Blockchain and eCommerce — why do they need each other?
Blockchain is a unique technology that has already proved to the world its reliability, stability, and usability in different areas. Numerous institutions such as banks, corporations, and non-profit organizations try to jump on the blockchain train and use this technology to store and protect their data, provide the security for financial operations and become more transparent for their customers.
Blockchain introduces a distributed ledger technology (DLT). This can simply be described as a ledger that keeps a record of financial transactions and distributes the records across diverse users and locations. Decentralization provides an absolutely new level of security to all who use blockchain technology, making it an excellent solution for financial operations.
Optherium, a global fintech company, created a Global Finance Blockchain Infrastructure that makes blockchain highly beneficial for businesses and users in different areas. In this article, we examine the best use cases of Optherium technology for the eCommerce sector.
- Over 25% of consumers are spending more on products and experiences this year than in years past
- In 2018, eCommerce sales accounted for 11.9% of all retail sales worldwide
- This number is expected to grow by nearly 15% each year
Overall, the eCommerce industry has doubled in popularity from 2015 to 2019. Such an explosion indicates the shift of today’s customer preferences to self-service methods of purchases, rather than contact with retail representatives. Luckily, as merchants constantly improve their service by collecting user information and extending personalization, shopping online has become easier than ordering an Uber.
However, eCommerce has various aspects that keep a significant part of purchasers and retailers on the sidelines of online shopping. There is much to improve — only 1 of 8 retailers has an online presence. The rest of them lose a large part of the profits. Why is this so? Let’s consider the greatest challenges of the online sales industry and look at the solutions Optherium offers.
1. No pesky fees
Every business owner knows the pain of losing operational costs. The average charge for a $200 money transfer is $14. This charge includes both sender and recipient fees, as well as the exchange rate margin.
Now, let’s imagine that Company X makes 1M transactions and has $10 average bill costs. This company expects a total income of $10M a year. Payment providers charge around 3% for each operation, which costs Company X $300,000 a year. Aside from this 3%, an additional $0.30 flat fee is charged per transaction by the payment provider. In total, Company X is plagued with operational costs of $600,000.
By using Optherium, Company X can avoid fees and save from $50,000 to $600,000. Optherium technology helps reduce the cost of transactions by eliminating the need for third parties. This can be seen in the pictures below.
E-commerce enterprises, marketplaces, and other companies that have a large number of users and transactions may upgrade payment systems with Optherium and make money on transactions as banks and payments systems do.
2. Faster than others
Blockchain and eCommerce are both fueled by transaction speeds. Apart from cost, 47% of merchants rank transaction speed as the most important factor to consider when selecting a banking provider. Unfortunately, the issue of low transaction speeds and confirmations plague blockchain. Therefore, blockchain technology cannot compete with leading players in the field, such as Visa. Can eCommerce bypass bank providers in the speed of operations?
The answer is yes. The Optherium Ecosystem executes 100,000 transactions per second (TPS) by leveraging Hyperledger Fabric technology and the MultiDecentralized Private Blockchains Network. These transaction speeds are four-times faster than the transaction speeds of Visa or any other existing platform. Optherium provides such high-performance rates by using blockchain channels in a unique way: each blockchain channel consists of five nodes that reach approximately 3,500 transactions per second. Optherium combines many of these channels to form a platform layer, and many layers to facilitate multi-decentralization and maximum security.
Take a look at the TPS comparison graph below:
3. Protects users and business
While retailers try to meet customer expectations on cost and speed of transactions, they have to be aware of hackers that threaten the eCommerce world. Merchants, who do business online, are exposed to significantly higher fraud risk and costly chargebacks. According to a study, fraud cost to retailer’s total revenue lost increased from 1.58% in 2017 to 1.8% in 2018. The study also points out that the most common type of fraud is stolen credit cards credentials. In this case, eCommerce companies are held responsible for compromised data. Moreover, the fraud gap could cost the retailer much more than implementing additional levels of security. Reliable and up-to-date software is a must-have for any eCommerce platform.
Optherium’s patented technology, MultiDecentralized Private Blockchains Network (MDPBN), solves such threats and protects e-commerce businesses from fraud. MDPBN is a ready-to-use infrastructure that provides organizations with an exceptionally secure and cost-effective environment for financial operations and data storage. Optherium MDPBN helps solve two major obstacles at once:
1) It protects businesses from fraud by using Multidecentralized technology and multiple layers of security that include: Know Your Customer (KYC) and Anti-money Laundering (AML). These protocols allow Optherium to prevent potential fraud, money laundering and bring compliance with FATF AML and GDPR regulations.
Dynamic biometrics-based verification and authentication (face, voice, fingerprint, retina) empower security and upgrade usability.
2) It protects user data by encrypting/decrypting data on the client’s end, so user data is protected from money fraud.
As we can see, the protection of data is not a simple task. While most companies overlook it, Optherium takes the extra effort to provide a safe experience to users. The innovative MDPBN technology can support existing e-commerce solutions or create new solutions by combining modules, functionalities, products, and services.
While e-commerce allows goods and services to be sold, blockchain technology acts as a strong bridge to unite traditional and digital markets. Slow transaction speeds, high fees, and low usability have been solved by unique, patented technology. Optherium eliminates these challenges and, in turn, gives any business the opportunity to increase customer loyalty and maximize profits.