Remember when e-commerce arrived on the scene and disrupted the global retail space? Well, now it’s e-commerce industry’s turn to brace for impact, thanks to the imminent full-force arrival of blockchain technology.
According to blockchain technology expert Nando Caporicci, here is what the e-commerce industry should prepare for — because it’s not a matter of whether blockchain technology will influence e-commerce, but how quickly it will happen, and how profound the effect will be:
- Faster Transactions
The current e-commerce transaction workflow can involve over a dozen steps, which is not just time consuming, but any breakdowns in the chain will disrupt, delay, or cancel a purchase — which is bad for customers, and even worse for businesses who suffer lasting (and sometimes permanent) reputation damage. Since there is no need for third party approvals, blockchain technology dramatically simplifies, streamlines and speeds-up the transaction process. Nando Caporicci elaborates to explain that all blockchain transactions take place on a single network, and processing time is only limited by how quickly new blocks can be created, and by the speed of the network itself.
- No Transaction Costs
Removing intermediaries from the transaction workflow does more than speed things up: it also means that customers don’t get dinged by processing fees that can range from 2-6 percent, in addition to currency exchange fees. There is some confusion around this advantage, because there is a blockchain fee associated with each transaction. However, Nando Caporicci states that this is not a conventional processing fee. It is compensation to miners around the world who maintain the network.
- More Secure Transactions
Blockchain networks are decentralized and use distributed ledger technology, which make them virtually impervious to the kind of cyber attacks that centralized e-commerce databases are constantly trying — and in many cases, struggling — to thwart. Blockchain doesn’t capture and store customer data, such as credit card numbers. It only holds transactional information. Nando Caporicci claims that it is impossible to replace an intermediate block in the chain. Any attempt to do so would require changing the blocks hash, which cannot be done without compromising the chain’s integrity.
- Business Process Integration
The distributed ledger technology that underlies blockchain processing can also be leveraged to interface with legacy and new business process systems, such as those that deal with inventory control, product description databases, loyalty rewards, and supply chain management. Comments Nando Caporicci: “Distributed ledger technology also enables smart contracts, which can automate virtually any task based on pre-set rules. For example, financial institutions can create smart contracts that automatically transfer the deed of a property to customers after a mortgage has been paid, and the property has been cleared of any tax liens. This not only saves time and money, but it enhances customer experience.”
Nando Caporicci’s Bottom Line
Deloitte estimates that by 2025, 10 percent of global GDP will be generated via blockchain, and governments around the world — including the U.S. — are racing (as much as governments can ever truly race, that is) to enact regulations and legislation to support what will eventually become the new normal on the e-commerce landscape.
Concludes Nando Caporicci: “The rise of blockchain does not merely signify an e-commerce evolution: it is a change that will re-invent the experience for businesses and customers alike; in ways that we can imagine, and indeed, in more ways that we cannot. It will be interesting and exciting to see how the blockchain story unfolds. In the big picture, we are just at the beginning.”