“Blockchain will do the same to banking what the internet did to media”
seems to be the phrase this year. In fact, like the internet was
the first native digital medium for information, blockchain is the first native
digital medium for peer-to-peer value exchange. Therefore, blockchain it is set
out to revolutionize numerous industries, including banking, cyber-security,
commerce and much more.
Vitalik Buterin, the creator of cryptocurrency Ethereum,
says that the technology is so convenient that it can be applied for years in
future industries beyond our current imagination.
As of today, the cryptocurrency hype is real. There is an
increasing number of new emerging startups based on blockchain driven
solutions, that seek to improve the way variety of industries have been
operating for decades. Then there are the skyrocketing prices of Bitcoin,
Ethereum and other alt currencies.
Such activities may indicate that this is something more
than just public hype. However, the general public still treats it as another
fad. So the question remains: Is it?
Blockchain and commerce
In the recent Global Ecommerce Summit, it was stated that
cryptocurrencies together with blockchain are the future of online payments.
Jasmin Battista, leader of e-commerce in the European Commission’s DG Connect
project, has emphasized that smart contracts are especially important for the
traders.
The Ethereum based system may be the following natural step
for transaction processing, order tracking, supply chain management or tracking
management activities. Many entrepreneurs and industries already work with the
technology adapting it to their needs and people’s problems.
For example, a startup Monetha is set to create an Ethereum
payment solution which resembles a combination of PayPal and Trustpilot. Just a
day ago they landed a strategic partnership with Pigu.lt, the largest online
retailer in Latvia, Lithuania and Estonia. The interest in the company is
peaking just a few days before their first ICO on August 31.
What makes blockchain such a promising medium for the future
of commerce? Here are the key advantages of what it offers.
Low cost
Probably the most significant benefit of blockchain in
commerce is cost reduction. Today, business transactions run through a complex
network of vendors, including credit card networks, banks and payment
processors. Blockchain removes all the unnecessary middlemen allowing for
cheap, quick and reliable peer-to-peer transactions.
Regular costs can add up to additional 7% for every online
purchase. These costs are passed on the buyer most of the time. People have
already shown that they are becoming increasingly aware of the extra cost by
switching and supporting banking alternatives such as the unicorn TransferWise
or Revolut.
Minimizing supplementary charges is a significant advantage,
especially in retail industry, where competitors tend to bleed each other out.
Transparency
One of the most attractive features of blockchain is
transparency, which is guaranteed by the distributed ledger system. The ledger
is public and that makes it is possible to trace back every bit of information
back to its origin.
Transparency is attractive for the e-commerce. Marketplaces
and brands tend to hold information for themselves, and in some cases, charge
traders for the information. Blockchain solves the issue since by making the
data visible, enabling every party to run its trade analytics free of charge.
Blockchain guarantees trust and transparency by design.
Every action is recorded in the ledger. Confidence among buyer and seller is an
essential ingredient. Many retailers try to establish it through loyalty
programs, marketing campaigns and other tricks. However, in blockchain commerce
system that is unnecessary as you can instantly see who are you dealing with.
Speed
A large number of stakeholders makes e-commerce transactions
unnecessarily complicated. The involved parties slow down the process by series
of bureaucratic steps, creating additional friction.
Payment billing and processing used to take up to a week,
but blockchain makes it happen almost in real-time.
Its decentralized approach disentangles the processing to a
simple interaction between buyer and merchant. There is no need for central
authorization entities, so the money can travel almost instantly and without
resistance.
Security
Commerce security in blockchain derives from its immutable
nature and decentralized structure. It prevents fraudulent transactions simply
by removing the ability to alter the data.
So even if the customer encounters falsified goods, it can
be tracked and recorded. Such implication could prevent future business with
untrustworthy sellers.
Accessibility
According to the latest Global Findex report, 2 billion
people and 160 million small businesses still don’t have formal access to
banking. While these are mostly poor people, 37% of the world’s population is
still an astounding number of unbanked people. Due to its digital nature,
blockchain is easy to integrate.
It may be too early to claim that blockchain will end
poverty, but its digital solutions are easy and less costly to implement and
has lots of potential to empower the excluded people to become the participants
in the global economy.
Future is now
While most of the population are still skeptical about their
future, many bright minds are sweating day and night to bring the best possible
solutions to the public.
Blockchain offers all of what our current commerce system
does, except that it is cheaper and faster. Making commerce and finances more
transparent is a huge step towards democratizing the economy and capturing the
power from the authorities by bringing it back to the people.
Source: huffingtonpost
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