Blockchain technology is taking on an increasingly important role in the global economy — and the ecommerce sector is taking notice.
Over 22,000 venues around the world currently allow customers to pay with cryptocurrency,* among them major brands like Expedia, Overstock, and Microsoft. And blockchain in online shopping is only going to gain more traction over the next few years.
But cryptocurrency isn’t the only opportunity that blockchain presents forward-thinking retailers. The benefits of blockchain in ecommerce extend from faster, cheaper business processes to greater data security and an improved customer experience.
Diving into a topic like blockchain technology and blockchain ecommerce marketplaces can get confusing, fast. We’ve distilled the essentials of what blockchain is and why retailers should pay close attention to this important emerging tech.
Blockchain has been a buzzword for a while now, but there’s still plenty of confusion on what it is exactly. Although it’s closely associated with Bitcoin, blockchain is not a type of cryptocurrency. It’s not a programming language. It’s a new technology.
The blockchain is essentially a completely secure online ledger that keeps a record of every transaction made at a given place.
Blockchain technology enables users to share and securely store digital assets. It has applications for payment processing, product searches, and even customer service.
The name “blockchain” comes from the structure of this digital ledger: individual records, called blocks, are linked together in a list, called a chain.
This chain of blocks becomes a database that is shared across a network of computers, also referred to as nodes, miners, or peers. These nodes maintain their blockchain by validating and transmitting data about digital transactions, like the movement of cryptocurrency from one network user to another.
Here’s an example: say you buy a pizza from your friend George and you pay him in Bitcoin. When you send George a Bitcoin, you create and publish an entry in the Bitcoin blockchain. The other computers in the network will check to make sure you haven’t already sent the data representing that bitcoin to another user (preventing you from spending digital currency you’ve already spent). Every computer in the Bitcoin network keeps a record of all the transactions made within the network, and tracks the balance of every account.
Because this ledger isn’t controlled by just one computer and doesn’t have a single point of failure, all entries can be viewed by the entire network. This means data that’s entered in a blockchain can’t be deleted, altered, or corrupted.
Because blockchain makes transactions safer and faster, the potential impact on ecommerce is tremendous.
What is the purpose of blockchain applications in business and commerce? The most common blockchain technologies used in ecommerce are Ethereum, which provides a platform for ecommerce brands that want to manage their own blockchains; and Bitcoin, the cryptocurrency that led to the development of blockchain technology and allows customers to make purchases in sites and apps that accept Bitcoin as payment.
Because it makes online financial transactions more secure, blockchain is a win-win for both brands and buyers. But it also provides a lot of other benefits, including cutting costs, improving business processes, making transactions faster, and improving the overall customer experience.
While the technology may be relatively new, there’s one big reason why blockchain ecommerce platforms are gaining traction: they benefit both merchants and consumers.
Industry experts agree that while the potential for blockchain technology is tremendous, it’s still in its earliest stages of adoption. Blockchain will grow to be integral to the new financial and ecommerce ecosystem.