Things you Should Know about Bitcoin & Blockchain in E-Commerce

There are several trending options influencing the entire e-commerce industry, but acceptance of cryptocurrencies as a payment method has set a new milestone for this industry, given the astronomic rise to the Bitcoin price. When it comes to processing payments in e-commerce sites, the talk especially used to be about PayPal, credit card, COD et al. But now it’s progressively making a switch to Bitcoins and digital currencies.

It is believed that digital currencies will be the future of e-commerce. Though it was founded in early days of the 21st century, it has picked up the pace in last few years. Nobody has had imagined that digital currencies could be put to any kind of practical use especially in the e-commerce industry. Local currencies those we use frequently couldn’t be converted into Bitcoin so easily; as a result, no retailer would even think of accepting this digital coin as payment. But gradually things started changing, particularly over the past three years.

According to the reports of BitPay, there were over 100,000 merchants globally accepting Bitcoins in 2015. At present, there are countless merchants who accept Bitcoins and the list is still counting. The transaction volumes of Bitcoin are rising steadily as BitPay alone receives 102,221 Bitcoin transactions per quarter in Europe in the FY 2015 which translates to 34,074 Bitcoin transactions per month.

The Blockchain Revolution:

Bitcoin is carrying a part of the Blockchain revolution which is these days shaping various industries. The Blockchain is the name assigned to the technology powering Bitcoin and is referred to a distributed transaction ledger containing a lot of computers connected to a network for storing the entire transaction details.

This makes it nearly impossible to fake any Bitcoin transaction that has been already distributed through the secured network. Blockchain eliminates the need for a middleman and transactions are secured though they are partly anonymous. Blockchains are tamper-proof public ledgers of transactions but in addition to tracking crypto-currencies, Blockchains are also being used to record stock transfers, loans, healthcare data, contracts and even votes. There’s no central authority in a Blockchain system as participating computers exchange transactions for inclusion in the ledger they share over a peer-to-peer network.

Each node in the Blockchain keeps a copy of the ledger and can trust others’ copies of it because of the way they are signed. From time to time, they bundle up the latest transactions in a new block of data to be added to the chain; together with the transaction data, each block contains a computational hash of itself and of the previous block in the chain.

Modification or faking the transaction in an earlier block would change its hash, requiring that the hashes embedded in it and all subsequent blocks are recalculated to hide the change. That would be extremely difficult to do before all the honest actors added new and legitimate transactions — which reference the previous hashes — to the end of the chain.

The E-Commerce Blockchain Model

In the e-commerce industry, individuals are able to register products and buy them directly from the sellers. Now imagine this: All the three entities — the seller, buyer, and marketplace — are on the Blockchain network. Each action performed by the seller or buyer generates a block and proof of work in the marketplace.

The buyer first places an order; then the marketplace generates a block and displays the proof of work; later, the seller receives the order to ship the product. The buyer then makes the payment, which once again generates a block and proof of work. The seller, after receiving payment, ships the product to the buyer’s address, which again generates a block and proof of work in the marketplace. The buyer receives the product and that’s how the cycle gets completion in the Blockchain.

Each action took place in the marketplace by both buyer and seller generates a block and proof of work based on which the counterparty acts. It’s a direct connection established between buyer and seller via the online marketplace with no interference of any middleman.

Why is the Blockchain Great?

The Blockchain isn’t owned by anyone so there isn’t any marketplace vendor the seller is obliged to, for paying any kind of fees. The vendor can also charge fees from the seller for creating a block, but there are no periodic selling fees the e-commerce marketplace vendor needs to charge the seller. Taking a good look at how Bitcoin adoption and usage is growing, it can be said that Bitcoins are eyeing to be in this marketplace for a long time.

How Customers Use Bitcoins to Buy Stuff at E-Commerce Platforms?

To shop with Bitcoins, customers of an e-commerce portal need to buy Bitcoins first from an online exchange or brokerage.

● Customers can buy digital currencies by transferring money from their usual bank account to the online Bitcoin exchange or brokerage.

● Later when Bitcoins are purchased, they can be assigned to a wallet which is basically a kind of online account that can be accessed while making a purchase.

While shopping at an e-commerce platform, customers only need to open their Bitcoin wallet and make the payment for the stuff they buy. This informs the Bitcoin network that a transfer has occurred and the process just takes a few seconds. Now the question may arise that this is exactly same as the PayPal transaction so what’s the difference?

In that case, Bitcoin is digitized global currency and is easier to move around. You don’t need banks to do them for you and you can also cut the middleman out of the process. Bitcoins help customers save on bank transaction fees that are charged for any transaction made on their network.

How to Set Up Bitcoin Payment for E-Commerce Platforms?

To set up Bitcoin payment in your e-commerce platform, you don’t need to worry about coding as there are several third-party payment processors to help you set it up. You just need to take care of your exchanges and everything goes smoothly for purchasing stuff at any e-commerce platform accepting payments for goods through Bitcoin exchanges.

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