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With the growing popularity of Bitcoin and blockchain in the past years, some believe that the latter can make or break the e-commerce industry.
But what does blockchain do in the first place? How can it affect the e-commerce industry?
According to eShop World, blockchain technology “is a decentralized digital ledger of transactions.”
Meaning, it is designed to record information that has something to do with financial transactions. The information is blocked by an impenetrable code, thus making blockchain one of the safest ways to transact money.
More and more e-commerce retailers are implementing blockchain technology. That’s because it offers solutions regarding cross-border retail.
If you are curious about how you can leverage cryptocurrencies for your e-commerce business, listed below are some of the ways blockchain can help your online store grow.
A decentralized platform means that the blockchain technology does not come from just a single point of control. Thus, the system is considered fair and secure.
Instead of relying on a single authority, the use of blockchain technology allows you to use consensus protocols across a network of nodes. These nodes validate and record the transaction, as well as make sure that the data is incorruptible.
Since blockchain records information, it is imperative that the data being stored is authentic and accurate.
Track Supply Chain
In relation to point #1, having a secure and fair system of recording and tracking online transactions could mean endless possibilities for the e-commerce supply chain.
According to Jon-Amerin Vorabutra, VP of process and technology at Nova Molecular Technologies,
“Every time a product changes hands, the transaction could be documented, creating a permanent history of a product, from manufacture to sale. This could dramatically reduce time delays, added costs, and human error that plague transactions today.”
Simply put, leveraging blockchain technology could mean a more solid relationship with your customers, as well as an increase in revenue for your e-commerce business.
There are e-commerce platform comparison posts that detail which platforms offer secured payment gateway options (i.e. the ability to use PayPal).
As mentioned earlier, blockchain records financial transactions and these data are blocked by impenetrable code. In relation to this, the system can trace the whole series of wire transfers.
Since blockchain is a decentralized ledger, it can create a complete record of financial transactions. Meaning, it can follow the movement of money and it will only end once it is converted into physical cash. After all, banknotes and coins are totally anonymous. Thus, fraudulent transactions are easier to spot when you have blockchain-based payments.
Running an e-commerce business means storing a lot of data. This includes your products’ SKU and your customers’ credit card details. Good thing, blockchain can also help you store and secure large sets of data.
According to Santosh Pavalesh of Belfrics Group,
“People don’t trust one another with their personal data, so they need to share their data in a secured and tamper-proof platform. And blockchain helps in creating that platform.”
If you can recall, blockchain encrypts your data. It also allows you to save a file or document with a cryptographic signature.
Moreover, its decentralized nature lets you cross check cryptographic signatures.
In relation to point #4, blockchain technology is not just for cryptocurrencies. In fact, you can also use it to create secured backups.
Because of its decentralized nature, blockchain allows you to keep track of any changes in your data or file. This comes in the form of a distributed database that stores a continuously growing list of transactions.
Every time a change happens, it will result in a different hash value. Thus, you can add a digital signature for each data set. As a result, you can ensure that you are deploying a recent and untampered backup.
Reward Customer Reviews
In addition to storing data and untampered backup files, you can also apply blockchain in filtering online reviews
According to Pew Research Center, 82% of American adults read online customer reviews before making a purchase. This means that it is becoming more and more important that online reviews are accurate, fair, and trustworthy.
Unfortunately, review platforms such as Yelp offers companies to remove unflattering reviews. Thus, companies can control customer input for a price.
Enter, blockchain solutions.
Since it is associated with cryptocurrencies, service providers such as restaurant owners can use digital currencies to incentivize users who participate through blockchain applications. Users can then redeem or trade this reward.
Provide Loyalty Gifts
Speaking of incentivizing, you can also use blockchain to provide gifts and rewards to your loyal e-commerce customers.
Here’s how Anupama Rao explains it.
“In all the loyalty portals operated by blockchain, the reward points can be deposited by the issuer in a customer crypto wallet. This wallet is available to the customer and he can use this crypto wallet and can spend at any merchant who accepts cryptocurrency in that blockchain network.”
As a result, the customer no longer needs to login just to redeem his purchase points. It can also foster cashless transactions, provided that the customer’s chosen merchant uses cryptocurrency.
Implement Smart Contracts
Although smart contracts were initially discussed in 1995 by Nick Szabo, its use became popular together with blockchain.
It basically stores a business’s terms of agreements, as well as verifying and executing the agreed terms. Thus, it removes reliance on a middle man.
According to Saswata Basu,
“Smart contracts let you programmatically make a transaction based on an event. This removes the human element of communication, interactions, and errors associated with such.”
Moreover, it gives businesses a competitive edge. That’s because smart contracts improve automation and speed in the supply chain. It also limits human error, avoids manual record keeping, and builds trust between parties.
In fact, successful implementation of blockchain technology is apparent among digital-based business ‒ including e-commerce.
Trust in Notary
Blockchain technology creates trust between two parties and ensures transparency. Just like in notaries.
That said, blockchain can reduce archiving work, which means making daily work more efficient. It also leverages security while minimizing paperwork. As a result, a notary can make his daily job easier and focus more of his time on what matters: The clients.
How can you apply this to your e-commerce business? Simple!
Blockchain technology makes your entire supply chain and retail process efficient. No need to archive your customers’ data, as blockchain can serve as an encrypted storage. It even records all of your financial transactions.
Blockchain became popular in the finance industry. But it is also adaptable that when it comes to businesses. It has the potential to reduce costs, increase transparency, enhance security, and increase efficiency. It will not just help your online business grow, but it can also create new opportunities in the future.
Jake Rheude is the Director of Marketing at Red Stag Fulfillment, an e-commerce fulfillment warehouse that was born out of e-commerce. He has years of experience in e-commerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.