5 Benefits of Using Blockchain in eCommerce

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Alex HusarChief Technology Officer at Onilab

Monday, July 5, 2021

Today, blockchain directly implies Bitcoin, but cryptocurrencies aren’t the only application for this algorithm. Blockchain can change the way we serve our needs and affect all sectors of the economy.

Article 5 Minutes
5 Benefits of Using Blockchain in eCommerce

Blockchain capabilities include translating any digital documents and files, be it money, accounts or contracts. According to Statista forecasts, spending on blockchain solutions will show a skyrocketing growth in the coming years, reaching almost $19 billion by 2024.

We can provide an analogy to explain the essence of the blockchain in simple words without using complex technical nuances. Think of the blockchain as a kind of ledger. It stores data and confirms its truth for all the event participants who have this book. Any changes inserted into the ledger will automatically appear for the entire community.

Let’s say someone tries to cheat the system, for example, by pasting incorrect numbers or rip a page out of the ledger. The algorithm will immediately detect a discrepancy and won’t allow it by referring to the data of other participants. Thus, the participants of the process can’t deceive each other.

Software algorithms guarantee the safety and invariability of the original data. All operations are entered into a single database and are transparent. At the same time, the blockchain excludes any governing body. The system is decentralized and self-regulates according to the rules initially laid down, making it predictable.

That’s why this technology can find applications in the field of financial services and less obvious ones. For instance, blockchain can become a copyright confirmation tool, or it can be used to create digital identities that can’t be counterfeited. Blockchain is effective for:

  • Creating public voting systems
  • Logistics and supply chain management
  • Rational distribution of energy

But blockchain can also have a remarkable impact in ecommerce, where the internet is most closely tied to finance. Blockchain can fundamentally change the way ecommerce is viewed, in the same way, that online retail has changed the usual shopping format.

5 reasons to use blockchain in ecommerce

Modern ecommerce has to cope with the challenges posed by the global market. Blockchain technology is poised to offer more efficient alternatives in payments, logistics, data security, market transparency and fair competition. Let’s take a closer look at how it can be beneficial.

1. User privacy

A noteworthy challenge the modern digital world is facing is the protection of personal data. Today, commercial platforms store all data, including customer banking information, in one place on their servers.

In this format, they’re vulnerable to hackers. The fact that we hear more and more about the schemes of cybercriminals testifies the ineffectiveness of this approach. It’s an obvious fact that the infrastructure of the internet in its current form has many vulnerabilities.

The security advantage of blockchain lies mainly in the absence of a centralized data storage system. It’s impossible to attack all disparate nodes of the blockchain platform.

Strong cryptography and additional security mechanisms ensure the highest security standards. It isn’t easy to talk about blockchain security algorithms without going into technical nuances, but the years of the “gold rush” with bitcoin convincingly illustrated the reliability of this system, in which they couldn’t find critical weaknesses.

2. Supply chain network

A supply chain is a network of people and corporations involved in creating and distributing a particular product or service. In other words, all the way from primary suppliers to end-users and customers. The basic supply chain system often includes suppliers of food or raw materials, manufacturers, logistics companies and retailers in the end.

Since blockchain networks represent distributed systems, they’re highly resistant to modifications and can be an excellent fit for a supply chain network. The blockchain consists of a chain of linked data blocks using cryptographic methods that guarantee the immutability and impossibility of falsifying the stored data. This is, of course, if there’s no confirmation of changes to the entire network.

As a result, blockchain systems provide a secure and reliable architecture for the transfer of information. Although blockchain technology often carries out cryptocurrency transactions, it can also be handy for protecting all kinds of digital data. Its application in the supply chain network can bring many benefits.

3. Cost reduction

The inefficiency of the supply chain generates a large amount of waste. This problem is prevalent in industries with perishable goods. The improved traceability and data transparency that blockchain ensures will help companies identify these wasteful areas so they can take action to reduce costs.

Blockchain will also help to get rid of fees for transferring funds to various bank accounts and payment systems. These commissions reduce the profit margin, so subtracting them from the equation is very important.

4. Ease of payments

Blockchain offers an end-to-end solution with all the qualities that matter most for payment processing. Transactions recorded in the blockchain are verified in a distributed peer-to-peer network, which notably complicates the falsification of sending and receiving funds.

In addition, thanks to smart contracts that help automate processes, it takes seconds to complete transactions.

Finally, blockchain payment processing can be tailored to the needs of almost any type of service, making it one of the most versatile options.

5. Receipts and guarantees

One of the challenges of ecommerce is tracking receipts and guarantees. Blockchain adds each transaction and proof as a block and stores them so you can quickly access and provide them when needed.

Blockchain outperforms paper documents because it’s much stricter and more legally binding. Regular documents can be easily modified or corrected. In the blockchain, it’s almost impossible to change the data. This feature allows people and companies to rely on information entered into the blockchain.

Since blockchains are usually transparent, it’s impossible to make changes to the blockchain invisibly. Otherwise, all participants in the network will immediately notice it. This transparency and immutability of the blockchain make it an excellent solution for storing and logging data.

Final thoughts

A lot of experts agree that blockchain is the most significant invention since the advent of the internet. We’re already witnessing how this technology is effectively transforming a wide variety of areas. Some even believe that this is an innovation that will set the vector for developing the entire fourth industrial revolution.

Alex Husar

Chief Technology Officer at Onilab

https://onilab.com/

Alex is Chief Technology Officer at Onilab. For over eight years, he’s been working on Magento migration and development projects as well as building progressive web apps (PWAs). Alex is an expert in full-stack development who shares his expertise and in-depth knowledge on modern technologies and Computer Software Engineering.

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