Ecommerce Trend: The benefit of cryptocurrencies/blockchain in eCommerce
With the official support of the big financial institutions/firms such as Goldman Sachs, Paypal, Visa/Mastercard, or the ecommerce platform giant Shopify, surely we in the ecommerce field shouldn’t miss the super fast rising trend crytpcurrencies and blockchain technology( also applied at Amazon and Walmart). Let’s check some benefits of crypto and blockchain in ecommerce and retail field.
Harvard: Better Than a Credit Card
Enthusiasts often point to cryptocurrencies’ potential to enhance both the efficiency and reach of e-commerce. The existing financial system — while certainly functional — has its share of inefficiencies, including its reliance on middle men, which often come in the form of credit card providers that charge up to 3% per transaction. Blockchain technology allows payments to occur directly between buyers and sellers, circumventing the existing system and reducing costs for both merchants and consumers. Blockchain also allows for the automation of the transaction verification process, where most banks today still expend significant resources on expensive manual verification. In fact, Santander InnoVentures has estimated that “blockchain technologies could reduce banks’ infrastructural costs by $15-20 billion a year by 2022.” These advantages will bring faster settlement times and cheaper international transactions.
Full post here: Is stablecoin the next big thing in Ecommerce?
Broader market appeal/easy global payment option
The rationale here is simple; the more payment options your ecommerce store offers, the wider the appeal you’re likely to have. Certain credit/debit card types are not available in all countries, which makes it more challenging for you to reap the benefits of a diverse customer base. Cryptocurrency has the advantage of being available globally and not controlled by any state or country, which makes it a particularly stable option.
Traditional payment methods such as banking and credit cards usually involve high transaction fees and commission, which is a big disadvantage to your business. While cryptocurrencies still involve third-parties, you have much more control as a merchant over what you’re willing to pay.
Payment processing times can vary significantly between banks and credit card companies, which has the potential to cause issues with your cash flow. Cryptocurrency transactions are processed instantly, giving you instant access to revenue from sales.
Because all cryptocurrencies use a decentralized ledger system, it’s virtually impossible to reverse or cancel a transaction once it’s been made. This gives merchants much greater protection against fraud or theft.
In fact, according to a February 2021 survey by Piplsay research, 57% of US-based consumers say that major brands should begin accepting cryptocurrency as a form of payment. With major platforms such as Shopify now allowing merchants to accept payments through their online stores, this is a major sign that cryptocurrency is becoming a viable alternative to traditional methods in the eyes of consumers.
Full article here: Cryptocurrency in ecommerce: What you need to know in 2021
Blockchain was readily embraced by the industry, which led to exaggerated expectations during the hype while the interest in exploring profitable use cases of blockchain has continued unabated. When it comes to supply chain solutions, industry giants with different roles in extensive value networks such as IBM, Maersk, Carrefour and Walmart all explore how blockchain can lead to more transparency, faster processing and the elimination of paperwork in an industry that is plagued by fraud and suffers from substantial inefficiencies (O’Brien, 2019). Amazon recently filed a patent for a blockchain-based authenticator to verify the authenticity of customer goods (Joshi, 2020). Overstock.com founded a subsidiary, Medici Ventures, with the mission to advance blockchain technology (Pollock, 2019). More specifically, their goal is to facilitate peer-to-peer transactions without any major intermediaries.
Another example is the envisioned $870 million free trade zone for e-commerce in Dubai named Dubai CommerCity that goes along with Dubai’s vision to become the “happiest city on earth” by leveraging blockchain technology for government efficiency, industry creation and international leadership (UAE Government Portal, 2020). Across all application areas, they further predict that the retail and e-commerce segment will exhibit the highest growth rates. Fueling this development, the COVID-19 pandemic has led to an increase in cryptocurrency payments during the time of crisis.
Full research here: The impact of blockchain on e-commerce: A framework for salient research topics
ShipHero: Disadvantages of Cryptocurrency in E-commerce
While the value of national currencies (e.g., U.S. dollar) fluctuates only slightly, cryptocurrencies are extremely volatile. We’ve recently seen massive upward swings, but a significant drop could pose a large risk for e-commerce retailers who need the cash flow for inventory replenishment and other day-to-day operations.
No Buyer Protection
When it comes to fraudulent chargebacks and purchases, consumers have enjoyed protection from credit card companies in the case of unauthorized expenditures. Crypto payments have no protections or recourse; like a wire transfer, when it’s gone, it’s gone. Therefore, consumers may require more trust in the retailer or brand before using cryptocurrency as a payment.
Bitcoin mining (essentially what powers the cryptocurrency system) consumes more electricity per year than the country of Argentina and has a carbon footprint as large as the country of New Zealand. Recently, Elon Musk caused the price of Bitcoin to plummet after announcing that Tesla will no longer accept Bitcoin due to environmental concerns.
Full post here: Cryptocurrency and e-Commerce