Ever since the massive success of Amazon and Flipkart, the e-commerce industry has grown exponentially. In 2018, e-commerce accounted for 11.9 per cent of the global retail sales according to Statista. We are here to discuss Blockchain technology. This number when extrapolated is expected to grow to 17.5 per cent by 2021. This comes as no surprise considering the transition of customers towards the online world as everything from food, clothing, travel, tickets, etc now has an online marketplace.
Despite the massive growth, e-commerce still has its caveats that need to be mitigated. The biggest problem is still the financial aspect with the payment gateways and the centric nature of e-commerce platforms. However, like every major problem we face these days the answer is common i.e technology. Current industry trends and tech giants are showing us that blockchain is slowly taking over the e-commerce sector. It is here to disrupt the current structure of e-commerce. The main solution it proposes is decentralizing the control and eradicating the middle man. Blockchain is popularly termed as the most disruptive technological innovation of the fourth industrial revolution and has been introduced in many sectors of business.
Intro to Blockchain
A Blockchain technology can be thought of as a diary that is almost impossible to forge. In the blockchain, digital information is distributed but not copied. It has almost created a new internet. Originally it was introduced for digital currency such as bitcoin but people have found many more uses for it. In the simplest terms, a blockchain is a timestamped series of unchangeable records that is managed by a cluster of computers and not only a single entity. These blocks are bound to each other using cryptographic principles which can be thought of as a chain. How will it revolutionize the industry? The reason lies in in the decentralized democratization. No one owns it. It is shared and opens for everyone to view and see which makes it very transparent. Let us discuss the major advantages this technology will offer.
Transparency has been one of the major concerns for the industry for a long time. In order to overcome this challenge, the business has tried to impose more rules and regulations but have failed. This is because of process centralization. As discussed earlier, with the help of blockchain, companies can go for a decentralized network based upon peer-to-peer nodes that are visible to all. All the transactions are verified by them. Each node has a copy of the transaction thus validating the process. This is a big deal winner because the banks impose hidden taxes and other tariffs which are only intimated once the money has been deducted from your account. With blockchain, there are no hidden taxes and levies. The entire process is like glass having traceability and complete accountability. This has been one of the biggest reasons for the paradigm shift of people towards this tech.
Blockchain ensures more security than any other centralized system. Every transaction is recorded, encrypted, and linked to the previous transaction. Each node holds a copy of the transaction. This makes it extremely difficult for hackers to infiltrate it. Even if some hacker is able to hack a particular node, the information will not make sense. This is due to fact that the entire data is decentralized. In order to get complete access to the data, the hacker will have to compromise all the nides possible which is virtually impossible. The only way possible might be the use of brute force but that requires too many computations and our computational power is still to reach those heights. The transparency of this medium also ensures security.
The cost is extremely low. Once a company resorts to this technology, they do not need to pay to third-party vendors or mediators. A transaction does not require extensive documentation. Every node has a copy that is unchangeable and accessible to all. This is a peer-to-peer network in which all the parties participate equally. So the cost is not of external servers rather more of giving and take. Each node participates in its resources in the network and in return reaps the benefits of transparency, security, and traceability. This also allows you to bypass all the bank and transaction fees in addition to the yearly deductions, taxes, etc. Reduced labor costs are also a big benefit of blockchain. One of the biggest benefits is that someone without an official bank account can enter the financial system which would otherwise be extremely costly and risk-prone.
In the traditional process, it becomes extremely difficult to track the entire supply chain process and detect fraud. This leads to problems such as forgery, counterfeit and even loss of goods. With blockchain, every party can track products which ensures that it is not replaced, misused or lost at any point in time. This is sort of a sacred trust the peer-to-peer community bestows upon each other. With the entire process as clear as water, there is absolutely no chance of fraud. Every node has a progress report which is immutable meaning it can not be altered or changed. With such aa clear and transparent system no one is ever able to alter the process. Even if someone were to do any altercation, it would immediately be caught, traced and that node permanently banned and removed from the entire blockchain community.
5.Enhanced Speed and Efficiency
In a traditional environment, the transaction takes time due to the paperwork involved. It is also prone to human error and fraud by a third party. Blockchain allows automating the process which reduces the need for any human intervention altogether. It automatically does all the tedious tasks enhancing speed and efficiency. This saves us from the long queues of banks and all the delays involved. In the case of an emergency loan, the process involves a lot of paperwork and tedious lines for many people. It also comprises of an interrogation. All this time wasted can be contributed towards the cause you are striving for. Blockchain and digital currency save you from all of this hassle. Being a trusted community, there are no problems whatsoever in transactions and withdrawal. All of the processes are extremely efficient.
High tariffs on services such as PayPal and Skrill are forcing users to look for alternatives. They usually charge around 2 to 3 percent of the purchase price. Blockchain experiments have shown fast and secure transactions with a low-cost considering the highest level of security and amazing user experience.
The supply chain management is also immaculate. Warehouses are usually the places of major fraud. However with blockchain, since the records are immutable, there is a strict check and balance. Since the entire information is available to all the nodes, there is no chance of a counterfeit. The flow of products is also clear. These measures have enhanced the belief of customers in this technology.
E-commerce comprised of a lot of data. It is generally centralized on a server This poses a lot of problems since the vulnerability factor increases many folds. Many cyber attacks have leaked the private information of users wreaking havoc all around. A decentralized system is a way to go. Even if there is a compromise, the loss will not be that colossal as compared to a complete central system. It is virtually impossible to hack all the nodes making this an extremely secure platform.
Loyal customers can also easily be rewarded. This is due to the tracing system. The points earned by customers can easily be stored. This really helps in rewarding customers for their loyalty and increasing brand populace.
Although this seems quite optimistic, there is still a long way to go. Despite all the advantages, blockchain is not very easy to install considering the fact that it is a peer-to-peer system. It is however the way forward.
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