How to Utilise Blockchain Technology for E-Commerce
What is Blockchain Technology?
Blockchain is a decentralised digital public ledger for tracking economic transactions. It's designed to record not only financial transactions but everything that goes in it. The best feature of a Blockchain is that it allows to view user's holdings and the transactions that they have carried out over the system publicly.
Moreover, it also conceals the identity of a user via powerful cryptography. The decryption of the cryptographic code needs a long and challenging calculation, thereby, making it the safest way to transact money.
Challenges in the e-commerce Sector
Blockchain technology is transforming the ecommerce industry by decentralizing the control and cutting the existence of middleman from the landscape. But, before exploring the potential of Blockchain technology for e-commerce industry, let's dig into the current challenges that the e-commerce industry is facing.
- High Costs- One of the major pain point of a seller in the traditional ecommerce business model is the involvement of a middleman, who takes away a good share of money on every purchase. The seller has to pay the transaction processing fee for completion of each transaction.
- Uncertain Security- Protection of buyers' data is another key concern for these kind of businesses. The system needs to gain the trust of their customers and have to assure them that their personal and financial data is safe. The current state of the ecommerce industry fails to provide foolproof security to the users.
- Time consuming- E-commerce model include an array of operations like supply chain, logistics, payment gateways etc. To manage all these operations e-commerce industry has to deal with this intermediates everyday. This consumes a lot of time to complete the whole process.
Blockchain technology for e-commerce is a boom for not only the sellers but also for the buyers. Few of the challenges which can be addresses by introducing Blockchain in e-commerce industry are as follows:
- Cost Reduction- With Blockchain, e-commerce industry can rely on the Blockchain technology for managing inventory, payment processing, product database and other business activities. This results in spending less on maintaining systems or hiring IT support teams to maintain them. Cryptocurrencies like Bitcoin, Ripple etc. will cut-down the fees that third party institutions like banks charge during transactions.
- Cyber Threats- Despite of using a secure transaction network, the e-commerce industry is always at a risk of losing their customers data and money due to unwanted cyber attacks. Blockchain technology is a perfect solution for resolving these challenges. It provides highest level of security by using distributed ledgers for managing the e-commerce database management systems.
- Fast processing- Blockchain technology for e-commerce is removing the dependency of middleman, manpower and third party organizations from the e-commerce model. It saves a lot of time consumed in the overall process ranging from inventory managing, to order placing to delivering at users door step.
These challenges have been bothering the sellers since the beginning. Thus, integrating Blockchain Technology to e-commerce sector can definitely be a good idea for the whole system. Here comes the need of Blockchain technology for e-commerce industry which is capable of resolving all the challenges alone.
Many e-commerce companies have already started investing in Blockchain technology to run their business smoothly. The day is not far when Blockchain technology will penetrate the whole e-commerce industry.