The years 1994 and 1995 saw the first real push into the area of e-commerce, with the likes of eBay, Amazon and Craigslist all coming into existence.
No doubt that in the early days, these companies were mere cavemen to what they would become in later years, but with their births and subsequent growth, online sales became mainstream.
Today, buying almost everything through the internet has become such a part of most people’s daily lives that little thought is given to where things might be going but a revolution in virtual payment systems is sweeping through the world in the form of digital currencies, and the internet retail industry might just be the catalyst to making crypto go fully mainstream.
Today we will be taking a look at how online shopping might help to springboard the use of cryptocurrencies and exploring the benefits and challenges that are strewn along the way.
Where are we at with adoption
When Bitcoin first appeared on the scene back in 2008, it was nothing more than a wildly speculative idea only touted by high-level computer nerds who arguably knew nothing about finance.
Nothing much happened until a programmer in the US made a purchase of two pizzas for a cool 10,000 BTC.
By today’s standards, that would be one hell of an expensive meal, but back then it was a transaction worth just a few dollars.
Nonetheless, it marked the beginning of digital currency adoption.
While much has changed since then, with hundreds of new coins and tokens joining the party, mainstream adoption of crypto has still been fairly slow.
Regulators around the world are having regular fistfights over what exactly these new assets are and how to allow people to use them.
With scams still abounding, ‘trusted’ exchanges like FTX falling apart seemingly overnight, prices being ever volatile and the general public not always very clued up on digital wallets and all that, those pushing for more use of virtual cash are having an uphill struggle.
That is not to say that adoption isn’t slowly taking place. Many experts are now setting their sights on online shopping as a potential tour de force candidate to quicken the mainstream acceptance and use of virtual assets.
The synergy between e-commerce and cryptocurrencies
E-commerce platforms have become an integral part of the modern-day shopping experience and continue to expand exponentially and at pace.
Estimates put the global e-commerce market value at over $5.7 trillion, with the expectation being that this will just keep growing with no end in sight.
The convenience of shopping through the World Wide Web, coupled with the variety of products and services available, has led to most people ditching the drive down to the shop and just ordering whatever they need through an app or website.
This is where cryptocurrencies might find their most solid footing for acceptance and use.
If integrated into these platforms, it could offer several advantages that might help propel digital currencies toward mainstream adoption, while also putting some extra wind in the sails of retailers.
Let’s look at a few advantages that would push web-based business platforms to consider heading in this direction.
Global accessibility
Unlike their old-school paper-based counterparts, these new computer-based coins and tokens are inherently borderless.
So, internet-based retail platforms can easily tap into a global customer base without having to try and navigate the maze that is currency conversion and international transaction fees.
This kind of accessibility would be ideal for businesses that operate across multiple countries or that have clients from abroad interested in using their services.
Reduced transaction fees
Okay, so by going fully virtual with payments, retailers might not have to go all in on figuring out the complexities of conversions and international transaction fees, but fees still need to be paid.
Traditional payment methods, especially in cross-border transactions, often involve significant fees.
Cryptocurrencies, on the other hand, can cut these fees to a minimum.
Most retailers have to pay a hefty price for each purchase made via debit or credit card, so by using digital money and transacting directly with the consumer, with no third party in sight, they might even be able to reduce some of their prices but don’t get your hopes up.
Security and speed
When it comes to security, not even crypto haters can criticize the enhanced security features that come with using blockchain-based technology.
Without getting into the nitty-gritty of it, these systems are cryptographically secure and pretty much hack-proof.
Faster transactions
So, some tokens might still have a few minutes of lag due to volume, miners, etc. But these days, most respected tokens are able to process transactions in near real-time.
This is good news for anyone who has ever made an international bank transfer, having to wait several days for the process to complete.
When it comes to financial transactions, the faster things move, the better.
Having seen some of the advantages that crypto adoption could bring to e-commerce platforms, let’s have a look at some of the challenges that might hinder things along the way.
Challenges to overcome
The potential benefits are clear virtual currencies can help online shopping providers and vice versa but several challenges must be addressed before a successful integration of cryptocurrencies into e-commerce platforms can take place to help drive mainstream adoption.
The three main stumbling blocks seem to be as follows.
Volatility
Cryptocurrencies are notorious for their price volatility. This alone can be enough of a deterrent for both merchants and customers to avoid getting their hands dirty with some digital dosh.
Stablecoins have emerged as one way of dealing with this, as they are pegged to traditional fiat currencies, but there have also been some controversies around them that have left many interested parties with a bad taste in their mouth.
Regulatory environment
As I mentioned before, regulators are lost when it comes to what to do about this new form of decentralized asset.
Either they want to ban it or they want to control it, but allowing people to use a medium of trade that the government does not hold total power over seems to be out of the question.
So, electronic commerce sites would need to navigate these regulations to ensure compliance if they hope to minimize legal risks, which is too much of a pain for most online retailers to even consider at this point.
Integration complexity and the user experience
Transacting in digital tokens has become a hell of a lot more user-friendly in recent years but still tends to require a certain level of technical understanding.
As such, e-commerce sites would need to provide a seamless and intuitive user experience to make cryptocurrency transactions accessible to the broader public.
This comes with its own set of difficulties as integrating tokenized payment options into websites requires technical integration and ongoing maintenance and making things user-friendly at the same time, can be a tough coconut to crack all at once.
At the end of the day
E-commerce platforms have the potential to act as the perfect bridge between the world of cryptocurrencies and mainstream consumers, but there are still many an obstacle that needs traversing before it will become a common sight on these retail platforms.
Their global reach, reduced transaction fees and enhanced security make digital currencies perfect for web-based transacting.
While there are still some challenges that remain, collaborations between the cryptocurrency and e-commerce industries could lead to innovative solutions that pave the way for more mainstream acceptance of this new form of money in the very near future.
Konstantin Rabin holds a Bachelor’s degree in International Business from the University of Groningen, the Netherlands. He has been working in the retail FX sector since 2010 and was heading the marketing department of one of the largest European brokerages and a financial data aggregation company.
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