How blockchain technology integrates with e-commerce activities
E-commerce is developing fast in recent years. Lead by eBay, Amazon and Alibaba, online retail e-commerce sales are foreseen to double from $2306 billion in 2017 to $4878 billion in 2021 (Source from: Statista).
But despite its fast developing, conventional e-commerce platforms still have their own drawbacks. Most of the reason is because of the complication and centralization of traditional marketplace platforms. Problems like high platform and transaction fees, insecure transactions and personal data keeping, and fake buyer & sellers ranking are hard to solve with a centralized platform.
With the blockchain technology, there are now fully decentralized marketplaces emerging around the world, aiming at solving all the existing problems e-commerce platform currently have. We could totally expect that the future of this industry will be disrupted and more advanced since e-commerce activities will no longer be exclusive, limited or unfair.
How blockchain can integrate into e-commerce activities?
Smart contracts can be programmed to run when the specified conditions and inputs, or when conditions have been met. This simplifies the resolution of many situations, as smart contracts can act as an escrow account in peer-to-peer transactions between sellers and buyers: without the need for any trusted third party or central authority. For example, by executing a transaction, a buyer sends settled price of desired product to the contract, then the seller will do every requirement mentioned on the smart contract.
Once the seller complied with the requirements (sending the right product product, within agreed deadlines and the product is received by the buyer) , the smart contract will automatically send the money to the seller’s wallet, there is no third-party in the whole process, which, greatly improves transparency and avoids disputes. This is just one of the many applications of smart contracts. The same procedure can also be applied to other parts of e-commerce activities.
Before cryptocurrencies, international payments were only possible made through banks or other money-remittance third-party operators. This meant handling, processing and clearing delays, but also high transaction fees and strong barriers to competition. Even though there are solutions like PayPal, they do not solve the Forex costs: the use of PayPal requires high costs.
Under this condition, all the companies are trying to create a solution to avoid going through these third-party networks.
Now with a blockchain-based platform, building a decentralized platform to secures transactions (including B2B, B2C and C2C interactions) becomes possible. In addition, a decentralized platform can provide automatically methods for invoices and accounting, etc, thus makes auditing process much easier. Using blockchain technology. Decentralized platform can disrupt the industry on financial aspects beyond that, simply by giving access to the nearly 2 billion adults that are excluded from any level of banking services. This would happen while still improving on security, costs, and user friendly.
Cryptocurrencies have the technological capability to provide solutions for a relatively low cost and remove the need of a third party like PayPal. They have numerous advantages such as instant transactions with low fees, free access, simplified process, etc.
A major flaw we currently storing data is to use the centralized servers provided by third parties, which makes it vulnerable — once the central server is done, all the data could leak easily. But blockchains are decentralized, so data is also decentralized. By hacking a single or a group of server, data won’t be damaged because even though data will be stolen from those servers, other servers also has the origin data, and it is almost impossible to hack an entire blockchain.
Hence, blockchain technology provides a secure system whereby individuals and businesses can directly interact with each other without the need for an intermediary. Buyers and sellers do not need to worry about data security and personal data leaking. So, marketplaces built on the blockchain technology are extremely safe due to data security.
Eliminate fake products and comments
Another disruptive function of blockchain technology is that it allows for a clear tracking of supply chains. With the mass adoption of blockchain, the entire supply chain of a product can be checked directly with a simple click. So when searching products online, whether the product is genuine, organic, fair or contains chemicals, everything can be seen directly on its blockchain.
Fake comments, on the other hand, is also a significant question that users suffer a lot, there are countless articles about how important this problem is (for example: https://yhoo.it/2MutZ4d). using blockchain technology, it is easy to make sure that all the comments and rates from customers who actually bought and received your products The same works for eliminating fake comments of a user’s creditability, no matter buyer or seller, thus improve the whole reliability of e-commerce activities.
From what we discussed above, blockchain technology has a big space of application in e-commerce domain. It can help on improving transparency, security, cost saving and reliability, thus create build better e-commerce environment, this time for everyone.
NeoPlace, a protocol for cross border e-commerce, is building an ecosystem for everyone to take part in e-commerce without the barrier of high cost threshold, nor the exposure to fake comments. This would still allow everyone to benefit from freedom and unleash creativity to build their own e-shop and marketplace to accelerate their business and increase their margins by a factor of 3.
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