receive a set amount of the given cryptocurrency being mined.
The same security and transparency that give blockchain such tremendous potential are what make cryptocurrency so appealing compared to the way we do things today. This is why cryptocurrency is the way of the future:
- No Fraud or Double Paying — Cryptocurrency can be automated using smart contracts that release funds when certain conditions are met. Once the transaction has been completed, it’s absolutely irreversible. There is no possibility of payments going through twice, and there is no potential for fraud.
- Anonymous, Confidential, and Verified — When you use cryptocurrency, you do so using a pseudonym that isn’t connected to your personal identity. Whenever a transaction occurs, other computers (the miners) will verify it. Transactions move through the network almost instantly, and it generally only takes a few minutes for them to be confirmed.
- No Third Parties — One of the big ones is that cryptocurrency is free to trade, and you don’t need any third-party help to do it. Since there are entire industries built around affecting the way people manage their resources, this could have revolutionary implications. Businesses and consumers will be able to practice totally free trade, in every sense.
What This Means for the Future of E-Commerce
You might as well get familiar with blockchain and cryptocurrency now because eventually, you’re going to have to. E-commerce is going to be more transparent than ever, which means it’ll be easier to hold businesses to their word. It’ll also remove the need for some of the biggest institutions in the world, ones we’ve relied on to handle our money for generations.
- More Transparency and Accountability
Blockchain and cryptocurrency aren’t exactly everywhere yet, but it’s very likely they will be. This is going to have dramatic effects on business, specifically with regards to e-commerce. For one, businesses won’t be able to “cook the books” if they’re held accountable by a transparent system that never makes a mistake. Anyone can trade cryptocurrency, and every party involved with the blockchain owns it. That means transaction history is made entirely public, and it forces companies to play by the rules.
- Middleman Out
Banks, credit unions, and financial institutions make a living off facilitating transactions. Once we fully understand and implement blockchain and cryptocurrency becomes more routine, there won’t be much of a need for their services. They’ll have to find ways to convince us we can’t live without them, or they’ll be phased out entirely. Eliminating these entities will save both sides money, which is particularly good news for startups; however, it’s bad news for banks, stockbrokers, and online marketplaces.
Benefits for Both Buyers and Sellers
Whether you’re on the buyer end or the seller end of the e-commerce spectrum, the rise of blockchain and cryptocurrency should bode well either way. It can only make the industry more secure and more efficient, which can encourage people to spend more. Direct transactions will also save money, making for better deals and opportunities, which can also stimulate the economy.
- Total Confidence, Trust, and Transparency — Some people have resisted the e-commerce boom because they simply don’t trust technology. Once they understand how foolproof and secure these systems are, they may very well have a change of heart. Buyer confidence should skyrocket, and corruption in business will be easily exposed. Both of these factors can give way to more positive change in e-commerce.
- Efficient Transactions — If you can easily get the job done yourself, there’s no reason to pay someone else out. Blockchain and cryptocurrency will allow buyers and consumers to trade directly, for free, and without the use of a third party. This leaves customers with more money to spend, and it gives businesses a little more room to play with deals.
Blockchain and cryptocurrency operate on the principles of security, verification, transparency, and decentralization. There are different kinds of cryptocurrencies, and businesses can even start their own. This new system will break down the boundaries between buyers and sellers, creating a more direct and efficient experience. Anyone can verify the authenticity of the publicly accessible information, and there’s no way to falsify it. It’s only a matter of time before this system is fully adopted, and we can expect to see big changes in e-commerce once it starts to take hold.